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It was an early October morning in Gettysburg, sky was gray. The night before, I had watched the second Presidential debate. I was pulled off the road along a hewn-wood fence facing the ground where Picket charged. And then, I could see it allthe massive field, and upper left, the rock formations of the northern line stretching along Cemetery Ridge to the Round Tops. To my lower right, the woods where Lee’s troops waited on the morning of July 3, 1863, the last and deciding day of battle. On the first day of battle, one of the federal captains had described the union retreat thru the town square, as “by the skin of our teeth”. But the Yanks held Cemetery Ridge and the high ground.
In these days of PR spin, framing and branding (such as “personal accounts” rather than “privatization of social security”) the rich metaphors from Gettysburg, this special place and history, came rushing to me as I sat there crossroads, skin of our teeth, hold the high ground, turning point of the war, and the “high watermark of the confederacy”.
Gettysburg was a crossroads in more ways than one. The nation is, today, at another crossroads. We are in a struggle to preserve our core values and principles. The attacks on retirement and social security, and the companion attempted roll-back of the mild corporate governance rules of Sarbanes-Oxley, are a final assault on the building blocks of America’s New Deal. They are also a rejection of the promise of modern work-life. We’ve already lost too many battles. But the battle to preserve Social Security and retirement security is a battle we cannot afford to lose.
As Bruce Springsteen said during the election, “the country that we hold in our hearts is waiting.” It still does. It is an Undiscovered Country that awaits.
I accidentally came across this fertile metaphor, the idea of an undiscovered country, in a review of a Tom Stoppard play, around the same time. An Austrian novelist and playwright named Arthur Schnitzler originally wrote Das Weite Land in the 1800s about his abhorrence of the Hapsburg Empire’s obsession with dueling (and war without end). Tom Stoppard re-worked the play, calling it The Undiscovered Country (yes, you may have heard of the Star Trek movie).
What timely notions, Gettysburg, and its meanings, and Das Weite Landthe Vast Domain. Terre étrangère. The Distant Land. Unknown Country. Far and Wide. The Promised Land. A simple title, with many translations. An Undiscovered Country.
Working people still have two vastly different possibilities for their future, despite the November elections. An undiscovered country that represents the hopes and promise of the future, or an attack on retirement and modern life itself, a return to a bleaker past, where life was solitary, poor, nasty, brutish and short (apropos Hobbes) and retirement sometimes the poor farm.
The Attack on Retirement
It’s spring now here in Pittsburgh, a fire in the fireplace attempting to ward away late snows and escalating gas bills. The election obviously went the other way, and in the sober light of day, the re-elected President is still on his tour of “town hall conversations”, campaigning for his Social Security “reform”.
Congress and the White House have been busy at work-not in solving major problems like poverty or global warming-but rolling back protections for working people and consumers, including the class action rules that allowed Erin Brockovich to win awards for PG and E cancer victims, and cutting bankruptcy protection for credit card debtors.
There are good economists like Dean Baker, Paul Krugman and Alan Blinder, former Federal Reserve member, who have successfully taken economic meat cleavers to the President’s proposal, explaining that the $2 trillion borrowing from the Trust Fund to start the “private accounts” is only an initial bail from the bucket; it could cost $4-6 billion or more. Alan Hevesi, Comptroller of New York State, reveals that the “plan” increases the acknowledged actuarial imbalance in the Trust Fund, so that the imbalance would start occurring in 2009, not 2018. It’s the math, stupid, you might say.
It’s also history. I heard a labor speaker recently talk about stories that his father told him from the 1930s in Aliquippa, Pa. Back then, lonely and poor elderly folks often lived out the end of their lives in poor houses and old age homes. The depression of the 1930s led to the election of Franklin Roosevelt, of course. As one Times writer put it,
“The Depression destroyed every mechanism that had existed for covering the vicissitudes of old-age dependency. Before the creation of Social Security, some Americans had private or state pensions, but most supported themselves into old age by working. The 1930 census, for example, found 58% of men over 65 still in the workforce; in contrast, by 2002, the figure was 18%.” And the elderly often became a burden on their children and families before the law was passed.
Roosevelt fought to get the program passed, explaining that “we have tried to frame a law which will give some measure of protection to the average citizen and to his family against the loss of a job and against poverty-ridden old age”.
The fountainhead of our work-life is still the New Deal. The Social Security Act established the systems-old age pensions, unemployment insurance, etc.-that brought millions out of poverty. The Wagner Act, the Fair Labor Standards Act (banning child labor), acts helping poor people, re-establishing faith in the banks, the regulation of corporations and commerce, etc. FDR brought “modern life”-literally-to vast parts of the country like the Tennessee Valley and the South. And the New Deal brought the promise of retirement security to workers for the first time. Professor Teresa Ghilarducci:
In the wake of the Great Depression, government, business and labor representatives forged an informal yet very real social contract on retirement security. For decades, that contract shaped the length of time for which workers could expect to retire.The expectation of healthy leisure at the end of one’s working life was the result of (this) negotiation. Social Security provided a safety net, but private pensions were the key to a secure, middle class retirement. Throughout the post-World War II period, workers regularly traded wages for pensions-and even went on strike over pensions. “Do Longer Lives Mean Just More Work?”, Perspectives on Work, Teresa Ghilarducci, vol. 6, issue 2.
“The president and Rove are betting that history is on their side,” wrote Howard Fineman in Newsweek (2/14/05). “Indeed, their proposal is the domestic capstone of the modern conservative movement, which surfaced in 1963 with what was then regarded (rightly) as a suicidal attack on Social Security by Barry Goldwater”
Is history on their side? The promise of modern work-life was the premise that working people would benefit from the efficiencies of technology and share from the fruits it yields. Workers, after all, invented many of the technologies and spurred many of the productivity changes through these centuries.
Bertrand Russell’s “In Praise of Idleness” asserted that the promise of plenty guaranteed by technology would mean that, unlike feudal times, the gains of workers would be converted to leisure. And people could work less and retire earlier.
“Let us take an illustration. Suppose that, at a given moment, a certain number of people are engaged in the manufacture of pins. They make as many pins as the world needs, working (say) eight hours a day. Someone makes an invention by which the same number of men can make twice as many pins: pins are already so cheap that hardly any more will be bought at a lower price. In a sensible world, everybody concerned in the manufacturing of pins would take to working four hours instead of eight, and everything else would go on as before. But in the actual world this would be thought demoralizing. The men still work eight hours, there are too many pins, some employers go bankrupt, and half the men previously concerned in making pins are thrown out of work. There is, in the end, just as much leisure as on the other plan, but half the men are totally idle while half are still overworked. In this way, it is insured that the unavoidable leisure shall cause misery all round instead of being a universal source of happiness.
Today, not only are half the pin makers being laid off, they will likely lose part or all of their pensions. Traditional pensions for workers in general have been sliding-covering half of full-time workers 30 years ago, to below 20% today. More recently, workers have seen pensions stripped at United, US Air, Beth Steel, Kaiser Aluminum and Polaroid, and dozens of other companies. And the Pension Guaranty Corp. (PBGC), the government agency that insures defined-benefit pension plans, ended fiscal 2004 with a net loss of $12.1 billion. It is in deep in trouble, with a year end deficit that doubled over 2003. (“The Domino Effect”, David Katz, CFO Magazine, 2/2005).
And lately, we’ve been reading that Gov. Schwarzenegger had wanted to abolish the pension system in California. Sean Harrigan, president of the state employees pension fund board (CalPERS), was fired by the Governor, part of chamber-inspired attack on workers in California. But there’s no going back. The CalPERS Board unanimously elected Rob Feckner its new president Feb. 16. Feckner said “We will do everything in our power to stop the elimination of our defined-benefit pension plan.”
Examinations of the “experiments” with Social Security in Great Britain and Chile have undermined the President’s case for privatization. The British “plan” under Thatcher has led to hundreds of thousands of workers losing money due to massive fee transfers to investment managers. In Chile, the ruthless dictator General Augusto Pinochet imposed private accounts on workers after the mass murders and oppression of the 1972 coup-d’tat, with the help of Milton Friedman and the University of Chicago boys. “Every time this plan has been tried, from Galveston to Chile, it has been a disaster. People lose money because they don’t have the advantages of the professionals and the state. Unless they get lucky, the state plan pays better and is more stable.” (WaPo, 4/11). The experimenters-in-chief, including the Cato Institute and its ilk, have created a Frankenstein.
All of this seems to be a well-packaged theft of not just money and retirement, as over-worked Americans are urged to work longer, but leisure in general. Professor Ghilarducci and others have refuted the urban legend that if you retire too early, you will die younger. In her paper “The Political Economy of Pro-Work Retirement Policies and Responsible Accumulation” (2004), she states”pension reform is increasingly geared towards encouraging older workers to postpone retirement and retirees to reenter the work force. In fact, retirement causes better health(Neuman, 2004)”.
Russell claimed that the well-to-do in America were “indignant at the idea of leisure for wage-earners, except as the grim punishment of unemployment”
The Roll-Back of Corporate Reform
A close friend of mine with the Pennsylvania SEC receives corruption reports many times a day on his Blackberry. The business press is fat with fresh, daily new corporate corruption scandals and new rip-offs of workers and shareholders. Yet, the Sarbanes-Oxley Act (SOX) is under a ferocious attack by Wall Street, corporate lobbies claiming that the paperwork and disclosures are strangling their clients. SOX may need a tweak, but it is working well.
Senator Joe Dunn of California warns that the right wing has squarely lined up against corporate governance and pension fund activism, quoting Steven Moore, President of the Club for Growth: “The witch hunt against corporate excess and corporate accounting scandals (is) all the rage on the left these days.”
What witch hunt? The only witch hunt I’ve noticed is when federal crime fighters yanked Martha Stewart into the hoosegow to set a quick “example”. Most of the bigger fish who caused all of the damage have delayed or skirted justice so far. Ken Lay is still a free man. And the defense used by former CEO Bernie Ebbers of WorldCom was laughable. In the entrepreneurial ’80s and ’90s, CEOs prided themselves in “walking around”, getting to know everyone who worked for them. Ebbers claimed the “know nothing” defense. Well, the jury quickly threw that out warped excuse, thank God.
Did we learn nothing in the last 5 years? The pressure to negate governance reforms comes amid continuing corporate scandals; the largest financial melt down since the Great Crash; millions losing their jobs in the recession; a number of states and numerous cities in fiscal kill-off; a renewed energy crisis; recent market weakness; and, now, a dollar fall off as central banks are now shorting the dollar and moving toward the Euro. Adam Shell reported in USA Today that markets do not recover soon after major crashes, and it took the post-Great Depression Dow 25 years to return to its 1929 levels.” (“10 Reasons why the Nasdaq won’t Recover Soon”, USA Today, B1, 3/10/05).
And, we may not get much help from the vaunted high-tech sector, every troubled city’s would-be white knight, as the “knowledge workers” are:
“among a wave of Americans taking to the highway to preserve a middle-class life.information workers are having mobility thrust upon them as companies change the way they staff computer-related jobs. Foreign workers are cheaper for some basic programming and technical jobs, and short-term contract workers give companies more flexibility to add and subtract employees as needed.” (Greg Schneider, “Slowdown Forces Many to Wander for Work: IT Unemployment Now Exceeds Overall Jobless Rate.” Washington Post, 11/9/04).
Paul Craig Roberts (Reagan’s Assistant Treasury Secretary) offered that: “So far in the 21st century, there is scant sign of the American ‘new economy.’ The promised knowledge-based jobs have not appeared.” (“Outsourcing Innovationand Everything Else”, March 2005).
If there is a recovery today, it is the most pathetic since WWII, at least in terms of working people and the middle class. Thus, it is not a very good time for investors and investment experiments in general. And it’s certainly not a good time to let CEO’s wiggle out of the financial sign-off requirements of SOX (lest we want more of the “know-nothing” defenses).
On top of all this, the pressure to “juice” the market will be tremendous. GovernanceMetrics International’s recent study of corporate governance practices indicate that the abuses that brought on the corporate Chernobylscozy boards, non-independent auditors, lush CEO arrangements, still exist, and that “investors must remain vigilant for executives and boards that are still in the Stone Age.The firm has just finished examining practices at 3,220 companies around the world. Of those companies, only 34 received GMI’s highest rating of 10.Of course, lapses in governance do not necessarily lead to poor performance at a company. But enough investors have lost big money in companies where conduct was questionable that governance should be a constant consideration.Armed with data, investment managerscan’t claim ignorance if a trifling corporate governance problem turns into something else.” (“Companies Behaving Badly”, Gretchen Morgensen, Page 3-1, NYT, 3/6/05).
And after the merge and purge binge that ended badly in 2001, the finance markets are at it again. From ISS: “The recent series of high profile mega-merger announcements should serve as a warning sign that companies flush with cash, and encouraged by a strengthening economy are once again actively getting involved in the high-risk mergers and acquisitions business;” the HP-Compac merger failure being exhibit A.
And SOX? In a recent article, “Lifting the Lid: Many Companies Called to Accounting Carpet”, Brendan Intindola of Reuters reports:
So for all the huffing and puffing about the costs of complying with one of the final mandates of Sarbanes-Oxley, introduced in 2002 after a series of huge corporate scandals, there are clear signs that Section 404 of the Act is forcing companies to uncover some deeply buried accounting skeletons.
Regulatory estimates from a few weeks ago put the number of companies that have been forced to come clean at 500 to 600 of more than 10,000 corporations registered with the U.S. Securities and Exchange Commission. Critic have argued the millions of dollars in extra auditing fees to determine if financial controls are adequate is money poorly spent, with no quantifiable return. Yet Section 404 may be keeping Corporate America honest, or at least focused, say accounting experts, adding that the benefits of raising investor confidence will, over time, substantially outweigh the upfront expenses.
Hevesi, having spearheaded lawsuits against WorldCom, the largest corporate bankruptcy in history, argues that “The job of directors is to be a fiduciary on behalf of shareholders, to demand documents, to ask tough questions of management.” As an organizer of the pension fund-led Coalition for Corporate Reform, Hevesi notes that the job of responsible shareholders is to reform companies, not destroy them or run themand that’s what the pension funds are doing.
Eliot Spitzer, Attorney General of New York State, rejoined that the right loves to cloak itself in the language of the free market, when in reality the leaders of American big business are hard at work against competition, transparency and accountability.
And Phil Angelides, Treasurer of California, had this to say about the California Governor’s plan to dismantle pension funds:
Why this proposal then? Because for the right-wing ideologues behind his plan, the issue is not saving money. It is about draining public pension funds of their clout. Across the country, the governor’s ideological soul mates are targeting public pension funds for elimination because those funds – with the CalPERS and CalSTRS at the forefront – have stood up for ordinary investors against the rampant corporate abuses.In pursuing corporate reform, the pension funds are operating not just in their own self-defense. They are also giving a powerful voice in the boardrooms to the interests of millions of families that have invested their savings in the markets.leading the fight on behalf of ordinary shareholders to put transparency and accountability back into American capitalism.
In a recent Harpers Magazine, Michael Hudson sums it up: “What Bush seeks to manufacture is a boom-or, more accurately, a bubble-bankrolled by the last safe pile of cash in America today. His plan is a Ponzi scheme, and in that scheme it is Social Security that is being played for the last sucker.” (“The $4.7 Trillion Pyramid”, 4/05).
The Promise of Modern Work-Life: The Undiscovered Country
We don’t need any more invented crises. We have enough real crises to keep elected leaders and everyone else busy for the next century. There’s enough on our plate.
A phalanx of financial institutions, think tanks and lobbyists have been leading this attack on retirement security and corporate governance, and have been joined by the Neo-Cons.
At the same time that the “privateers” and their lackeys in the capitols want to end the too-modest controls placed on them by Sarbanes/Oxley, the President and some governors want to hand over hundreds of millions a year or so in projected “fees” for managing “private accounts” back into the same caring hands of the Wall Street crooks that “experimented” with Enron and WorldCom, etc. And then they plan to demolish the pension trusts of the people, the only consistent forces that have stood against corruption.
So, where is this mugging headed? Next is the assault on modern work-life itself-the progress of the last 60-70 years. Because if SS is destroyed, everything is on the table, as Bush loves to say.
It’s all on the table, and it’s damned daunting. Just look around. For working families, it is the rejection of not just retirement security, but the 8-hour day, equal employment, health care insurance, minimum wage, etc. In general, the rejection of modern science, international policy ruled by end-times neo-cons, scorched-earth environmental policies, military overreach, and other such tragic absurdities.
After that first day at Gettysburg, the outcome was in doubt, as the Scotsman reported:
“The news of the result of the great engagement of the 3dwill probably be the most important in the whole course of this eventful war. The undoubted defeat of the Federals on the 1st augurs ill for their success in an encounterfor which they occupy a decidedly unfavourable position, under an untried commander, while they are fighting against the skilful and redoubtable LeeFor if Meade is beaten, no second Army of the Potomac remains to shelter the cities of the North against the victorious advance of the Confederate invasion.” The Scotsman, July 16, 1863.
But, as we know, the Yanks held the high ground. We, too, will win in the end. Bush and Congress are feeling the heat as a revitalized youth movement has joined the AARP in rejecting their privatization pipe-dreams. Financial houses are feeling the heat of the labor movement. And in California, the Governor just threw in the towel, for the time being, after a massive labor-community campaign convinced the public that the Governor’s pension fund demolition was mean-spirited and would hurt Californians. The tide is turning our way.
Back at Gettysburg, I remember groups of school children re-tracing the long path of the charge, walking for a long-time and then passing the road I was on, climbing the wood fence that had been a killing ground for rebels. Other groups were gathered around a speaker at the clump of trees at the northern center, as she explained the bloodbath that took place at the “anvil”. Monuments punctuated the horizon, sprouting as far as the eye could see. And, in front of the monuments, school buses.
As the French philosopher, Jacques Derrida, said, the future has a future. It is our undiscovered country, in our hearts. Who will be in it? Our children, and our children’s children, and theirs. It is for them we fight. Fight like hell and hold the high ground.
We’ve been here before, folks, we’ve beaten back these mossbacks, and we will win again. If we win this battle for the crossroads of the next century, we can win back our Undiscovered Country. Fear not, I think I can see the High Tide of the Neo-Con Confederacy.
© 2005 T.W. CROFT.