Each of your responses must be
than one paragraph.
1. Based on the theories discussed this week, which two (2) theories do
explains social inequality?
2. Which main points (from each theory you have chosen), do you think can best be used to explain inequality? Why do you like these theories over the other theories? Explain.
3. After reading the material for this week, to which social class do your really belong? Does your answer prior to reading differ after reading? Discuss what you have learned about social class and how this is determined.
Textbook Readings: Ch3 & Ch4
Repeat Performance: Globalization through Time and Space
In the midst of the lively conversation, the elegant, 90-year-old woman said, “Please excuse me. There’s something I want to share with you.” A moment later she came back with a letter, which she had received at the turn of the twentieth century. The writer was a young Englishman she had met during a transatlantic voyage. He was explaining to his 15-year-old correspondent how exciting it was to be growing up in the nation whose empire stretched around the globe. “What’s particularly impressive,” he wrote, “is that in spite of our modest size, the magnificent phrase still rings true: ‘Rule, Britannia! Rule the waves.’ And that’s going to be the reality for centuries to come.” How strange it felt listening to the young man’s words while realizing that the world’s once dominant nation was now sharply reduced in the course of less than one slender lifetime.
Yes, he was wrong. In fact, as we see with modern world systems, once a nation attains dominance, it is on the brink of decline, and soon a repeat performance makes another nation dominant. In this chapter we examine the development and demise of world systems, which significantly affect citizens’ economic and political opportunities around the planet. Then the focus shifts to global social stratification, with distinctive differences between core nations and the less developed peripheral and semiperipheral countries. Throughout the chapter it is apparent that not only classes but nations themselves vary in access to capital resources. In particular, certain types of capital such as technology and education affect social inequality within countries. The final section indicates how the context of the global age impacts class groups, ranging from the wealthy to the poor.
First, however, it is necessary to place the global age in context.
THE RISE AND FALL OF WORLD SYSTEMS
The past 400 years of human history have featured three time periods in which a single country—Holland (the United Provinces) 1620–72, Great Britain 1815–73, and the United States 1945–67—established hegemony, a situation in which one nation has sufficient power and influence to impose its rules and goals globally in the economic, political, military, diplomatic, and even cultural realms (FineDictionary.com 2017; Wallerstein 1984, 38). The leaders of hegemonic powers prefer to use consensus instead of coercion, but with supremacy in mind, they willingly resort to force. While the height of US hegemonic power has passed, its more than 800 military bases in over 160 countries and territories (Vine 2015), the continuing prominence of large numbers of American-based multinationals, and its well-funded if financially challenged government mean that the country continues to be the major player in the global setting.
In the 1970s and 1980s, Immanuel Wallerstein, Christopher Chase-Dunn, and a number of other scholars concluded that because countries are not isolated but are economically and politically interrelated with many others, then the world system is the most accurate and revealing concept for analyzing the structures and functions of modern nations. The modern world system is a capitalist global economy which contains multiple states and a single dominant international division of labor. When a particular system is fully established, one nation maintains hegemonic control, extending its influence throughout the global entity (Chase-Dunn 1989, 2; Wallerstein 1974, 7; Wallerstein 2011, xiii–xvii). During the history of world systems, nations have varied in their wealth, power, and the roles played.
Per Capita Income1
South Korea (Republic of Korea)
World-system analysts examining the international division of labor divide countries into three types—the core, the semiperipheral, and the peripheral, roughly the rich, the middle income, and the poor. A core nation is a country that possesses a successful industrial history, exerts both political and economic influence in the world system, and enjoys a high standard of living. Besides the traditional core nations featuring the United States, western Europe, and Japan, China has advanced economically, now possessing an impressive portion of the global personal wealth. In 2015 the countries controlling the highest percentage of global personal wealth were in order the United States, China, Japan, UK, Germany, France, and Canada with 41.6, 10.5, 8.9, 5.6, 3.9, 3.5, and 3 percent, respectively (Sherman 2015).
A semiperipheral nation is an independent state that has achieved a moderate level of industrialization and development. In Asia they include South Korea (the Republic of Korea), Singapore, Hong Kong, and Malaysia and, in Latin America, Argentina, Brazil, and Mexico. A peripheral nation is a member of the poorest, least powerful, and least industrially developed set of countries, which are primarily located in Africa, Asia, and Latin America (Bradshaw and Wallace 1996, 44–45; Sherman 2015; Wallerstein 1974). Some descriptions in this chapter cite all three types of nations; in other instances the semiperipheral and peripheral categories are combined as “developing” nations. Table 3.1 illustrates one of the major advantages that the residents of core nations possess—in this instance that they tend to live longer than people in the less affluent nations.
Table 3.1Global Inequality: Per Capita Income and Life Expectancy in Selected Core, Semiperipheral, and Peripheral Countries
1In 2016 US dollars.
Global inequality in income ranges widely. Not surprisingly the data here suggest that people living in more affluent countries have a better chance of living longer.
Sources: World Bank (2016; n.d.).
Across time total income inequality between the core and peripheral countries has widened. In 1820 estimates indicated that the 20 percent of the population living in the richest countries earned three times as much as the residents in the 20 percent poorest countries. In 1870 that ratio rose to 7 to 1, 30 to 1 in 1960, 60 to 1 in 1990, 74 to 1 in 1997, and 83 to 1 in 2007 (Ortiz and Cummins 2011, 2; Pieterse 2002, 3). It is abundantly clear that in contemporary times most workers in the peripheral nations have been increasingly losing out compared to their core-nation counterparts.
Furthermore the relationship between core nations and the other two categories of countries has been exploitative, with the wealthy states seeking two major benefits—raw materials and cheap labor. The raw materials include a variety of minerals and metals essential for manufacturing such products as automobiles, weapons, computers, and a lengthy list of other items. It is safe to say that without these raw materials the core countries’ wealth would be greatly diminished. To obtain raw materials, the European powers established colonies on every continent except Europe.
Representatives of core nations also sought cheap labor, sometimes using slaves. Before the end of the slave trade, 12 million Africans had been captured and transported to an alien, oppressive life in distant, hostile lands. While slaves were used to perform a variety of tasks, the majority of those in the Caribbean, Brazil, and the southern United States labored on sugar, tobacco, and cotton plantations (Bradshaw and Wallace 1996, 45–48; Chirot 1977, 22).
Slavery, of course, is now illegal internationally, and since World War II colonies have proved too costly to maintain, leading to their sovereignty. So is it safe to say that those poor countries are no longer exploited for their raw materials and labor? The answer is decidedly negative, and the key players shaping this modern reality are multinationals, which have developed in the context of modern world systems. A multinational is a large corporation which both produces and sells goods or services in various countries. Profit and a desire for free, unrestricted business activity determine the global choices, including decisions about contracts with feeder (supplier) factories, which manufacture goods for the multinationals. In the third stage of the world-systems process, multinationals have attained massive wealth and power. Walmart, the giant retail-store chain with 67.7 million employees worldwide, led the Fortune Global list of top 500 companies with a $486 billion intake in 2016, followed by three massive Chinese corporations—State Grid, Sinopec Group, and China National Petroleum (Fortune Global 500 2017).
The process producing the three hegemonic systems has involved a common set of stages (Wallerstein 1980; Wallerstein 1984, 39–40).
Conditions in the Development of World Systems
As each system developed, a fairly uniform set of conditions unfolded—first, expansion in three critical economic domains, namely agriculture/industry, commerce, and finance; then the formation of an ideology emphasizing free trade; third, the growth of military might to ensure a stable setting for doing business; and finally the demise of the hegemonic power and a restructuring of the system (Wallerstein 1984, 40–42).
THE FUNDAMENTAL ECONOMIC ISSUES OF AGRICULTURE/INDUSTRY, COMMERCE, AND FINANCE
Comparing the Dutch and American world-system experiences, one finds broad similarities and specific differences. The Dutch fishing industry was very successful, and a major contributor was the fifteenth-century invention of the haringbuis or buss, a fishing boat which not only had extensive cargo space but possessed a unique combination of speed, maneuverability, and seaworthiness. The buss provided sufficient deck space to gut and salt fish, preserving the fish and permitting the boats to stay out from six to eight weeks. Using their busses, the Dutch dominated the North Sea herring fishery, the Iceland cod industry, and the Spitzbergen whale hunt. The Dutch also were ingenious at growing crops. Possessing little land, they became experts in draining large areas and perfecting intensified agriculture. Such industrial crops as flax, hemp, hops, and dyes grew well in Dutch soil. The United Provinces not only produced industrial crops but also became the top producer of industrial goods. Textile production centered in the northern Netherlands, and it grew steadily for a century until the 1660s when formidable British competition began to replace it.
The Dutch were also heavily involved in shipbuilding, a highly organized and mechanized activity, using such labor-saving devices as wind-powered sawmills, block and tackles, as well as great cranes to move heavy items. As a precursor to the twentieth century automobile business, Dutch shipbuilding required a number of ancillary industries, producing spare parts, provisions, rope, nautical instruments, and sea charts. In its hegemonic heyday, the United Provinces engaged in a number of other world-leading industries, including the production of paper, books, armaments, crockery, tanned hides, cut tobacco, and soap (Wallerstein 1980, 39–44).
Equipped with an array of high-quality products that included a growing fleet of ships, Dutch merchants were in a strong position. The nation’s international trade flourished, expanding 10-fold between 1500 and 1700. In 1670 the United Provinces shipped three times more tonnage than Great Britain, its closest rival, and more than the tonnage of Britain, France, Spain, Portugal, and Germany combined (Wallerstein 1980, 46). In the early seventeenth century, trading companies’ activities could extend well beyond just trade. Various Dutch trading organizations, most notably the Dutch East India Company, became extensively involved in plundering and privateering, capturing Spanish and Portuguese ships and effectively accumulating revenues to help pay for both the military expenses incurred in naval warfare against Spain and Portugal in Asia and also for the company’s naval fleet and commercial facilities that would reinforce its prominent role in trade (Borschberg 2013).
British merchants found the Dutch trading activities dazzling, watching in amazement and envy as their commercial fleet recaptured Baltic and Mediterranean markets lost earlier to the British (Ormrod 2003, 34). The nation’s reputation as the world’s dominant commercial force survived well beyond the actual fact. As late as 1728, the renowned author Daniel DeFoe referred to the Dutch as “the Carryers of the World, the middle Persons in Trade, the Factors and Brokers of Europe” (Wilson 1941, 4). However, not all observers were admiring. British patriots deeply resented the fact that merchants from the United Provinces were so profit-hungry that if the price was right they would willingly trade with Spain, both countries’ mortal enemy (Kennedy 1987, 68).
During this era some Dutch citizens were making substantial amounts of money, and they needed a safe and secure location for their capital. De Wisselbank van Amsterdam became that location, with its deposits rising 16-fold through the century. The bank’s growing wealth allowed it to develop a substantial credit function, greatly adding to its wealth. In addition, the stability of Dutch currency made it the preferred money of the day, permitting low interest rates and attracting further investment (Wallerstein 1980, 58–59).
As the Dutch world system was declining, the roots of what would eventually be the American system were developing. In the seventeenth and eighteenth centuries, core industries developed in New England featuring shipbuilding, cod fishing, the distillation of rum, and light manufacture; in addition, colonial merchants made profit carrying products between the colonies and Great Britain. Eventually New England merchants, farmers of the middle colonies, and the southern plantations owners realized that it would serve their common interest to divest themselves of British colonial control.
In the nineteenth century, agricultural exports, including slave-grown cotton, were money-making products. At that time the northern industrial sector was developing a variety of products, and in the opening decades of the twentieth century the export of cotton textiles, a variety of machines, electrical appliances, and automobiles were successful (Chase-Dunn 1989, 182–83). American industrial development caught and surpassed its major rivals. For instance, in 1855 the British originated the Bessemer process to produce high-grade steel at low cost. Then the Germans developed a more efficient, low-cost process, but shortly afterwards the United States exceeded both countries, producing 70 percent of the world’s steel within 30 years of the introduction of the Bessemer process (Bunker and Ciccantell 2005, 187). Such an energetically competitive approach is generally missing from the modern American big-business world.
As it rose to hegemonic supremacy following World War II, the United States initiated the Marshall Plan, which helped war-ravaged European countries reestablish themselves economically. The government provided $12.4 billion over four years to both allies and former enemies, and those nations primarily used the money to buy large amounts of food, feed, fertilizer, machines, vehicles, equipment, and fuel from American companies. In the late 1940s, the Marshall Plan served as a major financial tool, helping to solidify the world-wide dominance of American business (Chirot 1977, 149–50; Kaplinsky 2005, 223; O’Brien 2014).
PHOTO 3.1 While the Marshall Plan supplied much-needed aid to both allies and former enemies, it also provided the foundation for the worldwide dominance of American business.
Source: Everett Historical/Shutterstock ID 252142252.
THE DEVELOPMENT OF AN IDEOLOGY, THE COMPLEX OF VALUES AND BELIEFS, THAT SUPPORTS A SOCIETY’S SOCIAL-STRATIFICATION SYSTEMS AND THEIR DISTRIBUTION OF WEALTH, INCOME, AND POWER
The hegemonic power normally seeks an unrestricted international flow of capital and labor as well as political restraints on arbitrary governmental power and the loss of civil liberties. A major reason for supporting free trade is that then the dominant nation does not need to pay for the administrative control that establishing tariffs would entail. Often free trade serves hegemonic powers well. However, if it does not, then they have promoted tariffs. In the nineteenth century, Great Britain, the hegemonic power, was much more supportive of free trade for French, German, Dutch, and Spanish colonies than for its own, which officials felt required protective tariffs for its products. After World War II, the United States grasped the hegemonic baton, promoting the general idea of free world trade but often favoring tariffs to protect its own products. Furthermore during this era, a host of former colonies became independent countries, and most of their leaders supported the United States’s hegemony and ideology (Chase-Dunn, Kawano, and Brewer 2000, 80–81; Leffler 2014; Martin 2008, 172–73; Wallerstein 1984, 41).
The Trump administration has promoted the development of new tariffs against China and other major exporting countries, producing mistrust from both rival and allied nations. Such initiatives are likely to raise the cost of protected goods, which normally can be produced cheaper in countries where the tariffs are not enforced, and the end result of this tariff system could be a sharply lowered world living standard (Coy 2018). It seems very likely that such a policy could produce increased economic inequality.
THE ROLE OF THE MILITARY
While dominant powers in the world system often present themselves as peace-loving, their leaders have recognized the necessity of a strong military presence. In fact, each of the three major world powers established its hegemony by winning wars covering an approximate 30-year span—the Dutch in the Thirty Years War from 1618 to 1648, the British in the Napoleonic Wars from 1792 to 1815, and the Americans in the two world wars occurring between 1914 and 1945 (Wallerstein 1984, 41–42). A close relationship exists between hegemonic wealth and military power. The Netherlands’ commercial success permitted the country to develop the world’s largest navy as well as the only army comparable to Spain’s. Admiral Alfred Thayer Mahan, the leading nineteenth-century authority on sea power, declared the “United Provinces owed their consideration and power to their wealth and their fleets” (Mahan 1889, 97).
While the relationship between wealth and military power could affect prospective hegemony, another factor might come into play. Unlike such countries as France, Germany, Spain, and Russia which have had potential adversaries sharing the same land mass, Great Britain and the United States have had physical separation from potential enemies. Thus historically these two eventual hegemonic powers had less need than other nations to form a large, costly standing army, spending the money instead on economic development and, particularly in the British case, naval expansion (Chase-Dunn 1989, 161).
That situation has dramatically changed. Since the 1950s the expenditure for the American military has been enormous, with major corporations supporting an active world-wide military presence and receiving large contracts for a wide variety of goods and services. The eye-popping reality is that the US military expenditure is over a third the global total—about $611 billion annually, representing 36 percent of all military spending and more than three times the amount spent by second-place China (McCarthy 2017). In his farewell address, President Dwight D. Eisenhower, once a celebrated army general, warned about the growing threat of a “military-industrial complex” (Chirot 1986, 241–42).
THE RESTRUCTURED WORLD SYSTEM
Each of the three hegemonic systems developed after a lengthy war, and afterwards the new national power sought to establish economic and political stability on its own terms (Wallerstein 1984, 42–43). Before World War II was over, in fact, British and American representatives met in Bretton Woods, New Hampshire, to plan a stable economic structure that would promote world financial growth (Kaplinsky 2005, 12–13). The Bretton Woods conference was a distinctly hegemonic performance, favoring the United States. At one point the renowned economist John Maynard Keynes, the chief British representative from the previous hegemonic nation, declared that the Americans “plainly intend to force their conceptions through, regardless of the rest of us” (New York Times 2009). While Keynes and his compatriots grumbled, they acknowledged that the money the Marshall Plan provided would overcome not only British but other European countries’ opposition to American directives at Bretton Woods.
One important outcome of the conference was the formation of several global organizations, notably the International Monetary Fund (IMF), the World Bank (WB), and the General Agreement on Tariffs and Trade, which eventually became the World Trade Organization (WTO). Since the 1980s these organizations have eliminated most restrictions on trade, greatly benefiting multinationals and handicapping the formerly protected peripheral and semiperipheral countries (IMF, WB, and WTO 2017; Kaplinsky 2005, 13–14; Kentor and Boswell 2003, 302).
Writing from the vantage point of having been the chairman of President Clinton’s Council of Economic Advisors, the distinguished economist Joseph E. Stiglitz concluded that while the IMF officially seeks to ensure global economic health, its real agenda is very different. Stiglitz added that IMF support for free trade “may not have contributed to global economic stability, but it did open up vast markets for Wall Street” (Stiglitz 2002, 207).
In fact, such open systems tend to promote their own demise. First, that very openness encourages the spread of the hegemonic power’s technologies. Foreign competitors will have ample opportunity to develop newer, more efficient technologies along with more recent, better organized plants. Bombed into ruin during World War II, the Japanese auto industry rebuilt with cutting-edge technology to become formidable competition for its American rival. More recently China with advancing technology and workforce skill has become a major player in the world’s industrial production.
Second, in order to establish themselves as world leader in the production and sale of goods, the companies residing in the hegemonic power must steadily raise employees’ pay. It is a precarious situation. Competing firms in other countries, which almost inevitably have a lower standard of living, can pay their employees less, permitting these companies to undersell competitors located in the hegemonic power (Ross 2015; Wallerstein 1984, 45).
A decisive moment has arrived. Wallerstein wrote, “Once the clear productivity edge is lost, the structure cracks” (1984, 45). The US hegemonic decline started in the 1970s (Wallerstein 2003, 13). However, while the United States no longer has hegemonic control, a host of American multinationals with great wealth and influence has meant a persistent economic prominence. Sociologist Daniel Chirot claimed that American leadership
in the capitalist world is far from over. For better or for worse, there is no country in the system that will have the power to determine its course as much as the United States … well into the twenty-first [century].
Table 3.2 lists the principal factors in the preceding discussion of world systems.
Table 3.2Major Elements of World-Systems Analysis
A.Three nations which established hegemonic control: Holland 1620–72; Great Britain 1815–73; and United States 1945–67
B.Three types of countries in world systems: core; semiperipheral; and peripheral
C.Four stages in hegemonic development
1.Economic growth: agriculture-industry; commerce; and finance
2.Ideology emphasizing free trade; in reality, core nations promoting ample protective tariffs for their companies’ products
3.Strong military necessary to establish a form of hegemonic control
4.A restructuring of the previous world system, with the new hegemonic power trying to establish economic and political stability that best serves its interests
Sources: Chase-Dunn (1989), Chase-Dunn, Kawano, and Brewer (2000), Wallerstein (1974; 1980; 1984).
The upcoming international analysis displays persistent evidence of US multi-nationals’ influence.
SOCIAL STRATIFICATION AND SOCIAL INEQUALITY IN THE GLOBAL SETTING
Modern world systems have always been in flux, with the production and distribution of such goods as clothes and sport shoes gradually globalizing over time. In the 1960s I spent a few weeks alone in a small town in northern Italy, eventually feeling somewhat homesick and looking forward to any conversation in English. Then one day I saw a young red-haired man sitting in a park. Right away I knew he was an American. He had American jeans, often referred to as Levi’s, and hightop, black-and-white Keds. At that time the United States was either the principal or only market for those products, which were made exclusively in the United States. He had to be an American. Sure enough!
Now the situation is different. Multinationals sell jeans, sport shoes, and many other consumer items once available only in the United Sates in stores throughout the world. As upcoming material indicates, the multinationals responsible for such products establish policies that impact on semiperipheral and peripheral nations’ economies and class structures. One word of caution: A given country’s economic development emerges gradually over time. While modern multinationals exploit many poor nations and contribute to their persistent poverty, those countries, which were once colonies, have usually experienced a lengthy, destructive relationship with core nations that significantly antedates the multinational era. The peripheral nations have been victims, with the majority of citizens deprived of effective schooling and decently paying jobs; these individuals are often severely deprived, but overall they are neither unmotivated nor intellectually challenged. Most Americans are somewhat aware of a similar process occurring on their soil. Much like colonial powers, the US government systematically deprived Native Americans of both their land and traditional way of life, exploiting them mercilessly and transforming them into the poorest, least educated, unhealthiest racial group in the country.
The core states, which have historically been the exploiters, have a fairly different class structure from the one that exists in the widely exploited peripheral and semiperipheral countries. Within the core nations, a fairly uniform level of affluence and work tasks means that the social-class structure tends to be fairly consistent from country to country (Berberoglu 2009; Ishida 1989, 69). The following set of social classes generally prevails:
•The capitalist class, whose members control the nations’ multinationals and possess a disproportionate share of wealth. Capitalist class members’ net worth often varies from one country to another; for instance, in 2016 by one measure (with fairly similar results to the one described in Chapter 1), American CEOs made 260 times as much as average workers in their company while in other countries the figure was considerably less—162 times more in Switzerland, 147 in the United Kingdom, 143 in Canada, just 37 times as much in Japan, and a mere 10 times more in China (Lu and Melin 2016).
•The professional/management (upper-middle) class, whose participants are well educated, often with advanced degrees, and generally well paid.
•The lower-middle class composed of small-business owners, clerks, and salespeople possessing sufficient schooling to qualify for these jobs and enough income to accumulate modest savings.
•The working class including both skilled and unskilled job holders. Members possess limited formal education and considerable variation in job complexity and income. For instance, carpenters, plumbers, electricians, and welders are much more skilled and better paid than assembly-line workers or custodians.
•The poor obtaining the least schooling and fairly few job skills. Poor people’s job situation varies considerably, with some permanently unemployed and others working full-time and receiving a low wage (Berberoglu 2009, 36; Boliver 2017; Müller, Lüttinger, König, and Karle 1989; Sicakyuz 2008).
While social class has a major impact on people’s job prospects, gender can also play a significant role. A confidential report ordered by Walmart itself revealed that in 1995 in many categories of employment the conglomerate was paying its US female workers 19 percent less than their male counterparts and that men were five-and-a-half times more likely to receive a promotion to a managerial position. In spite of receiving this information, Walmart executives made few adjustments in their hiring and promotion policies. In 2010 the Supreme Court dismissed a sex discrimination law suit involving 1.5 million Walmart employees (Bario 2010; Totenberg 2011). Claims of Walmart’s gender discrimination have persisted. In 2017 two former female Walmart employees filed a lawsuit in federal court saying that the company has treated pregnant workers as “second-class citizens,” rejecting their requests to limit climbing on ladders, heavy lifting, and other tasks posing dangers for them. The suit cited a 2015 Supreme Court decision indicating that pregnant women should be treated as temporarily disabled workers. A minimum of 20,000 past or present employees and perhaps as many as 50,000 might be eligible to join the suit (Wiessner 2017).
In contrast to the core countries, the semiperipheral and peripheral nations have their own fairly uniform set of classes, which overall provide their members less valuable financial and human capital than the core countries supply:
•The upper class which is either corporate and engaged in industrial and commercial enterprises or landowning and involved in crop and livestock production; in addition, top political leaders primarily live and work in the national capital.
•The upper-middle class containing a small number of well-educated professionals and high-level government officials.
•The self-employed lower-middle class made up of artisans, shopkeepers, and small-business people.
•The peasant class providing assorted agricultural products and either owning or leasing their land.
•The working class composed of industrial, clerical, and service job holders as well as temporarily unemployed individuals.
•The informal sector of people engaging a wide range of small illegal businesses, which can be fairly stable money makers; some of the poor are permanently unemployed and/or homeless (Berberoglu 2009, 53; Hoffman and Centeno 2003; Robinson 2012).
Multinationals’ investment in semiperipheral and peripheral nations has consistently been exploitative, undermining those nations’ economies in several ways.
STRUCTURAL DISTORTION IN THE ECONOMY Historically core states have used less developed nations as sources for extraction of minerals, crops, or natural resources like timber, coal, or oil. The extraction work is largely unskilled and low paid, offering jobs that are a far cry from the more diversified opportunities that exist in core nations, where a wide range of production and sales positions develop (Chirot 1986, 99; Kerbo 2006; Phillipot 2010). Even when manufacturing moves to poor countries, benefits for the local workforce are modest. Multinationals’ heavy investment permits them to gain control over various political and economic processes in the host nation, structuring job activities to maximize their profits. As a pair of sociologists suggested, the giant companies become “the only game in town” (Kentor and Boswell 2003, 310).
AGRICULTURAL DISRUPTION When multinationals invest in agriculture in less developed countries, the rules of the game once again promote maximized profit. Mechanized farming and extended use of land become the order of the day. Food prices rise, and poor peasants find it increasingly difficult to locate land to grow their crops. Agricultural disruption is hardly a new process. It is well known that a blight was the immediate cause of the so-called “potato famine” which between 1845 and 1852 drove over a million Irish citizens to migrate to the United States. What is less well known is that starting long before the blight, much of the country’s best land was used for exported products, particularly livestock which continued to be shipped to England, often under heavy guard, throughout the seven-year famine (Hutchinson Encyclopedia of Britain 2011; Kerbo 2006; Kinealy 2002).
TOP-LEVEL COLLUSION As a rule the relationship between a developing nation’s political leadership and multinationals’ representatives becomes intimate, mutually self-serving, and corrupted, paving the way for multinationals to maximize profits, often at most local citizens’ expense. A report by the Organisation for Economic Co-operation and Development indicated 427 completed bribery cases involving public officials in both poor and wealthy countries between 1999 and 2014, with 2011 the peak year. While the report did not reveal the names of the corporations involved, a prime suspect is Walmart, which faced probes for bribery in several countries after revealing violations in Mexico (Ferdman 2014; Jones 2010; Voreacos and Dudley 2014).
OPEN MARKETS Since the United Provinces obtained hegemonic power, core nations have generally supported unrestricted trade. Their multinationals usually possess the vast resources to dominate commercial arrangements, often in developing nations undermining fledgling industries. Frequently, as previously noted, the core nations’ call for open markets is distinctly hypocritical. As the dominant multinationals located in such countries as Germany, Japan, and the United States were establishing themselves, they depended on import tariffs or other protections from foreign competition. In fact, some of those measures continue. The United States and the European Union continue to pay their agribusinesses substantial subsidies, allowing them to underprice foreign farmers, many of which are small, struggling, and located in developing nations (Kerbo 2006).
In the fierce global economy, it is hardly surprising that the 25 poorest nations are struggling, suffering a common set of crippling disadvantages. To begin, many of them are still embroiled in political unrest and violence, which has persisted since their political independence. These conditions are not only life-threatening but adversely affect economic development. In addition, to advance economically, countries require a significant portion of educated citizens and infrastructure development. However, in 17 of the 25 poorest nations at least a third of the population is illiterate, and in 21 of the 25 poorest countries less than half the people have access to electricity. In addition, these nations generally lack enough doctors and modern health-care facilities. In part for this reason, their life expectancy is low—never above 70 years and in some cases such as the central African country of Chad with only 51.6, over 30 years fewer than the developed nations with the highest life expectancy cited in Table 3.1 (Stebbins, Sauter, and Frohlich 2016).
Since the 1980s an additional factor has intensified the global pursuit of profit. Large institutional investors, which are major big businesses, have accumulated enough collective savings to exert significant impact on financial markets, pushing for accelerated cash flow to shareholders. Corporate officials pass on this sense of urgency to the leaders of the supplier factories which manufacture their products. The leading multinationals have become adept at the practice. Walmart has developed into the world’s largest retailer by pressuring its suppliers to compete with each other to manufacture the least expensive products. To obtain a similar result, a British multinational used a variety of techniques including so-called “cross-cutting,” where the retailer obtains a price quote from one supplier, then contacts a second with the intention of undercutting it, and finally returns to the original supplier (Kaplinsky 2005, 176). It is hardly a hospitable employment setting for workers in those supplier companies. In 2006 about 66 million people, the majority of whom were women, assembled goods for a global market. They faced long hours, low wages, environmental threats, sexual harassment, and union repression. The frequent absence of unions means that employees have no prospect of collective bargaining to improve wages and working conditions (Chandy 2017; Palpacuer 2008).
The previous set of points has emphasized that the multinational-driven global system has tended to exploit peripheral and semiperipheral states. Do the core nations, which created colonies and later multinationals, bear the full responsibility for poor countries’ degraded conditions? Modern-world-systems theory points to those nations’ significant negative contribution. It is important, however, to acknowledge an additional factor: Many poor countries have suffered corrupt leadership that helped drain the nation’s resources, and either civil servants or businessmen who oppose that leadership face major sanctions. In such corrupted national contexts, a widespread perception has often developed that the civil service is not a sector of government that promotes citizens’ rights but instead a fairly secure means for becoming rich (Bradshaw and Wallace 1996, 51–52; Hors 2017).
The last point emphasizes that while globalization significantly impacts people’s life chances, national factors such as the governmental concern for citizens’ rights also affect social inequality. In examining 143 countries, researchers at the IMF learned that additional conditions influencing a given nation’s social inequality included technology, education, the sectional share of employment, and governmental support for public welfare.
•Technology: Across all world regions, there has been a steady increase in nations’ distribution of information and communications technology. Individuals schooled to use such advanced skills will widen the income gap from those without such skills. This factor is the most prominent one that has driven a recent acceleration of economic inequality across nations.
•Education: Increased education is likely to provide better access to higher-skilled, better-paying positions.
•Sectional share of employment: Shifts in type of work can significantly impact many people’s income. If industrial development sharply increases in a country, the new job holders are likely to experience much more income growth than farmers.
•Governmental concern for public welfare: A study of social inequality in 60 nations found that whether or not a nation has a large public sector that provides the citizenry effective schooling, health care, and other benefits significantly impacts income inequalities, particularly for the poorest states. A federal government’s ability to provide such benefits depends heavily on its economic welfare, and the extent of big-business involvement in countries can decisively influence that condition. Inevitably taxes can play an important role. A review of 53 fairly developed nations indicated that those with high tax rates for wealthy citizens such as France and Switzerland possess relatively low levels of economic inequality compared to the United States, which has low tax rates for the wealthy and high levels of economic inequality. However, while money is important, a critical necessity concerns the level of sustained commitment political leaders make to their citizens’ economic well-being (Cloninger 2016; Hoffman and Centeno 2003; Hors 2017; International Monetary Fund 2007; Kollmeyer 2013; Lee, Nielsen, and Alderson 2007).
Assessments of social inequality are revealing, often indicating that poor individuals and families are losing out compared to their more affluent compatriots. However, one should remember that income information about social inequality reveals a significant part but not the entire story of people’s economic condition. Mexico serves as a case in point. Between 1985 and 1994, the income differences between high- and lowskilled workers expanded. At the same time, changing tariff policies increased the disposable income for all households, with wealthier households obtaining a 6 percent increase and their poorer counterparts a 2 percent increase, leading to a 3 percent reduction in the national level of poverty (International Monetary Fund 2007, 42).
The prevailing conditions in modern world systems provide the context for the development of various social-class trends.
THE GLOBAL SPECTRUM: FROM THE VERY RICH TO THE VERY POOR
Semiperipheral and peripheral nations display sharp economic inequalities, with those at the top very rich. Russia is a striking case in point. A single event initiated the ferocious race for wealth. The so-called “loans for shares” was a rigged government sale of a host of publicly owned resources that included factories, mines, minerals, transportation systems, oil, gas, and coal. President Clinton and a team of Harvard advisors strongly supported this sale, concluding that it would assure that the transformation of socialism to capitalism would be permanent.
Those who secured the lion’s share of state resources used hardcore criminal techniques—assassinations, massive theft, and illegal stock manipulations and buyouts— to build their empires. In addition, many critics, including President Putin, pointed out that these wealthy individuals failed to take the time and trouble to expand their businesses effectively, choosing instead to focus on such quick-profit approaches as stock speculation, investment in banking, and buyout of mineral-processing plants (Kramer 2006, 3.1; Petras 2008, 319–21).
Interestingly at least one clear exception exists to the overall Russian pattern for becoming a billionaire. Oleg V. Deripaska, who may be the richest Russian, got his start working on the shop floor of a Siberian smelter. He became a physicist and then an industrialist, developing a massive aluminum business. While his commercial ventures do not appear squeaky clean, it seems apparent that unlike most Russian billionaires Deripaska has been conscientiously building his company. The key, he explained, has been cheap electricity from Siberian hydropower. “It’s like a physics equation,” he asserted. “If a country imports energy or energy-related products, it means the country will not be able to produce aluminum” (Kramer 2006, 3.1).
While in 2017 Russia had 96 billionaires, China had 319, much closer to the United States’s world-leading 565. Like their Russian counterparts, few if any Chinese billionaires grew up rich. Instead of extensive financial capital, their families provided valuable social capital, links to political officials from whom they could purchase land, import and export licenses, and various public enterprises such as housing projects and factories. In the 1980s as this collusion thrived, the Chinese Communist Party became a huge bribe-taking apparatus, often displacing both urban workers’ housing and rural villages to provide wealthy real-estate speculators and construction-company owners opportunities to enrich themselves. Leading capitalists have found that a government patron cannot only help secure their access to valuable resources but can assist them in avoiding certain expensive labor regulations that would have required them to pay for such costs as pensions, health insurance, and environmental protection (Alexander 2017; Kroll and Dolan 2017; Petras 2008, 322–24; So 2003, 368).
Unlike their Chinese or Russian counterparts, India’s billionaires traditionally tended to be born rich, part of privileged upper-class business families, and they simply capitalized on their initial advantage. Nowadays, however, a full two-thirds of the nation’s 101 billionaires are self-made men. A number of government policies has created a billionaire’s paradise, particularly in new economic zones, where wealthy businessmen can avoid taxes and restrictive labor legislation and reap huge profits on rapidly rising real-estate values; meanwhile the issues that benefit the wealthy contribute to an economic nightmare for low-income workers, who experience eviction, rising prices, and poor job prospects (Bhattacharaya 2017; Desai 2007, 3–4; Petras 2008, 325–26).
Like India several Latin American countries have national economic policies that promote wealthy individuals’ drive for further enrichment. Both the IMF and the WB played important roles in developing the modern Mexican and Brazilian economies. These policies permitted wealthy people to buy telecommunications, banking, and other formerly public facilities and also to receive tax exemptions and subsidies. Furthermore these arrangements promoted declining social services, increasing state repression of labor unions, growing regressive taxation, and bankrupting of small farmers, peasants, and rural workers. In 2017 Brazil had 43 billionaires, nearly half of the continent’s total of 87, followed by Mexico with 15 and Chile with 12 (Estevez 2017; Hoffman and Centeno 2003; Petras 2008, 321–22).
Billionaires’ rise in semiperipheral nations effectively fits a Marxist model highlighting the bourgeoisie’s profit fixation. In all of the countries just considered, the largely IMF-backed policies that benefit the wealthy are harmful, sometimes drastically harmful, for most of the populace. The upcoming section illustrates how current global economic and political realities impact various sets of job holders. Table 3.3 provides international data about both poverty and inequality, demonstrating that internationally extreme economic inequality and poverty persist. Certain regions are particularly vulnerable to it.
Table 3.3Extreme World Poverty: Some Harsh Facts
In 2015, 736 million people representing 10 percent of the global population lived on less than US$1.90 day, a distinct improvement from 1.85 billion constituting almost 36 percent of the Earth’s people in 1990.
Over half of the extreme poor living in Sub-Saharan Africa, with 413 million surviving on less than US$1.90 in 2015.
A distinct majority of the global poor reside in rural areas, are poorly educated, employed in agriculture, with half of them under 18.
In 2017, the projected number of unemployed people was 201 million, with about 2.7 million more expected to increase that figure the following year as labor-force growth rose faster than job creation. The areas in which workers are most vulnerable to job loss are southern Asia and Sub-Saharan Africa. In contrast, in 2017 the expectation was that in developed countries unemployment would slightly decline.
Sources: International Labour Organization (2017), World Bank (2017).
The harsh challenges employees in developing nations often face are apparent in the upcoming discussions of work in China, Latin America, and India; unionization in global sweatshop settings; and squatters’ struggle to survive.
Three Semiperipheral Locations
CHINA China’s expanded participation in world trade has been startling. Although other low-wage markets have grown, none can match its increase in exports since 1990. Business leaders in competing nations have been amazed. In Mexico, one of China’s chief rivals, it was as if there was a “great sucking sound” of jobs migrating to China (Kaplinsky 2005, 132).
In China, where business and political leaders work closely together, the government usually provides the dormitories where factory workers live. The housing provision is for individuals not families, and since the tenants are migrants, not citizens of the locale, the state can impose residency controls. If they lose their jobs, they also lose their housing. Because workers are completely dependent on the factory and the state for both their employment and residence, they usually accept long hours at low pay (Pun and Yu 2008).
Dong, for instance, was a 23-year-old migrant worker from a fairly poor village in Hunan. As the eldest daughter, her father asked her to quit school at 16. She moved to Shenzhen, where she lived in a state-owned dormitory and worked for a feeder factory. Dong explained that she realized that working in unpleasant conditions in a strange city would be a major challenge. “But I thought it was still worth it to try, and it was a chance for me to look at the outside world” (Pun 2004, 31).
Almost every year Dong returned to her poor village, bringing about 2,000 yuan ($240) to her family, which was more than its total income. The family was happy with her contribution, and she was pleased to help them. However, the work took its toll. Dong said, “The working hours are too long. It’s too hard.” She returned home one New Year’s exhausted, thinking that she would not go back to the city. “I stayed home for two months and I slept, slept all the day” (Pun 2004, 31). Feeling restored and with a boyfriend in a nearby village, Dong returned to factory work, concluding that even though her job was difficult and exploitative it represented a last chance to enjoy her personal freedom outside the village before settling down to married life.
The long working hours that Dong and other industrial workers in supplier factories often endure have become one issue in the anti-sweatshop movement in the United States and western Europe directed against Walmart, Reebok, Nike, and other multinationals. Those companies, in turn, have at least gone through the motions of pressuring their suppliers to upgrade their working conditions and payment. A study of two Chinese supplier factories for Walmart found that anticipating the monitors’ questions, managers supplied their employees uniform answers, particularly involving working hours, rest days, and wages. Interviewed later in their dormitories, the workers admitted that they did not approve of the false answers management required them to give. However, they feared that not only would they get in trouble if they told the truth, but management had convinced them if they failed to support the denial of sweatshop conditions the regular flow of orders to the company might cease (Pun 2005, 107).
This factory’s operation illustrates hegemonic despotism, a condition where modern firms can control operations by threatening workers with downsizing or even plant closure. Indeed companies’ ample opportunities to relocate mean they can pit worker groups in different areas against each other, undercutting their efforts to unionize or improve wages and working conditions (Collins 2003, 10; Santella 2012).
Walmart has become highly successful at implementing hegemonic despotism. The giant chain has dramatically increased its number of stores and its share of the American toy market. As previously noted, a key to Walmart’s growth has been its system of getting the lowest prices possible by pitting one supplier against another. The majority of Walmart’s supplier factories are Chinese, and the company’s pricing strategy has worked well in the Chinese dormitory system, where workers have little recourse to accepting an exploitative, punitive, sometimes unhealthy work setting (Pun and Yu 2008).
In the twenty-first century, Chinese factories have received extensive attention about dangerous working conditions. For instance, in Suzou, 137 workers suffered serious nerve damage from exposure to a toxic agent used to clean the glass screens of Apple’s iPhone. One 27-year-old man had become so hypersensitive to cold that even when indoors he needed to wear down-insulated clothes. In a loud, angry voice, he explained that he was much too young for such an inconvenience. He added, “Only 50- or 60-year-old men wear something like this” (Barboza 2011). Apple officials said they would alter dangerous conditions at the plant and monitor injured workers’ progress, but a dozen employees who had suffered injuries said that Apple never contacted them (Barboza 2011). In recent years studies reveal Chinese factories producing such serious safety threats as the release of nanoparticles causing severe lung damage (Gilbert 2009) and exposure to trichloroethylene leading to kidney injury (Vermeulen, Zhang, Spierenburg, and Tang 2012).
Another troublesome reality concerns the increase of what are known as “shadow factories.” In modern Chinese manufacturing plants, so-called “five star” factories, which by local standards treat their workers fairly, pay decent wages, and maintain safe and healthy working conditions, often find that major corporations like Walmart demand more than these organizations can produce. The solution for these manufacturers is to outsource to a shadow factory, which can range from a mom-and-pop activity to a large hidden manufacturing unit. An auditor hired by Walmart to examine its supplier operation said that the numbers can be revealing. “We would look in the system which shows the [five-star] factory has only 300 people to handle an operation receiving massive production orders worth millions of dollars. How does it add up?” (Kroll 2012).
LATIN AMERICA The involvement of Latin American countries in the global system also has distinctive features. First, many of these countries have a long history of core nations’ economic dominance during which there was a formation of a national upper class, which became wealthier and more powerful than their counterparts in most other developing states. Second, over time this social class deeply entrenched itself economically and politically, often emphasizing sharp racial differences to help emphasize class distinctions. Finally many of the Latin American nations have failed to address less affluent citizens’ needs. Modern political officials have tended to support multinationals, promoting policies that have kept wages low and working conditions oppressive (Hoffman and Centeno 2003, 381–83; Lee, Nielsen, and Alderson 2007, 85).
Not surprisingly employment in the Latin American global economy is a difficult experience. Many Mexicans work in factories where they produce low-cost clothing for exportation. In the village of San Sebastián, one plant has 14,000 workers, most of whom are Indians from nearby settlements. The law requires that if employees are on the job for more than 30 days, they must register to obtain medical and other services. Scarcely half the workers at the factory feel they can afford the benefits, and so to avoid the payment they quit after 29 days and are rehired. Most individuals are on the assembly line, producing jeans and shirts. A significant issue is that since the factories do not provide necessary training, the majority of workers are unqualified for their jobs.
Wages are based on the number of pieces assembled and tend to slightly exceed the official minimum wage of $3 a day (Berruecos 2008, 1704–05). A researcher told José, a manager in a clothing-manufacturing plant, that the wages seemed very low. José agreed but noted that other local firms had similar standards. Certainly, he conceded, pay was lower than in the United States and many other nations. However, José added, “compared to here, it [the pay] is not. And we offer them a future, we offer them a chance for advancement and many other things. So I think we’re helping” (Berndt 2003, 272–73). Perhaps the point to reemphasize is that such factories are often either the only or the best game in town.
In some factories, however, job qualities are better. The Mexican subsidiary of Dannon, a French firm best known in the United States for yogurt, has established several highly unusual practices. First, in a country where workers refer to bosses as “gods” or “tyrants,” the Dannon leadership has downplayed rank differences, emphasizing that employees can call their superiors by their first names and see them without appointments. A machine operator evaluated his supervisor. “If I have any doubts, I approach him [my boss] and he can help me resolve my problem.” A project manager agreed, indicating that employees “did not work as boss and workers but as friends” (d’Iribarne 2002, 250).
Throughout the factory the dominant, often mentioned expression was that “We are all Dannon,” a statement conveying a sense that everywhere Dannon products were sold the company’s image was the reflection of all its employees. Besides its positive personnel policies, the corporation displayed unusual financial support for workers, paying them better than competitors and offering more flexible hours and greater job security (d’Iribarne 2002, 248).
On occasion the company has engaged in initiatives that extend its contribution beyond the factory to the greater residential community. In one of the country’s driest regions, Dannon built a water-treatment plant, providing 25,000 people cheap, safe drinking water in a location where previously people had to travel long distances to reach what were often polluted springs. Furthermore the project has produced steady jobs for the 250 women who distribute the water (Danone 2017).
Among low-income Latin Americans Dannon employees are the lucky ones. A decidedly less fortunate category of people are Central Americans migrating from the poverty and political upheaval of Honduras, El Salvador, and Guatemala through Mexico with the intention of reaching the United States. In recent years these travelers have faced armed, violent gangs which often kidnap them, attempting to extort money to gain release. Manuel, a Honduran migrant explained: “Before on the journey, there were robbers and everyone knew that they would steal whatever you had on you but then they would leave you in peace.” He added, “Imagine, they kidnap 20, or ten or even five people and they ask for $5,000 for each one. They know that their families will send money even if they cannot afford to” (Vogt 2013, 764).
INDIA Like Mexican job holders, Indian employees face diverse working circumstances. Overall it is a poor, primarily rural nation, where about half the country’s workers are either farm owners or farm laborers. Examining consumers’ expenditures in the 1980s and 1990s, one finds that the greatest increase was in the lower-middle income—households spending between US$129 and $301 per month—and less growth has occurred among those in the upper-middle contingent spending over $344 a month (Desai 2007, 6–7).
Nonetheless in the twenty-first century, the Indian professional and management class has done well. Government employees receive salaries that are often adjusted for inflation and that include fairly regular increases. Professionals in the private sector, however, have been India’s major middle-class winners. Since the government’s willingness to accept multinationals’ presence in the early 1990s, information technology (IT) has steadily expanded, with the software industry growing by 50 percent annually between 1990 and 1998. Estimates indicated that over 200 Fortune 500 corporations outsource some of their software needs to Indian companies. Besides software development and programming, the Indian IT industry provides overseas customers call centers, accounting, and data entry. Over 160,000 men and women work for Indian call centers answering inquiries from customers in developed nations. While an average Indian wage earner obtains about 5,000 rupees a month, a call-center employee can obtain up to 15,000 rupees ($300). About 45 percent of call-center personnel are female. The work is highly competitive, and many employees suffer burnout, often leaving their positions in less than two years (Desai 2007, 9–11; Hartley and Walker 2012; Mitter, Fernandez, and Varghese 2004, 173–77).
For Indian IT specialists, it is clear that money is not the only consideration in locating jobs. A study of 60 women in the IT industry indicated that many respondents strongly valued autonomy and self-reliance and like Shirin, a 25-year-old graphics specialist, viewed their careers as a means of maintaining a vibrant sense of self. She said, “If you have to achieve something, you cannot stay in one job. It’s very stagnant water” (Radhakrishnan 2006, 9). Shirin explained that to qualify for new jobs she needed updated knowledge and skills and that only in such an expanding professional context would she feel a sense of accomplishment.
Unlike Shirin most Indian workers must make wages their priority. At Phoenix International, a supplier factory for Reebok, the experienced, largely literate employees received subminimum wages, and it was only after the formation of a union that a change occurred. In addition, any mistakes workers made on the job led to such punishments as beatings or painful confinement in the burning hot sun. In fact, the formation of the union flowed from an incident where a pregnant woman suffered the latter punishment. The union made workers feel empowered and less fearful of discussing the many serious problems they encountered. One worker explained, “It is difficult to believe that the Reebok persons didn’t know of the unpaid extra working hours, the lack of rest intervals, the arbitrary fines [in violation of] labor laws.” While the union did win workers various rights, the victory was short-lived. In 2000 the plant was illegally closed, putting 2,000 individuals out of work (D’Mello 2003, 38–39).
What roles do unions play in improving global workers’ lives?
Unions against Sweatshops
In the 1990s Nike, the giant producer of footwear, apparel, and equipment, faced criticism for using sweatshops and child labor. Pressures increased until 1998 when company cofounder Phil Knight pledged to change the companies’ practices, and Nike spent the following decade doing just that. However, in 2017 protesters in 25 cities in 12 countries asserted that once again Nike sweatshops were back in business—with, for instance, workers in a Nike plant in Hansae, Vietnam suffering wage theft and verbal abuse and collapsing at their sewing machines because of laboring for hours in temperatures well above the legal limit of 90 degrees; or hundreds of employees in a factory in Honduras illegally losing their jobs because of strong union support (Bain 2017).
American students have been prominently involved in these protests. Angeles Solas, a national organizer for United Students Against Sweatshops (USAS), indicated that besides Nike her organization has also challenged Adidas, North Face (an outdoor product company), and other large corporations. She explained, “Nike is not going to go away: It is the biggest sports apparel manufacturer in the world. So our goal is to improve worker conditions and practices” (Segran 2017).
During the 2017 protests against Nike, outraged workers and students revealed that severe violations occurred at Nike supplier factories, violations that auditors Nike supposedly had in place should have detected. That issue became the focus of the protests, with USAS launching a campaign called “Just Cut It,” demanding that until Nike allowed independent factory monitoring, universities should cut all ties with the company. Rutgers and UC Berkeley immediately ended multi-million dollar agreements with Nike, and Cornell, Boston University, Georgetown, and Northeastern University cut off Nike’s right to produce university-logoed apparel. Soon Nike gave in, signing an agreement providing clear standards for factory access and redress for various types of violations (USAS 2017).
Such protests are more likely to involve some countries than others. An examination of 84 developing nations indicated that after foreign investment occurred, the presence of one particular factor was most likely to promote conflict and unrest—a country’s possession of a large working class, whose wages and working conditions foreign investment would be likely to impact (Rothgeb 2002). In selected nations this class has been active and militant.
In the early 2000s in Chinese medium-sized towns and villages, where multinationals’ supplier factories have been prominent, working-class people protested against the forced relocations, political corruption, tax abuses, and other actions that have benefited wealthy people and corporations at their expense. A major upsurge in strikes eventually occurred. In 2011 and 2012 China had a total of 567 strikes, but that was just the beginning. In the following years, an economic slowdown produced a surge in layoffs and salary cuts. As a result in 2015, 2,800 work stoppages occurred, twice the number for the previous year and 14 times the figure for 2013. In January 2016 alone, the number of strikes nearly equaled the total for the years 2011 and 2012 (Bensman 2006, 7; Denyer 2016; Petras 2008, 324; Zhen 2016).
Global workers producing goods for multinationals usually labor in sweatshops, where the following negative conditions are prevalent:
•Unstable employment and low compensation: Such conditions often fail to provide “a living wage,” which means sufficient income to survive decently in that particular locale.
•Exposure to difficult, dangerous working conditions: Major issues involve fire safety, the presence of toxic material and chemicals, and the absence of clean water. Serious if slightly less pressing, workers often suffer crowding and excessive heat or noise.
•Sexism and racism: Testimonies indicate that women and racial groups have often been objects of discrimination, obtaining lower pay, less advantageous job arrangements, and, in the case of women, exposure to sexual harassment and assault. In Panoptimex, a feeder factory in Mexico, which makes televisions for the multinational CEW, women are young, generally under 20, and usually compose about three-fourths of the assembly-line workers. A researcher observed that the supervisors, who are all men, engage in “monitoring efficiency and legs simultaneously, their gazes focused sometimes on fingers at work, sometimes on the nail polish that adorns them” (Salzinger 2007, 174). On occasion the supervisors propositioned the workers, who often submitted to their advances, thinking, usually mistakenly, that it would lead to promotion.
Throughout the global economy, where work is tedious and stressful, the majority of managers believe that women are more docile, compliant employees. In the highly controlled modern garment industry, where inspectors have begun to evaluate employees’ output in greater detail, factory owners and managers tend to feel that women can more readily deal with the stress and criticism, making them increasingly valued job holders. Throughout the western hemisphere, Mexican women have a reputation for both patiently and competently doing the tedious, repetitious tasks that occur in manufacturing and information processing.
•Captive and child labor: In various countries in Asia and Africa workers remain in forced servitude until a debt is paid. Sometimes those workers are children; in addition, child labor is common in the textile and apparel industries, particularly in Bangladesh, India, and Pakistan.
•Ineffectual monitoring: The emphasis on cheap prices makes it unlikely that the inspections multinationals sometimes initiate will yield significant reforms. These giant companies besieged by international criticisms of making huge profits from sweatshop labor have felt pressured to respond, officially ordering feeder factories or subsidiaries to eliminate or curtail sweatshop conditions. However, under management surveillance, employees either mislead the examiners, or local companies simply ignore the violations. Both the multinationals and their feeder factories are firmly committed to keeping product prices as low as possible, and most violations are cost-effective (Collins 2003, 156–57; Dänzer 2011; Esbenshade 2004; Loomis 2015; Rivoli 2003, 224–26; Wright 2007, 194–95).
Have unions proved useful in curtailing sweatshop conditions? Sometimes. The Kukdong plant in Mexico, a Nike feeder factory, had a company union that management required employees to join. In this case workers became militant, seeking to develop an alternative union that would address their grievances and goals. Graham Knight and Don Wells, the social scientists who studied the plant, found the struggle between workers and management involved three stages.
First, an opening protest occurred, starting in December 2000. In a setting featuring low wages, compulsory unpaid services provided to management, and inadequate transportation subsidies, employees decided to boycott the cafeteria, which had substandard food that made some workers sick and caused them to miss time on the job. The absence of a union that would seek to address people’s grievances was glaringly apparent. One respondent explained that the company union proved worthless, remaining uninvolved when employees were seeking a better wage or were fired. The workers had a plan, initiating their protest with the food boycott, which developed into a successful collective effort that was less jarring than a strike but involved 90 percent of the workforce (Knight and Wells 2007, 89). Nevertheless repercussions occurred.
Second, management personnel acted, and the protest accelerated. It started in early January when corporate union officials fired five protest leaders. Workers, in turn, occupied the factory compound, demanding the individuals’ reinstatement. Police attacked the protesters, causing sufficient injury that 15 of them had to be hospitalized. The police’s harsh response encouraged further militancy as union advocates fanned out throughout nearby neighborhoods to gain residents’ support. An important detail was that most of the factory workers had strong roots in the area and could use their social capital to bolster the common cause. In upcoming months the workers’ mobilization broadened. Several protest leaders toured the United States, speaking to media personnel and student groups. Kukdong activists’ targets dispersed, including not only Nike officials but also representatives of various American universities which used Nike apparel and belonged to a pair of high-profile associations that monitor and report on conditions in the international garment industry. During the protest phase, a significant change had occurred. Now the Kukdong laborers were no longer focused on grievances directed against them but were committed to obtaining their rights. A leader spoke out forcefully in favor of eliminating the company’s union, which had always treated workers harshly (Knight and Wells 2007, 91). The Kukdong workers were convinced that they needed their own union—one that worked for them.
Third, following the publicity the protests created, four investigations of the Kukdong plant occurred, disclosing various violations of the Nike code the company’s supplier plants were supposed to follow. By March the workers had established their own union—the Sindicato Independiente Trabajadores de la Empresa de Kukdong Internacional de México (SITEKIM). While the company’s union persisted, trying to use intimidation and bribery to further its agenda, SITEKIM decisively prevailed, becoming the workers’ effective representative at the plant. By April SITEKIM received certification as the legal union at Kukdong (Knight and Wells 2007, 92–93).
Knight and Wells observed that the three phases of the protest were closely interrelated, building upon each other. For instance, the Kukdong workers were quickly able to advance from their initial protest, the cafeteria boycott, to a second stage, providing American students and reporters extensive publicity about their cause. Effective preparatory work with universities and media companies made this progression possible (Knight and Wells 2007, 93).
The authors noted that proponents of the anti-sweatshop movement have seen the Kukdong victory as a triumph of international labor solidarity confronting corporate power. Conceding that universities, mass-media organizations, and other outside structures had a role, the authors believed that the Kukdong protest also featured a local dimension. Knight and Wells concluded that the international and local dimensions of the protest were closely interrelated, with each making a critical contribution to the creation of SITEKIM (Knight and Wells 2007, 98). In such contexts innovation can prove invaluable.
A provocative approach that many unions in developing nations would undoubtedly embrace is what is called “lean manufacturing,” a strategy developed in the 1980s by Japanese auto makers and used in many developing nations. Instead of traditional systems where managers hold all authority and workers perform simple repetitive tasks, employees engage in a select number of tasks, take responsibility for product quality, and are encouraged to suggest system improvements. In the mid 2000s, Nike introduced the lean-manufacturing strategy to its suppliers, and researchers in 11 countries found that factories’ serious labor violations involving such issues as wages, benefits, and rest days declined sharply from 40 percent to 25 percent of plants. A member of the investigating team was enthusiastic about the results. He declared:
We think that the key to these performance improvements is the new role that workers play in lean manufacturing. While the production system requires more worker skill and effort, employers have incentives to retain these valuable workers through improved working conditions.
One wonders, however, whether substantial numbers of multinationals’ leaders will consider such a program worthwhile—whether, in particular, such a different arrangement will positively impact their bottom line and encourage them to amend the harsh, traditional systems they have maintained.
Meanwhile efforts to promote workers’ rights in sweatshops or near-sweatshops around the world will continue. Following the successful “Just Cut It” campaign against Nike, two prominent labor-rights activists asserted the following simple but seemingly indisputable conclusion: “What successful campaigns have in common is collaboration between consumers and workers, who often must continue the fight for years before seeing results” (Gearhart and Newell 2017).
Factory workers struggle to make a living. Their lives are difficult but usually less desperate than squatters’ experience.
PHOTO 3.2 In Brazil, the squatter communities like this one in Rio de Janeiro are called favelas.
Source: David R. Fraser/Photo Library Inc/Alamy.
Squatter Communities: A Global Surge
Squatters are simply individuals or families who occupy land with no legal claim for so doing. A substantial number of people living in slums, particularly in developing nations, are squatters. In Brazil alone there are at least 600 such communities. Currently slum dwellers total nearly a billion, and unless methods are found for improving the quality of life in povertystricken areas of developing nations’ cities, the number will sharply increase, perhaps to as many as 3.5 billion by 2050 (Taher and Ibrahim 2014). While squatters tend to be poor, often very poor, that is not always the case. They vary in income, work, aspirations, and social class (Neuwirth 2006, 14).
Experts on squatter communities have examined the conditions that create and sustain them. In Brazil they are:
•Growing inequality: During modern globalization Brazil eliminated a substantial number of unskilled jobs and increased positions for university-trained professionals, making it one of the economically most unequal countries in the world.
•Surplus population: In the early 2000s, Brazil’s unemployment rate was one of the highest in its history, with many people losing jobs and unlikely to work again. Furthermore the majority of workers were poorly paid and/or were exploited in temporary jobs, often making it difficult or impossible to live outside squatter communities.
•Retrenchment of the welfare state, with programs involving the poor focused on surveillance and control: Compared to Europe or even the United States, Brazil has provided many fewer supports for poor people.
•Stigmatization: Are people maligned for living in squatter communities? A research team asked their respondents about eight sources of discrimination they might encounter, and this issue received the most reference—by 66 percent of the research subjects. Stigmatization promotes isolation and a diminished opportunity to make the contacts necessary to break out of a squatter residency (McCann 2013; Perlman 2004; Srinivas 2015).
When one examines a squatter community like Kibera in Nairobi, Kenya, all of these factors impinge.
Kibera, Africa’s largest squatter community, was in a valley and was primarily composed of mud blockhouses. Each structure contained as many as 20 rooms, which were about 10 feet by 10 feet. Ventilation was poor, through the door and sometimes a small window. The one room had to meet all family needs, serving as a living room, dining area, kitchen, washroom, study, and even, if going outside at night is dangerous, a temporary toilet (Neuwirth 2006, 70–73).
The local government did not recognize Kibera, providing no sewers, no electricity, and no water supply. To obtain water, residents had to pay 10 times as much as more affluent people living in a neighborhood with municipally supplied water. Furthermore during those fairly frequent times when water was scarce, the price of city-controlled water remained stable, but the street supply tripled or quadrupled in cost, making it 30 or 40 times more expensive than municipal water (Neuwirth 2006, 80–81).
In Kibera water was an illegal source of money-making, and so was housing. The Provincial Administration, a generally inactive collection of tribal chiefs and elders, controlled the government land where Kibera was located. For a substantial, under-the-table fee, this group permitted wealthy investors to build squatter housing. Investigator Robert Neuwirth indicated that since the cost of developing such properties was low and required minimal upkeep, owners made substantial profits (Neuwirth 2006, 94). Tenants who were late with the rent were quickly thrown out. A resident emphasized that renters are always subservient to landlords (Neuwirth 2006, 4).
While life in Kibera was difficult, even oppressive, many residents were proud, hard-working individuals who struggled to make a decent living. Neuwirth indicated that upon meeting him, many individuals quickly brought out their high-school diplomas or photos to build the case that they were not the unworthy inhabitants of a squatter town but were well-educated, responsible people holding good jobs (Neuwirth 2006, 70).
Kibera residents had varied backgrounds and lifestyles. Michael Obera’s job as a clerk in the City Council paid over 9,000 shillings a month (around $120) and represented a middle-class income, but he struggled economically because the city was always two months behind in issuing paychecks. Obera lived in Kibera because renting elsewhere was too costly; outside the squatter community, two rooms for himself, his wife, and four children would have consumed his entire salary (Neuwirth 2006, 71–72).
Unlike Obera’s job, employment inside Kibera is part of the informal sector, which involves jobs and businesses that government neither monitors nor taxes. Neuwirth observed a teenaged hauler carrying an enormous burlap full of cabbages belonging to a woman too frail to carry them. Such workers had semiofficial locations where they remained, and if they poached on someone else’s territory, a fight was likely. Depending on how heavy the load and the distance covered, the hauler could make up to 50 shillings a load, perhaps 250 shillings ($3) a day. It was hard work but good earnings for Kibera (Neuwirth 2006, 75–76).
Within the squatter community, running a well-located hotel could be both a demanding and lucrative livelihood. Sabina Ndunge, who was the sole support of her six children and owned Bombers Pisa Motel, opened her hotel at 5 a.m. and closed at 9:30 p.m. She bought all her food at a local market 10 minutes’ walk from her location. Economics prompted her to keep meat out of her stews. In fact, the cost with meat would have been three or four times greater. Ndunge, who had run her hotel since 1988, would have liked to see such improvements as paved roads, permanent buildings, and access to health care but only if her expenses did not rise. Her business required keeping her prices low—only possible if the products and services she needed to run the hotel stayed cheap (Neuwirth 2006, 76).
Winnie Kioko was another businesswoman in Kibera. She worked as a seller of potatoes. Every week she rented space in a truck, rode to the Rift Valley, and bought potatoes, which she sold to stores and restaurants. Her earnings were about 4,000 shillings ($48) a month. Kioko was a member of a 15-person merry-goround to which each woman contributed 1,000 shillings every two weeks. Twice a month someone received the kitty. At one point Kioko had additional expenses and lacked the money to buy potatoes. For six months she stopped making her weekly trips for potatoes until the 15,000-shilling payment from the merry-goround allowed her to get started again. Merry-gorounds emphasize spending, not saving; joining one is a practical way of recognizing that at times individuals like Kioko need extra money for business expenses, old debts, or perhaps a medical bill. Interestingly only women participated in merry-go-rounds; neither women nor men could explain why this had been the case (Neuwirth 2006, 90–91).
Kibera’s residents, people like Michael Obera, Sabina Ndunge, and Winnie Kioko, have lived in a squatter community where the informal sector dominated. That reality suggests that such individuals’ lives are similar in certain respects to the American underclass—the poorest of the poor—discussed in Chapter 8. Clearly the inhabitants of Kibera had minimal access to valued types of capital.
Consider Michael Obera, whose middle-class salary brought a reasonable amount of financial capital, which would suggest some economic security. However, he encountered the stress and inconvenience that government employees in many peripheral nations face—that their countries’ underfunded treasuries mean wages are likely to get paid late. Harsh economic conditions also played a central role in Sabina Ndunge’s life, forcing her to select her entrées’ ingredients carefully so that customers could afford them and prompting her to support improvements in the community only if they would not increase her expenses. Finally Winnie Kioko, while possessing the least financial capital of the three, developed robust social capital, using her merry-goround to raise the money required to revitalize her business.
These three individuals and many other members of the Kibera squatter community were hard-working, resourceful, and fairly successful. Their lives, however, were precarious, always impacted by both the local and national economy and the conditions cited earlier which promote squatter communities; social reproduction seemed nearly inevitable. It appeared unlikely that children growing up in a squatter community will have access to the human and financial capital that would make it possible for them to advance to a more prosperous way of life. In sum, they count among the largest losers in the modern global system.
Home ownership could improve that situation. A nationwide program focused in Peruvian squatter neighborhoods revealed that when people became property owners, their economic investment in housing improvement increased more than two-thirds— not only because of pride of ownership but also because of greatly diminished fear of being evicted (Field 2005). The utility of such a program seems clear. The problem is that subsidizing large-scale home ownership would be expensive—nearly $300 billion to buy housing for the approximate 670 million people who will become squatters between 2005 and 2020. The sum is staggering, but it becomes conceptually less daunting on appreciating that it is about $3 a year per person on the planet (Neuwirth 2006, xiii).
More modest but distinctly productive actions which have proved successful in various international cities in assisting squatter populations include the extension of roads and services into slum settlements to connect them with the more prosperous parts of cities, the provision of jobs involving such useful tasks as the construction of sewers and the collection of garbage and trash, and the development of more effective, cheap forms of transportation along with safe bicycle paths and pedestrian walkways (Sheehan 2017). Small advances improve lives. On much the same wavelength, William Cobbett, the head of Cities Alliance, a global program to revitalize urban slums, explained, “Slums disappear not through being removed, but by being transformed. Over time, the shack becomes a house, the slum becomes a suburb. This is how citizenship and cities are built” (2013).
In some cases such revitalization occurs but not in others. In 2018 bulldozers entered Kibera and destroyed it, using the land for a highway extension, which is supposed to relieve traffic congestion in Nairobi. About 2,000 families instantly became homeless, and the Kenya Urban Roads Authority, the government agency in charge of the highway project, refused to provide compensation or make efforts to resettle the displaced residents, indicating that they were squatters on government land. The Kenya constitution, however, offers some compensation to occupiers forced to leave their locations, but after Kibera was destroyed, no authoritative proposals came from government officials. “ ‘Progress is good. We are not refusing that,’ [said] Jackson Muindo, 25, who lost his home in the demolition and now [slept] outside. ‘But this is not progress. This is being taken advantage of’ ” (Golla 2018). He had a point—that like the members of all squatter communities the former residents of Kibera were almost powerless in dealing with outside forces, unable to exercise any influence to thwart the political forces that razed their community.
The challenges, however, are formidable for many global residents. Let us consider the chapter’s principal conclusions, which tend to support that contention.
Historically three nations—Holland, Great Britain, and the United States—have established hegemony, dominating the world system for a period of time. In the modern world system, countries divide into three types based on economic level—in declining affluence they are the core, the semiperipheral, and the peripheral. During the first two hegemonic phases, the core nations exploited their colonies, benefiting from their raw material and cheap labor. In the modern era, multinationals have attained massive wealth and power investing in developing nations.
The formation of a modern world system passes through four stages—expansion in three fundamental economic domains, namely agriculture/industry, commerce, and finance; the formation of an ideology emphasizing free trade; the growth of military might; and the decline of the hegemonic power and a restructuring of the system.
Because of their countries’ contrasting economic and political structures, the socialclass systems in core and developing nations are distinctly different, with poverty and low income, limited modern technology, and restricted schooling more prevalent in semiperipheral and peripheral states. Multinationals’ investment in developing nations has undermined their economies in various ways.
While multinationals significantly impact the poorer countries, other factors affecting social inequality within them include technology, education, sectional share of employment, and governmental concern for public welfare.
In the context of the modern world system, citizens in developing nations have had highly varied experiences and levels of success. Billionaires in Russia, China, India, and Latin America have diverse backgrounds but often share the advantage of profitably colluding with their own governments. In contrast, ordinary global workers in China, Mexico, and India can only obtain highly controlled, poorly paid jobs. In a few factories such as Dannon’s Mexican subsidiary, however, workers have been well paid and treated humanely. In India IT professionals receive good salaries and often have various job options.
Many workers in developing countries, however, face sweatshop conditions, which include low wages, exposure to difficult, dangerous working conditions, sexism and racism, captive and child labor, and ineffectual monitoring. Can unionization mobilize to combat these conditions? Sometimes. For instance, the successful Kukdong protest, which produced a strong workers’ union, displayed a distinct combination of local mobilization and international support.
Squatter communities, which are rapidly expanding, contain many of the planet’s poorest people. Certain conditions, namely growing social inequality, surplus population, retrenchment of the welfare state, and stigmatization, have promoted these settlements. Kibera, a squatter community in Nairobi, Kenya, displays a variety of lifestyles and occupations among its largely hard-working residents struggling to survive a relentlessly demanding environment.
Table 3.4 suggests that around the world social reproduction is alive and well, providing illustrations of the sharply contrasting access to various types of capital for the global affluent and the global poor.
Table 3.4Contrasting Capital Access among the Global Affluent and Poor
The opportunity to use these resources for a variety of purposes related to living well and increasing one’s wealth including investment in various global businesses
Necessity to seek jobs in sweatshop conditions involving low pay, unstable employment
Possession of sufficient funds to prepare youth educationally to benefit from their nation’s involvement in modern occupations such as India’s growing participation in IT technology
Very limited chances for schooling and training to prepare for high-paying jobs
Effective connection to groups willing to promote their interests, notably, the mutually beneficial if often corrupt association between developing nations’ wealthy business people and their governments
General lack of access to valuable connections. Exceptions: Squatters’ merrygo-rounds or sweatshop workers’ benefits from prominent international support
1A broad category of people extending from the wealthy to middle-class managers and professionals.
A final thought about the inequities of the global economy. Throughout human history individuals and groups have often been effective at confronting formidable immediate threats—the marauding bear or tiger, the opposing army, or the devastating epidemic. In contrast, the modern global economy poses serious, slowly expanding problems like growing world poverty and homelessness that are least threatening for the nations possessing the most resources to confront them. Is there a reasonable prospect of mobilizing a major movement to alter global inequities? What would be an effective strategy for initiating it?
Key Terms in Glossary
Modern world system
Foundation for Social Inequality: Concepts and Structures
A host of provocative findings about US social inequality are apparent, but here are just two of them. The nation’s most obvious political division—between Republicans and Democrats—reveals distinct differences about their perception of social inequality. When asked why a person is rich, 66 percent of Republicans or respondents leaning toward the Republican party said it was because they worked harder while 21 percent emphasized their having advantages in life. Among Democrats or Democratic leaners, the respective figures reversed the emphases—29 and 60 percent. A similar pattern prevailed among party members/supporters when asked about individuals being poor. Fifty-six percent of Republicans and Republican leaners said it was lack of effort and 32 percent indicated circumstances beyond their control, and, once again, the Democrats and Democratic leaners reversed the Republican numbers, displaying 19 and 71 percent (Smith 2017b). In the upcoming section, it is apparent that like political party affiliation, people’s relationship to three key concepts—social class, ideology, and social mobility— affect their outlook on social inequality.
In addition, over time certain specific types of organizations and activities have expanded social inequality, increasingly separating a select wealthy few from everyone else. From the 1940s through the early 1970s, earnings up and down the income ladder grew at fairly similar rates, roughly doubling when adjusted for inflation. Then, however, in the recent course of the Great Recession of 2008, the economy slowed, income levels widened, and the top 1 percent became the most distinct beneficiaries (Stone, Trisi, Sherman, and Horton 2017).
While the top 1 percent did well, an even more select group has been particularly fortunate over time. In 1982 among the Forbes 400, the richest individuals in the United States, the average member had a net worth of $230 million. In 2016 that value had risen to $6 billion, more than 10 times the 1982 average when adjusted for inflation (Institute for Policy Studies 2017). Those 400 individuals have more wealth than the bottom 61 percent of the population. But consider one even more economically select group: The 20 richest people in the country, who, as a writer pointed out, are sufficiently few that they could fit into a Gulfstream G650 Luxury Jet, control more wealth than 152 million Americans living in 57 million households (Holland 2015).
How, one might wonder, did these enormous inequalities develop? Two sets of background information contribute to an understanding—conceptual elements and structural or interactional data. The first section examines the concepts and ideas that underpin the American sense of how society works and should work. The second involves the structures and activities—the institutions, organizations, agencies, and practices—that shape the central economic and political activities.
As the focus shifts to the concept of social class, one might consider, given its enormous wealth and power, even in comparison to other rich people, that the Forbes 400 might represent a social class unto itself.
ON YOUR OWN: SOCIAL CLASS, IDEOLOGY, AND SOCIAL MOBILITY
If a theme runs through the three subjects in this section, it is the idea that individuals and families are free agents—on their own. The traditional outlook on this position is that individuals or families possess the freedom to make their own decisions and chart their own destiny. Generally little attention has gone to the fact that left on their own many groups are vulnerable to powerful pressures and crises. As the upcoming chapters demonstrate, the less affluent people are, the greater their vulnerabilities. In this section it becomes clear that with an emphasis that people are on their own, many Americans downplay social-class membership, focusing instead on the preeminence of the individual and the family. It is abundantly clear that both of the other topics discussed here— the American ideology and emphasis on social mobility—contain ideas consistent with the emphasis about being on one’s own. An analysis of social class is the foundation for the rest of this section.
Social Class in the United States
As the definition in Chapter 1 indicated, a social class is a large category of similarly ranked people distinguished from other large groupings by such traits as occupation, education, income, and wealth (Gilbert 2011, 263). In accord with this definition, social scientists generally use measures of occupation, income/wealth, and education to distinguish social classes (Dye 2002, 150). However, the extensive research on class has displayed a wide variety of measurements, differing on such issues as whether to focus on one or more variables; whether the research site should be a single town or city, or the entire nation; or whether the class placement should be subjectively or objectively determined (Perry-Jenkins 2005, 454). Even the analysts who subscribe to the following classification are likely to differ in their estimated percentages of people comprising the various social classes.
This text uses a five-class scheme based on several variables but featuring occupation, thus locating it in the Weberian tradition. In this classification occupation, education, and income are distinctive for each class. Data for the social classes come from the “Annual Socioeconomic Supplement of the Current Population Survey,” which collects information from 50,000 to 75,000 households:
1.The first of two privileged categories is the upper class or superclass, with income from investments and inheritance, and some members holding top corporate positions; education from prestigious college and universities, sometimes including post-graduate work; and a typical household income of $350,000 or more yearly; and a total of about 1.8 percent of the population.
2.The second privileged group is the upper-middle class, involved in high-level management, professional work, and ownership of medium-sized businesses; education featuring college graduation and often post-graduate study; a yearly income of between $100,000 and $350,000; and a 29.4 percent segment of the people. This class includes “the working rich,” such wealthy professionals as some doctors, lawyers, dentists, who earn money enough to qualify them as upper-class members. However, they are not part of that class because their income derives from fees and salaries, not investments.
3.The first of two majority classes (in numbers) is the middle class, sometimes designated the lower-middle class, employed in crafts, lower management, semiprofessional, and nonretail sales work; at least high-school completion and often some college credits; income about $50,000 to $100,000 a year; and a total of about 32 percent of the population.
4.The second category within the majority set is the working class, composed of low-paid craftspeople, clerical workers, and retail-sales employees; a frequent possession of a high-school certificate; earnings of about $30,000 to $50,000 a year; representation of about 17.1 percent of US inhabitants.
5.The poor involving the working poor and the underclass represent about 19.8 percent of the population, with a yearly income of $30,000 or less. The working poor, with jobs in service work, labor, and clerical activities; education involving at least some high-school attendance; income about $25,000 a year.
The underclass considered a portion of the poor involves individuals who are unemployed or working part-time, often outside the mainstream work structure, and are often dependent on public assistance or other government subsidy; income about $15,000 a year. In 2012 about 26 million 18-to-64-year-olds lived below the poverty line, with about 15 million remaining unemployed throughout the year (Gilbert 2011, 244–49; Marger 2011, 56–61; Rose 2016; Weissmann 2013).
Conducting a survey with three random samples of American adults aged 18 and older, the Gallup Poll sought respondents’ opinions of their social class, dividing them into fairly similar classes to the previous designation—five instead of six, with a single class for the poor. The figures were 3 percent upper class, 15 percent upper-middle class, 43 percent middle class, 30 percent working class, and 8 percent lower class (poor)—fairly similar to the data-based scheme provided above (Newport 2016). In particular, the sizes of the middle-class components are quite close—61.4 percent for the Current Population Survey and 58 percent for the Gallup Poll. Describing themselves as middle class, it would appear, is a way of suggesting most Americans are similar, thus downplaying or even dismissing the significance of social class and implying that people should be judged solely as individuals.
Economist Michael Zweig suggested that several factors appear to promote Americans’ tendency to consider themselves middle class rather than working class. One issue is social mobility. Because of the national push to advance one’s economic and social position, working-class origin is widely considered a stigma, simply a condition to escape. Second, consumerism comes into play, with middle-class buying patterns featured in media sources. Finally mass-media policies play an important role; newspapers, radio, television, and magazines pay little or no attention to the working class, and unions, which have historically served people in many working-class jobs, receive limited or negative coverage (Zweig 2000, 39–56).
Perhaps what is most notable about class is that outside sociology and other academic spheres, it is seldom a topic of discussion. Why is that? Sociologist Gregory Mantsios asserted that “[i]n politics, primary and secondary education, and to the mass media, formulating issues in terms of class is unacceptable, perhaps even un-American” (2007, 183).
Sociologist Diana Kendall has offered a related argument, featuring a useful concept. Media framing is the process of packaging information and entertainment in order to produce a distinct impact on an audience. The process involves a series of decisions about what is informative and entertaining—such decisions as how much coverage to give a story or whether to give it a positive or negative spin. Media framing is particularly apparent with news, but it also occurs with entertainment (Kendall 2005, 7; van der Meer and Verhoeven 2013). All in all, leaders in the major media determine that to placate corporate sponsors and to promote entertainment, their best course of action is to offer a superficial look at social class and social inequality, trivializing them. Kendall indicated that “the media either play class differences for laughs or sweep the issue under the rug so that important distinctions are rendered invisible” (Kendall 2005, 229).
The general avoidance or de-emphasis of class-related issues in the media and also in schools means that most Americans do not perceive shared class interests, making common cause unlikely. Most notably this trend undermines union organizing.
Nonetheless situations arise in which class differences, though often not discussed as such, can create ongoing conflict. In the late 1990s, in Burlington, Vermont, the city lost its previous supermarkets. A referendum took place to determine what would be the replacement—a standard supermarket that featured bargain items that poor and working-class families often valued, or a more health-conscious, somewhat more expensive list of products, which middle-class people generally favored. Feelings were strong, with angry testimonies at one meeting indicating that lower-income individuals refused to have a group of residents stopping them from buying the white bread and red meat that they preferred. The issue, however, ran deeper than food choices.
One local observer suggested that there was a class-based background to this conflict—that for the first time since high school the lower-income residents were in face-to-face relationship with the upper-middle-class individuals, who were top students and teachers’ favorites. “So there are years of resentment that have bottled up … these people” (Alvarez and Kolker 2001). The commenter had no research data at hand, and yet what he said about differing class experiences in school will generally be supported in later chapters.
While most Americans seldom refer to social class or discuss class-related issues, they are well aware that a pair of factors associated with social class—income and wealth—varies widely. Income and wealth, which are often discussed interchangeably, have distinctly different meanings. Income involves individuals’ earnings obtained through wages, salaries, business profits, stock dividends, rents, and other means. Wealth, as noted in Chapter 2, is people’s economic assets—their cars, homes, stocks, bonds, and real estate, which can be converted into cash. More affluent families have greater income and wealth than less affluent families, but, in particular, they can possess a greater portion of all wealth.
Table 4.1 demonstrates that between 1980 and 2017 only those individuals in the highest designated income bracket ($100,000 and over) have generally increased their percentage of the total national income (Statista 2017; U.S. Bureau of the Census 2008a; Mislinski 2018).
As far as wealth distribution is concerned, it has shifted significantly over time. In the late 1920s, according to one assessment, the top 1 percent possessed a full 50 percent of the nation’s wealth, with that proportion steadily declining to the lower 20s in the late 1970s and then rising steadily to 42 percent in 2012. Most of this increase goes to the top 0.1 percent of families, a mere 160,000 tax units, whose wealth share has expanded from 7 percent in 1978 to more than three times as much—22 percent in 2012 (Saez and Zucman 2016).
Wealth, or the lack of it, is one determinant of lifestyle. In Chapter 2 the examination of Max Weber’s social-stratification theory indicated that status-group members have distinctive lifestyles. A lifestyle is a particular set of behavioral patterns involving social relations, childrearing practices, language usage, and other activities deriving from members’ consumption patterns (Gilbert 2008, 245). American social classes are large and diverse, containing within them groups possessing varied lifestyles. Money can have a significant impact. Abundant amounts of cash allow the rich to purchase mansions, vacations, airplanes, and other amenities not available to other classes, and these items contribute to a uniquely privileged lifestyle. An impactful factor affecting the economics of people’s lifestyle involves the states in which they live. For instance, an analysis of residents in all 50 states indicated vast differences in people’s perceptions of how much money they required to reach the point where additional cash would not increase happiness. The figures ranged from a family income of $65,850 in Mississippi to nearly twice as much—$122,175 for Hawaii (Short 2017).
While Americans are broadly aware of the existence of social classes, they seldom appear to analyze their fellow citizens as members of them. Instead they see individuals as largely autonomous entities, subject to the broad ideological forces about to be discussed.
The American Ideology
As we saw in Chapter 1, ideology involves a complex of values and beliefs that support a society’s distribution of wealth, income, and power. The images and vision an ideology provides often distract people from recognizing their society’s inequalities. The American version is a “rags-to-riches” ideology, which was perhaps most famously represented in the Horatio Alger novels.
It is an ideology that presidents and other public personages have widely praised, describing a country where unparalleled individual success is uniquely available. Announcing his run for the presidency, Ronald Reagan declared that ours is truly a land of opportunity, “never mean and always impatient to provide a better life for its people in a framework of basic fairness and freedom” (Reagan 1979).
In 2014 the New York Times conducted a nationwide survey with over 1,000 respondents, asking them whether it is possible to start out poor and become rich. Sixty-four percent of those questioned said yes, the lowest percentage in about two decades and indicative of the public’s declining faith in the prospect of upward mobility (Sorkin and Thee-Brenan 2014). Yet even that decline indicated that nearly two-thirds of the interviewees supported the American dream of rags to riches, and so these data would appear to be persistent evidence of legitimation—individuals’ willing acceptance of the dominant ideology and institutions and the social inequalities they promote.
Extensive evidence exists in support of this legitimation. Even during the Great Depression of the 1930s when widespread unemployment and growing poverty might have produced support for a redistribution of income, only one-third of respondents in a nationwide survey backed the idea of a ceiling on income, with the remainder turned over to the government as taxes. Then in 1981 another survey item raised the possibility of a top limit on earning set at $100,000. Eighty percent rejected this idea, including substantial numbers of the very poor (Ladd 1994, 38–39).
Table 4.2Data on Slowdown in Mobility Prospects for Most Americans
In 2015 about half of parental advantage passed on to children
with about 52 percent of it transmitted for men and 47 percent for women.
Children at the extreme ends of the income range encounter distinctly different prospects; for instance
children born in the most affluent decile earn income that is three times greater than their counterparts born in the poorest decile.
Research on two time periods—1981 to 1996 versus 1993 and 2008—indicated a decline in upward mobility over time across most economic subgroups. These declines tend to be substantial
with the chances of middle-income individuals reaching the top two deciles falling by about 20 percent.
Sources: Carr and Wiemers (2016), Mitnik and Grusky (2015).
Marx’s concept of false consciousness seems applicable here. Whether it is a proposed limit on income or the upcoming issue of individual achievement, most Americans appear convinced that the rags-to-riches ideology superclass members like Ronald Reagan have favored also supports their own interests. Ideology tends to capture people’s minds, precluding a hard look at the facts before them. It seems safe to conclude that it represents false consciousness, helping to promote economic and political elites’ interests.
Many scholars have written about the American ideology, and some of the specific features have included the upcoming topics—individual achievement, hard work, equality of opportunity, and support for the capitalist order (Bellah, Madsen, Sullivan, Swidler, and Tipton 1996; Lodge 2012; Ladd 1994; Marger 2011, 218–29; Williams 1970, 452–500).
INDIVIDUAL ACHIEVEMENT The idea of individual achievement is that each person is dependent on his/her own abilities, talents, and efforts for obtaining valued rewards, especially income and wealth. The focus of achievement has traditionally been the work world, notably business, which is the main avenue for becoming rich. But while much of the attention involving individual achievement has focused on obtaining wealth, the most admired Americans have featured an array of more general laudable traits that are firmly in the “rags to riches” spirit. Sociologist Robert Merton indicated that a fitting model for American individual achievement has been Abraham Lincoln, who not only displayed an array of stellar personal traits but was “eminently successful in climbing the ladder of opportunity from the lowermost rung of laborer to the respectable heights of merchant and lawyer” (1968, 480–81).
It appears that one reason professional sports are so popular in the United States is that they represent high-level individual achievement—top athletes pitted against the most formidable opponents. Sometimes journalists or the athletes themselves use warfare analogies, referring to being “in the trenches” or “taking no prisoners.” In 2010 shortly after three basketball superstars—LeBron James, Dwayne Wade, and Chris Bosh—had arranged to play together on the Miami Heat, Michael Jordan, one of the top all-time players, was asked whether he would have made such a move two decades earlier. Speaking as a “warrior” from another era, Jordan replied that he never would have contacted Larry Bird and Magic Johnson (along with Jordan the best players of that era), “and said, ‘Hey, let’s get together and play on one team …’ In all honesty, I was trying to beat those guys” (ESPN.com News Services 2010).
Carl Beuke, a psychologist, proposed an approach displaying a roughly similar approach to Jordan’s. He stressed that people pursuing individual achievement possess certain robust values focusing on their own development—that success requires a strong personal commitment; that difficult challenges represent chances to do well; that an effort to achieve is both enjoyable and useful; and that invariably one’s skills can be improved (Beuke 2011).
In focusing on individual achievement, Americans tend to downplay the impact of family-of-origin differences in financial, human, cultural, and social capital. The focus is on the single person’s success … or failure. In studying middle-class adolescents in crisis, sociologist Elliott Currie was struck by how many of their parents seemed committed to the idea that in this highly competitive, achievement-oriented society “even the most vulnerable must learn to handle life’s difficulties by themselves—and that if they cannot it is no one’s fault but their own” (2004, 122).
A national celebration of individual achievement, however, does not mean that Americans are inevitably successful. In the Programme for International Student Assessment given every three years to 15-year-olds in 71 developed and developing nations, the American students placed 38th in math and 24th in science. Among the 35, generally high-income nations which sponsor these tests, the Americans ranked 30th in math and 19th in science (DeSilver 2017). Is the work ethic more effective in those countries?
PHOTO 4.1 With their highly skilled, stylish play and recent NBA championships, Steph Curry and his Golden State Warrior teammates appear unquestionably to display high-level individual achievement.
Source: Copyright 2019 NBAE (Photo by Adam Pantozzi/NBAE/Getty Images).
IMPORTANCE OF HARD WORK In The Protestant Ethic and the Spirit of Capitalism, Max Weber argued that the Puritans, who subscribed to Calvinist theology, had a strong influence on the development of capitalism. The Puritan god was considered an aloof, inscrutable being deciding “the fate of every individual and [regulating] the tiniest details of the cosmos from eternity” (1958, 104). Supposedly human beings existed simply for the glorification of God and were expected never to question His decisions, accepting them on faith. One critical article of faith involved the doctrine of predestination, which asserted that before birth people were destined either for salvation or damnation. While nothing could be done to earn salvation, the Calvinist religion directed that it was individuals’ duty to act as though they were among the elect, “and to combat all doubts as temptations of the devil” (Weber 1958, 111). Thus, Weber contended, Puritans were given “a positive incentive to asceticism.” Following religious directives, they were driven to work hard, to be austere and highly organized, and to be successful—not to become wealthy but to glorify God.
For the Puritans the source of the incentive to work lay in individuals’ relationship with God. Weber wrote, “In practice this means that God helps those who help themselves. Thus the Calvinist, as it is sometimes put, himself creates his own salvation, or, as would be more correct, the conviction of it” (1958, 115). As historian Daniel T. Rodgers phrased it, these early settlers were “laborers for their Lord, … engaged in a task filled with hardship, deprivation, and toil” (1978, 4). By the nineteenth century, that “preoccupation with toil” was a fundamental characteristic of American business activity (Rodgers 1978, 5). While the Puritans made glorifying God their priority, the long-term impact of their emphasis was to provide the cultural foundation for how to live life, particularly in regard to work.
Rodgers and Weber were analyzing the work ethic—the conviction that unrelenting commitment to one’s job is necessary both for occupational success and for building character. It is a prominent part of the American ideology, but as a writer on American business provocatively suggested, it is questionable that it leads to success on the job. She observed that if individuals work for a fixed salary or an established wage, then simply working hard might lead to the boss’s appreciation but hardly significant job advancement. While working hard is necessary, the key factor for success is self-determination, a sense of control over one’s work activity. It does not require starting one’s own business; it means making carefully planned choices about one’s work activity keeping in mind the impact that those choices have in the immediate work setting. Inertia is a distinct enemy; if a current job offers little promise, then self-determined employees follow a plan and move on to a position offering more promising prospects (Ryan 2016). While such an approach can undoubtedly produce advancement, it involves the distinct risk of operating on one’s own, perhaps with limited support. All in all, for Americans hard work remains a key component to achieve occupational success.
An international survey indicated that among 10 developed nations, the United States distinctly displayed the highest proportion—73 percent—indicating that hard work was important for getting ahead. Next in line were the United Kingdom at 60 percent, Germany at 49 percent, and Japan at 42 percent (Pew Research Center 2014).
With Americans, however, evidence suggests that they not only believe in working hard but that they are personally invested in their jobs. Writer Studs Terkel spent three years interviewing individuals in over 100 different jobs, and he learned that “those we call ordinary are aware of a sense of personal worth—or more often a lack of it—in the work they do” (1974, xxiv).
A contemporary national survey conducted with over 5,000 adults provided information about Americans’ occupational satisfaction. About half (49 percent) were very satisfied with their current jobs, with the level of income coming into play. Fifty-nine percent of respondents with income of $75,000 or higher were very satisfied compared to 45 percent of those between $30,000 and $74,999 and 39 percent for those with income under $30,000. Income level also differentiates Americans on the topic of projected job security. Overall only 12 percent of Americans indicated that they were fairly or very likely to lose their jobs in the following year. Individuals with income below $30,000 were four times as likely as those in the $75,000 and more bracket and three times as probable as those in the $30,000 to $74,999 category to consider job loss a fairly or very likely possibility (Pew Research Center 2016).
Are Americans generally concerned about people’s chances to be successful?
EQUALITY OF OPPORTUNITY Traditionally American culture has emphasized equality of opportunity, a situation where people possess broadly similar chances for success in business, politics, and other prized endeavors. From its inception the United States was committed to break from the British tradition emphasizing royalty, nobility, and hierarchical privilege locking people into a rigid social-class structure.
During the nineteenth century, the country achieved progress in restricting class privilege by eliminating such practices as imprisonment for debt and slavery and initiating provisions for common citizens to obtain land and public education. While acknowledging these accomplishments, sociologist Robin M. Williams, Jr., conceded that “[m]odern America, of course, shows inequalities of wealth, power, and prestige; and there is far from being equality of opportunity to acquire these things” (1970, 474).
Since its inception in the nineteenth century, the American public-school system has been touted as a vehicle of equal opportunity. Many biographies or autobiographies of wealthy, successful men and women, who have risen from poverty or economically modest backgrounds, have praised teachers and schools that have been critical in their development. Education has had a large impact on people’s lives. Analyzing the relationship between schooling and occupational success, sociologist Dennis Gilbert observed that “the good jobs go primarily to those who have completed college—about a quarter of young men and women” (Gilbert 2008, 141). As we see in upcoming chapters, various social classes have distinctly varied quality and quantity of schooling available to them. In spite of such inequalities, however, Americans strongly believe that equality of opportunity exists. The McCoy Family Center for Ethics in Society located at Stanford University has concluded that over 90 percent of Americans believe that equality of opportunity is an essential American emphasis, particularly as it applies to social mobility and public education (McCoy Family Center for Ethics in Society 2018).
While Americans broadly support equality of opportunity, they display some differences on the issue. Republicans or Republican leaners often contend that the focus should be on citizens’ possession of equal rights before the law, with government and other agencies prohibited from limiting their pursuit of individual success. Democrats or Democratic leaners support the idea of equal rights before the law, but they go a major step farther, recognizing, as did Robin Williams, Jr. in the previous statement, that through no fault or credit of their own some people have better opportunities in schooling, work, and in other prized pursuits and that to some extent it is government’s duty to equalize those opportunities, appropriating resources from the well-off and giving them to the less well-off (Weinberger 2012). Differences of opinion on this issue are frequent and are likely to persist indefinitely.
Supporters of the three ideological points just described are likely to endorse the American economic system.
PREEMINENCE OF LIBERAL CAPITALISM Liberal capitalism is a combination of a democratic political system and a capitalist economy, supporting free trade and unrestricted economic competition. From Chapter 2 we should recall that capitalism is a system in which economic production features private ownership in pursuit of profit.
Over the past 200 years, it has been apparent that liberal capitalism has been the American system for producing prosperity and economic growth, with central planning and government intervention proving distinctly less popular. In the United States, liberal capitalism has received widespread endorsement, not only because it has produced abundant, money-making goods and services but because the system is sufficiently open to let many individuals pursue their personal plans to obtain wealth and success (Anderson 2007).
The historian Henry Steele Commager lauded the spirit of American enterprise. He wrote, “The American knew that nothing was impossible in his brave new world … Progress was not, to him, a mere philosophical ideal but a commonplace of experience” (1947, xi and xiv). The touchstone of progress, sociologist Robin Williams, Jr. suggested, has been an ever-expanding per capita gross national product (1970, 469).
Overwhelmingly Americans have supported liberal capitalism. Both of the two major political parties are committed to the system, with many candidates for elected office receiving a significant amount of their financial support from corporate givers. Unlike most other countries, which have some type of proportional representation permitting minority parties to obtain seats in their legislatures, the American system is winner-take-all, making it rare that a representative of a third party, perhaps someone critical of liberal capitalism, is elected (Alesina, Glaeser, and Sacerdote 2001).
A corollary of the American support for liberal capitalism is Thomas Jefferson’s idea “that the government which governs least, governs best” (Reed 2006). Keep government off people’s backs, with business activity minimally legislated and regulated. In these regards other modern nations restrict capitalism more extensively. Later in this chapter, some consequences of limited regulation are discussed.
Even in fairly difficult economic times, many Americans have faith that liberal capitalism will deliver. Four surveys done by Gallup Poll over 22 years involving over 1,000 respondents in each instance found that a fairly consistent proportion—28 percent in 2012 and 32 percent in 1990—believed that it was very or somewhat likely they would become rich in the future. Age was a significant factor. Nearly half under 30 (47 percent) felt they would become rich, but for respondents aged 30 to 49 just 35 percent expressed that belief (Newport 2012).
While the percentage of citizens thinking they would become rich remained quite consistent over time, a significant change in outlook toward the economy has been developing. A Harvard University survey found that young adults have become less inclined to support capitalism—just 42 percent of respondents compared to 51 percent who opposed it (Ehrenfreund 2016b). John Della Volpe, the polling director, suggested Bernie Sanders’s anti-capitalist candidacy for the presidency had produced a profound impact on Millennials. Della Volpe said, “He’s not moving a party to the left. He’s moving a generation to the left” (Ehrenfreund 2016a).
The American ideology has supported people’s belief in social mobility.
Fixation on Social Mobility: Where Is the American Dream?
Social mobility is the movement of an individual or group up or down in a social hierarchy such as a class system. Does the American ideology with its emphasis on individual achievement and hard work provide realistic guidelines for achieving upward mobility? Researchers Roberta Rehner Iversen and Annie Laurie Armstrong’s answer would be negative, emphasizing the following myths about social mobility:
•Myth 1: “Initiative gets you in the door.” The authors indicated that in the United States education is considered the key to success, with schooling and training the basis for increased pay and better jobs and the belief that schooling can overcome any existing inequalities. However, in the twenty-first century, a growing number of workers are facing a situation involving “deskilling,” where the introduction of new machines means that semiskilled operatives replace skilled craftsmen in a variety of working-class jobs. Deskilled job holders include individuals who load ships, do short-order cooking, typeset, and bake. Semiskilled replacements face work settings where initiative as represented by the contributions of education and skill training can do little to promote social mobility.
•Myth 2: “Hard work pays off.” The traditional corporation provided job stability and career ladders, which permitted workers to move up in both responsibility and income. Recent studies included in Chapter 6 dispute this conclusion, indicating that globalization, downsizing, and outsourcing have eliminated many secure career paths. It is a situation that is good—flexible—for employers, but employees in a wide range of jobs can experience insecurity and loss of morale, with the realization that their work is often no longer likely to pay off.
•Myth 3: “Pull yourself up by your bootstraps.” This position is consistent with the idea of individual achievement—that wholly or almost wholly on one’s own the self-reliant person can be upwardly mobile. The fact is that through American history young people’s upward mobility has received support from vocational learning in schools, apprenticeships, and networks of family members, friends, and acquaintances. Today, however, the majority of entry-level workers lack all or most of these resources. Many are school dropouts, often undereducated or underskilled, deprived of supportive networks, and thus unprepared to be successful in a work world where, especially at lower levels, it has become increasingly difficult to move upward (Iversen and Armstrong 2006, 14–19).
As the third myth suggests, families can be essential supports for young people’s upward mobility, providing financial capital for schooling, which has become increasingly critical for occupational success, and also supplying cultural and social capital (Bowles and Gintis 2002; Hamilton 2013). As the focus shifts to the measurement of social mobility, it is helpful to keep in mind the impact of structural conditions on individuals’ prospects for upward mobility.
A pair of concepts highlights important realities about social mobility. Intergenerational mobility is a measure of social mobility comparing a child’s and a parent’s class location. Structural mobility is a type of social mobility where either technological or institutional change creates an increase or decrease in jobs within a certain social class. Since the 1970s the introduction of computers and automation has produced structural mobility, reducing millions of blue-collar and later white-collar jobs (Theriault 2003, 126–27). In addition, millions of workers have been the victims of changing institutional policies, where many corporations have accelerated both downsizing and outsourcing. The growing presence of these two sources of structural mobility has meant job losses and income reduction, producing a “downward intergenerational drift among young adults from middle-income (or upper-middle-income) families who cannot find jobs that will allow them to replicate their parents’ income levels or living standards” (Perrucci and Wysong 2008, 64). In the middle-twentieth century, however, upward social mobility was more prevalent.
The early studies of intergenerational mobility focused on fathers and their sons. In 1962 Peter M. Blau and Otis Dudley Duncan did research on 20,700 employed men interviewed by the Current Population Survey, and 11 years later David L. Featherman and Robert M. Hauser replicated the earlier research, examining 33,600 employed men. The results were quite similar. In 1962, 60 percent of the sons were upwardly mobile and 23 percent downwardly mobile. In 1973, the respective percentages were 60 and 26 (Blau and Duncan 1967; Featherman and Hauser 1978, 93). In both studies, in short, upward mobility was more than double downward mobility.
That pattern, however, has altered, with upward mobility declining and Americans becoming less likely to expect it to occur. In 2015 researchers at Stanford’s Center on Poverty and Inequality found that in examining the 1987 tax returns for dependents who were born between 1972 and 1975 that about half of parental financial location gets passed on, with 52 percent of it passed on for men and slightly less—47 percent—for women, figures suggesting that the US is a country with limited social mobility. Individuals growing up at the extreme ends of the economic range are likely to have very different disposable income, which is income after taxes to be spent as they choose. For instance, the children raised in well-off families (units at 90th percentile) on average are going to possess three times the disposable income of their poor peers (10th percentile) and 70 percent more than those in the middle class (50th percentile) (Mitnik and Grusky 2015, 1–5). The differences among income groups were somewhat greater than the researchers anticipated. “One might think we’d have nailed it by now, but there was some uncertainty,” said David Grusky, an author of the report (Pinsker 2015).
Two economists reached similar conclusions, using data from the Census Bureau’s Survey of Income and Program Participation, which tracks individuals’ earnings and revealed people’s income trajectories between 1981 and 2008. The investigators divided their workers into deciles, say the least affluent 10th of earnings, the next decile between 10 and 20 percentile, etc. Then they determined the extent of movement individuals made between deciles in two 15-year time periods—1981 to 1996 and 1993 to 2008. When the researchers compared data from the two time periods, the chances that someone born in the lowest 10 percent would move above the 40th percentile decreased over time by 16 percent. In fact, people in the seventh decile were 12 percent more likely to end up in the fifth or sixth decile. Furthermore earnings for those in the top 10 percent became higher than they used to be, making it more difficult than in the past to move into those top ranks (Carr and Wiemers 2016). In conclusion, Michael D. Carr, one of the authors, indicated, “The probability of ending where you start has gone up, and the probability of moving up from where you start has gone down” (Semuels 2016).
Not surprisingly Americans’ prospects for upward mobility have become less common than in many other countries. The Economic Mobility Project of Pew Charitable Trust found that children were more likely to have higher earnings than their parents in the United Kingdom, Canada, Australia, France, and the Scandinavian nations than their age equivalents in the United States.
Let me conclude this section by suggesting that as with any concept, it is important when writing or speaking about social mobility to keep its meaning firmly in mind— focus on the idea of upward or downward movement in a social hierarchy. Sometimes analysts, even sociologists, lose that focus. For instance, a prominent text has a discussion on the topic, indicating that families are a prime resource for upward mobility and that wealthy, particularly upper-class families are particularly helpful. The fact of the matter, however, is that while upper-class families often promote their children’s occupational success, they do not help them become upwardly mobile. It is not conceptually possible, because the children are already at the top of the class hierarchy. Remember: Stay focused on the core meaning of the concept.
The discussion has focused on social class, ideology, and social mobility—topics having a widespread impact on Americans. Now the focus shifts to important activities which a select few seek to dominate, insuring a society where their elite interests reign supreme.
THE INVISIBLE EMPIRE AND ITS CALCULUS OF CONTROL
As the lengthy, sometimes bitter, contest for the 2008 Democratic nomination between Hillary Clinton and Barack Obama stayed locked in the media spotlight, a common misconception once again seemed creditable: that the prime movers and shakers in the power elite are prominent, highly scrutinized individuals. Such people can provide entertaining media theatre, but the actual economic and political policies are often formulated elsewhere, by less known or largely unknown individuals. Not only are the individuals who make prominent policies frequently obscure, but, in addition, the organizations involved receive little public attention. Their activities are well organized, systematically executed, unspectacular, and singularly important. Robert Perrucci and Earl Wysong referred to the existence of an “invisible empire.” It is invisible in that the various groups and organizations that are responsible for the activities are out of the public view, and politicians and the media seldom provide more than the barest information about these structures. Furthermore it is an empire in that “the privileged-class leadership has crafted a far-flung and widely dispersed collection of resources, organizations, and processes into a coherent political force that ensures the perpetuation of its interests” (Perrucci and Wysong 2008, 142).
The elements producing this political force are the policy-making process, lobbying, campaign spending, the power of the press, and public policy, namely taxation, the budget, and regulation. In military parlance it seems apparent that the power elite has well-equipped arsenals with refined, efficient weaponry for defeating adversaries on each of these competitive battlefields.
The Elite Policy-Making Process
The superclass provides most of the funding for the various non-governmental organizations (NGOs) discussed here. The four-part process begins with foundations, involves think tanks and universities, and features policy-making groups. Both superclass and upper-middle-class individuals function within these different structures, and the most powerful and influential among them participate extensively in interlocking directorates.
FOUNDATIONS Among the over 86,000 foundations in the United States, only a few are well enough funded to produce a significant impact on policies. A foundation is a tax-free organization that spends money on research, education, the arts, and many other endeavors. Upper-class corporate leaders control large foundations, which possess well-credentialed boards and staff. Foundation money comes from dividends they receive on substantial blocks of corporate stock, with a small group of wealthy organizations making the lion’s share of foundations’ contributions. In 2014 the most affluent 50 foundations gave about $14.8 billion, 24.5 percent of the total giving.
The wealthiest foundations generally have interlocking directorates with each other and with a wide range of large corporations, providing input for a fairly unified power-elite policy. Often foundations provide “seed money” for looking into issues members of the superclass consider important. In addition, their funding goes to think tanks (Carp 2013; Domhoff 2010, 91–92; Dye 2002, 174; Foundation Center 2014; Perrucci and Wysong 2008, 164–65).
Without foundation money think tanks and policy-making groups would be seriously handicapped.
THINK TANKS A think tank is an organization that does the most detailed research and analysis in the policy-formation process. While research and analysis are primary functions, public relations can be important, with many think tanks producing newsletters, reports, and media interviews promoting favored policies. In the most prominent, well-funded think tanks, the researchers are individuals with advanced training and degrees from prominent universities. The United States possesses nearly 2,000 think tanks, about a third of the world’s total. There exist about twice as many conservative as liberal think tanks, and the conservative ones are generally better funded, with 16 of the 25 largest receiving large amounts of money from major oil companies, specifically 13 from ExxonMobil, nine from Chevron, and four from Shell; in addition, 12 of the top 25 received support from weapons manufacturers, and 10 obtained funding from finance corporations. Unlike lobbyists and political candidates, think tanks only reveal their contributors if they so choose (Carp 2013; Project Censored 2014; Best Schools 2017; Center for Media and Democracy 2017).
The most prominent conservative think tanks include the Brookings Institution, the American Enterprise Institute, and the Heritage Foundation, with the first two organizations having some prominent politicians and economists associated with them. In addition, both the Brookings Institution and the American Enterprise Institute have about 60 percent of their directors sitting on the boards of major corporations. These interlocks help to provide corporate leaders information about the think-tank activities and to build support for favored policies (Domhoff 2010, 97–98; SourceWatch 2005).
An essential reality of think tanks is that the donors, especially the large donors, invariably get plenty of advantage for their contributions. In summarizing those benefits, a writer noted that “many lure big donors with a package of benefits, including personalized policy briefings, the right to directly underwrite and shape research projects, and general support for the donor’s political needs” (Silverstein 2013).
Like all the organizations in the policy-making process, the think tanks require university support.
UNIVERSITIES The nation contains about 4,000 colleges and universities, but in 2017 there were only 57 qualified as “billion dollar universities”—those with endowments of $1 billion or more. Besides unusual wealth these schools have disproportionate interplay with the power elite. They receive about two-thirds of all college and university endowment, and the wealthiest and most prominent such as Harvard, Yale, Stanford, University of Texas, and Princeton provide education for large numbers of eventual corporate and political leaders as well as future members of foundations, think tanks, and policy-making groups. Many trustees at the wealthiest, most prominent private universities come from major corporations. In addition, the presidents of well-known universities sometimes serve as directors of major corporations or become important political appointees. Finally universities are the location for some of the research that think tanks and policy-making groups use to promote their interests (Domhoff 2010, 99–100; Dye 2002, 129; Trugman 2017).
POLICY-MAKING GROUPS These are the organizations that formulate important economic and political policies. Their membership features heads of major corporations, banks, and law firms, important government officials, and prominent people from universities, foundations, and the mass media. These individuals need to review the policy-related research done by foundations, think tanks, and universities. At the groups’ meetings, members have a chance to question experts from think tanks and universities, familiarizing themselves with the issues at hand. Discussion occurs on the policy direction(s) to take, and leaders make deliberate efforts to establish a consensus among the members. Once consensus is established, these organizations use various media forms including journal articles, books, press releases, interviews, speeches, and lobbying to influence both politicians and the general public. Three of the most prominent policy-making groups are the Council on Foreign Relations (CFR), the Committee for Economic Development (CED), and the Business Roundtable (BRT).
The CFR is the major policy-making group dealing with foreign affairs. Founded in 1921, the CFR commissions studies on foreign-policy issues and then initiates discussions and seminars among its members and leading government officials in order to reach consensus. While most of the over 5,000 members of the CFR do nothing more than receive reports and attend large banquets, the board of directors, whose members are usually powerful, influential people from business and politics, tend to be active participants.
The CED was founded in 1942 with the idea of both preparing for the possibility of another major depression and of having in place a plan that would override any proposals that a liberal–labor coalition might develop. The CED contains a combination of current and former major corporate leaders, university and college presidents, and the heads of prominent NGOs. Like the CFR the CED uses study groups examining reports produced by academic experts. The difference is that at the CED the results of committee deliberations are released, with footnotes indicating where members had differences of opinion. The CED, which was once a moderate-conservative organization, changed its general stance and became more decisively conservative in the middle 1970s at a time of rising oil prices, rapid inflation, and growing unemployment (Committee for Economic Development 2019; Council on Foreign Relations 2017; Domhoff 2010, 104–11; Dye 2002, 124–27).
Finally the BRT, which was founded in 1972, is an organization whose members are the CEOs of about 140 of the nation’s largest corporations, which collectively employ over 15 million workers and produce more than $6 trillion in annual revenues. BRT consistently tries to shine a positive light on big business. For instance, in 2006 BRT leaders tried to convince government officials that it should not be compulsory for companies to reveal corporate executives’ golden parachute benefits or deferred compensation. BRT was a major supporter of the 2017 tax law, initiating a major TV and radio campaign to convince the American public to support this version of tax reform (Cook 2017; Domhoff 2010, 111–13; Dye 2002, 127; Hayes 2017). Another public-relations effort has involved BRT’s attempt to counter surveys’ evidence showing widespread public disapproval of big business’s emphasis on short-term profits and frequent disregard for anyone else’s needs. John J.Castellani, the Roundtable’s president, said “A lot of pain and suffering has come from business’s wrongdoing, and we must again foster trust” (Deutsch 2005). To help regain that trust, BRT developed a corporate ethics program and then later started what it calls Sea Change, an initiative to encourage business to maintain environmentally sound growth.
The BRT was a prominent player in promoting a major set of policies involving all four components of the invisible empire.
THE NEOCONSERVATIVE POLICY MOVEMENT In the late 1970s and early 1980s, what observers describe as a “neoconservative” policy movement emerged and has continued to remain influential. Support for these emerging positions originated from two sources—the failure of established fiscal practice to prevent the stagnant economy of the 1970s; and the mobilization of the corporate community and its allies. Many observers believed that the election of Ronald Reagan and the more conservative Congress that arrived with him were responsible for these policies; however, some of the new conservative practices actually preceded Reagan’s election by several years.
The major players in this neoconservative economic surge included several of the organizations just discussed—think tanks like Heritage Foundation and the American Enterprise Institute along with policy-making groups, particularly the BRT. Some of the outcomes of this effort have included support for Israel and the necessity to invade Iraq following the destruction of the Twin Towers; the passage of the Economic Recovery Tax Act of 1981, which was the largest tax cut in US history and one that has distinctly favored wealthy people; loosening of clean water and air standards that business had found too costly; and promotion of welfare reform, namely cutting welfare rolls and releasing into the workforce millions of individuals ill equipped to support themselves and their families (Jenkins and Eckert 2000; Lobe 2016).
Presently the neoconservative movement continues, with leaders’ activities remaining obscure to the public. For instance, Bruce Kovner, previously the manager of Caxton Associates, the world’s largest hedge fund, has been an important player, controlling wideranging activities helping to develop economic and political policies. While Kovner is shy, humble, even self-deprecating, his actions reverberate. He has used his wealth and connections to corporate and political leaders to become very influential. In particular, Kovner became the chairman of the American Enterprise Institute, which under his direction promoted the most potent neoconservative ventures in a generation—notably support for a militarily backed democratization of the world, beginning with the Middle East and the Iraq War; and advocacy of an unrestricted free market, where all or most government regulations on commercial activity were either removed or severely reduced.
At the American Enterprise Institute, Kovner had an arsenal of intellectuals, between 50 and 100 people, who could produce a steady flow of well-written reports and op-eds that barrage the public with the Institute’s neoconservative point of view. The positions expressed favored wealthy and powerful interests, shortchanging most segments of the population. For instance, one of Kovner’s associates suggested that the idea of a living wage, something like $12 an hour, is a sinister plot that seeks to bring socialism to American cities. Like the poor, the working class was also under fire. At the American Enterprise Institute Kovner and his colleagues were highly critical of unions, with one report supported by several confusing charts indicating that between 1947 and 2000 unions cost the US economy over $50 trillion in lost income and output (Hedge Papers 2015; Thompson 2008, 20; Weiss 2005). In later chapters I examine both unions and the living wage, suggesting that most evidence supports very different conclusions.
The American Enterprise Institute and a vast range of other organizations frequently engage in lobbying.
The Burgeoning Business of Lobbying
Lobbying is the process by which individuals or groups attempt to influence government officials to support legislation or policies sought by their clients, who can be corporations, professional and trade associations, or consumer and environmental groups. Lobbyists include former government officials, former politicians, lawyers, public-relations specialists, and corporate executives specialized in relations with government. Lobbyists try to convince politicians that it is either in their interest to support clients’ wishes or, at least, that providing support will not be damaging to the politicians. To win over politicians, lobbyists offer financial support, which politicians need to meet the steep cost of campaigning (Center for Responsive Politics 2017a; Domhoff 2010, 176–77; Dye 2002, 121–22).
Two types of lobbying exist. First, federal lobbying entails various specific individuals or groups, often corporations, seeking a “fixer” who can “open doors,” which is a prominent activity in Washington. These clients want to influence policy making in Congress and federal agencies. When thinking about lobbying, most people have this type in mind. Second, class-wide lobbying is a more extensive activity involving coalitions of powerful corporate groups subsidizing lobbyists’ intervention in the political process to initiate legislation or other actions promoting upper-class interests, which often oppose those the majority of the populace maintains (Dye 2002, 121–22; Perrucci and Wysong 2008, 143–44). These two types of lobbying are quite different.
FEDERAL LOBBYING To serve their wealthy clients, Washington lobbying firms employ thousands of lobbyists. Attorneys are widely represented, because they often have the knowledge, skills, and contacts to influence congressional members and agency personnel. Former House members who become lobbyists are most likely to have served on the money committees—Commerce and Ways and Means. While the number of registered lobbyists has declined since 2007, the amount of money spent on the activity suggests that the actual number has remained quite stable. A major reason why lobbyists often choose to avoid registering is that since 2007 new, often stiff, civil and criminal penalties involve such issues as finance disclosure and gift rules (Friedman 2014; Perrucci and Wysong 2008, 146–47; Santos 2006, 52; Watson 2016).
Figure 4.1 shows the generally increasing expenditure for congressional lobbying over 17 years, totaling $3.15 billion in 2016 (Center for Responsive Politics 2017a.)
FIGURE 4.1. Expenditure for Lobbying Congress and Federal Agencies.
The total cost of federal lobbying rose from $1.45 billion in 1999 to more than double that figure,$3.31 billion, in 2008 and then remained over $3 billion a year until 2016.
Source: Center for Responsive Politics (2017a).
Between 1998 and 2017, the five industries spending the most for congressional lobbying were pharmaceuticals/health products $3.7 billion; insurance $2.6 billion; electric utilities $2.3 billion; electronics manufacturing $2.1 billion; and business associations $2.1 billion (Center for Responsive Politics 2017b).
With their potent social capital, former politicians can produce highly lucrative lobbying results, both for themselves and their clients. A controversial case in point has been The Carlyle Group, a Washington-based investment firm extensively involved in buying low-valued defense-contract companies, obtaining lucrative contracts for those companies, and then selling them at a substantial profit. To pursue these activities, Carlyle has employed a former British prime minister, a former Philippines president, a Saudi prince, a former secretary of state, and most impressively former president George H. W. Bush, who served the company for 10 years. Bush was an extremely useful pickup because he had maintained a nearly 30-year relationship with the very wealthy Saudi Arabian leadership, which did much of its purchasing of military products through Carlyle connections. Bush became a lobbyist for Saudi military leaders, opening doors with Pentagon officials and business leaders to help his clients obtain weaponry and aircraft (Dye 2002, 122; Freeman 2004).
To various observers Bush, the first former president to craft a commercial relationship with the Pentagon, was embroiled in a blatant conflict of interest in which, according to Charles Lewis, Director of the Center for Public Integrity, a nonprofit news organization, the senior Bush “earned money from private interests that worked for the government of which his son was president” (Leser 2004). The payments Bush and his Carlyle associates obtained from the Saudis were considerable, about $1.4 billion (Freeman 2004).
While a number of federal lobbying situations such as the one involving the Carlyle Group and former President Bush receive some publicity, class-based lobbying epitomizes the invisible government, with all or most of the work done behind the scenes carefully hidden from public view.
CLASS-BASED LOBBYING This activity concerns well-organized corporate initiatives where wealthy business interests are pitted against organized labor and/or citizen and consumer groups on what tend to be minimally publicized issues both sides consider economically and politically significant. Such wealthy policy-making groups as the BRT, the Conference Board, and the CED are at the core of this type of lobbying.
The fruits of class-based lobbying are readily apparent in modern society. As previously noted, between 1998 and 2017, the pharmaceuticals/health products industries spent $3.7 billion lobbying Congress (Center for Responsive Politics 2017b).
That massive expenditure appears to be the major reason why between 2005 and 2016, in spite of some congressional members’ criticisms of rising drug prices, not a single one of 119 congressional proposals to establish price controls made it out of lower committees (Chon 2016).
Invariably the high drug costs put many people’s lives on the line. Data from a survey of over 34,000 adults 18 and older indicated that in order to save money nearly 8 percent of Americans did not take prescribed medication. The poorest respondents, those with income 139 percent of the federal poverty level or less, were the most likely to avoid the medication, with nearly a 14 percent refusal rate (Cohen and Villarroel 2015).
Like lobbying, campaign giving involves large sums of money.
Congressional candidates require substantial sums of money for two interrelated reasons. First, the American political system is highly individualistic, with success dependent on name recognition and personal image. As a result wealthy donors and fund raisers are essential for candidates seeking to defeat opponents, whose supporters are engaged in an equally costly effort. These wealthy backers are particularly important at the primary stages when expensive TV advertising promoting name recognition and clarification of one’s positions are critical in helping to start a campaign. Second, the electoral apparatus plays a significant role. Italy, Germany, Japan, Russia, Sweden, Spain, and most of the world’s leading democracies have some version of proportional representation, where the electoral formula attempts to match the national or regional votes a party receives with its legislative seats. In such a system, a party’s vote total significantly influences candidates’ prospects, with office seekers often receiving financial support from their parties and sometimes being seated even if they did not win their own district. Small parties representing nonaffluent interests can often have an impact. The American system, in contrast, is winner-take-all, and finishing second is worthless for the candidate. Office seekers are largely left on their own to develop financial support, which becomes a critical concern since the amount of money raised distinctly increases the likelihood of winning (Alexander 1976, 44; Domhoff 2010, 159–62; McClennen 2016). Sociologist G. William Domhoff concluded that American politics “is like a high-stakes poker game: Anyone is welcome as long as they can raise millions of dollars to wager” (2010, 160).
That is the key—the ability to raise the money. In 2010 the Supreme Court made the process easier for candidates with wealthy support, declaring that corporations and other organizations no longer faced limitations on campaign spending for ads and other political tools either promoting the election or the defeat of a candidate. The case, designated Citizens United v. Federal Election Committee, curiously concluded that campaign spending represents a form of constitutionally protected speech (Dunbar 2016; Olson 2017). The decision permitted the development of super PACs (political action committees), which are organizations that can give unlimited contributions to political candidates on behalf of corporations or unions. Super PACs’ contributions have accelerated, nearly doubling from $609 million in the 2012 presidential election to $1.1 billion in 2016. During the same span of time, the number of super PACs also nearly doubled, going from 1,300 to 2,400 four years later. Critics of Citizens United have been particularly concerned that with the huge amounts of money currently involved in campaign giving, foreign interests will find it easier to use their money illegally to influence American elections (Dalgo and Balcerzak 2017).
But here is a significant point of contrast. While some other countries also permit unlimited campaign contributions, they display other conditions that tend to mitigate the significance of massive giving such as free TV time for candidates and much shorter campaign seasons. In addition, parliamentary systems are economical, with individuals only voting for candidates within local districts—a much less expensive proposition than the US arrangement where people vote for various levels of candidates, with exorbitant campaign expenditure particularly for the presidential elections but also for senate contests. Consider these startling comparisons. In Germany the 2013 election for chancellor and all of parliament cost a mere $93 million, roughly the same as the $94 million in Colorado’s 2014 contest to elect a single senator and significantly less than North Carolina’s $108 million spent in its senate race (Rosenberg 2014).
Americans tend to take a negative view of Citizens United. When giving their opinion about corporations’ and unions’ current right to spend unlimited money on political causes, a formidable 78 percent felt it was a bad decision and only 17 percent considered it a good one (Stohr 2015). Even experts were surprised by the numbers. University of Chicago law professor David Strauss said, “Wow. Wow. I’m stunned.” He added, “What it suggests is that Citizens United has become a symbol for what people perceive to be a much larger problem, which is the undue influence of wealth in politics” (Farias 2015).
The mass media represent another influential segment of modern societies.
The Power of the Press
Toward the end of his career, Theodore White, the celebrated chronicler of presidential elections, concluded that the American mass media is inordinately influential, “determin[ing] what people talk about and think about—an authority that in other nations is reserved for tyrants, priests, parties, and mandarins” (1973, 327).
Decades after White’s statement the power of the press has changed in one important respect: It has become more centralized. Media analyst Ben H. Bagdikian indicated that in 1983 the men and women who headed the 50 or so dominant mass-media corporations “could have fit comfortably in a modest hotel ballroom.” Twenty years later that number was reduced to five, who “could fit in a generous phone booth” (Bagdikian 2004, 27). What happened?
By the 1990s what have become the big five media conglomerates had expanded impressively. During those years these organizations and their allies engaged in successful lobbying, and as a result Congress passed a major piece of legislation. Robert W. McChesney, a professor of communications, indicated that “[t]he 1996 Telecom Act was
… the product of the largest corporate lobbies all salivating at the prospect of rewriting the law to provide them a large slice of the action” (2003). In addition, a brief reference in the act gave digital spectrum, the publicly owned space used for high-definition channels and worth about $70 billion, to the media conglomerates free of charge. Had those giants been charged a fair price, the payment would have permitted a significant tax cut for the entire middle class or perhaps served as a major source of funding for a national health-care program (Moyers 1999). Except for the business and trade press, which praised the passage of the act as valuable to owners and investors, the new law received almost no news coverage.
The Telecommunications Act of 1996 altered existing restrictions on ownership limits. Previously a media owner could possess no more than 12 television channels, 12 radio stations, and 12 newspapers. After the passage of the Telecom Act, individuals could own an unlimited number of television channels as long as they represented less than 35 percent of the market, and there was no longer a ceiling on radio-station ownership. The new legislation set loose a feeding frenzy, a frantic scramble for the available prizes. It was a situation encouraging aggressive activity, with those companies not pushing for increased acquisitions vulnerable to take-over (McChesney 1999, 21). Clearly, with what had once been 50 becoming five and then six in 2010, only the wealthiest and most powerful mass-media corporations survived as independents.
This small number of conglomerates and their subsidiaries has a huge impact. Just six of them—CBS, Comcast, Disney, 21st Century Fox, Time Warner, and Viacom—produce about 90 percent of the TV broadcasts, radio programming, books, newspapers, and magazines (Bishop 2015). Table 4.3 lists the major properties these six conglomerates possess. The six could reduce once more to five if the government approves Disney’s lengthy campaign to acquire 21st Century Fox.
Table 4.3The Six Mass Media Conglomerates, Their Major Possessions, and Yearly Revenue
Walt Disney Co: ABC, A&E, ESPN, Lifetime, Marvel Studios, Walt Disney Studios, and Pixar; $22.45 billion in yearly revenue
Comcast: NBC (along with WNBC and MSNBC), Telemundo, Bravo, USA Network, The Weather Channel, and E!; $19.72 billion
21st Century Fox: Fox (including News, Sports, and 20th Century), Barron’s, New York Post, Wall Street Journal, HarperCollins Publishing; $18.67 billion
Viacom: BET, Comedy Central, MTV, Nickelodeon, Spike, and Paramount Pictures; $9.61 billion
CBS Corporation: CBS: News, Sports TV Network, Showtime, Simon & Schuster; $9.57 billion
Time Warner: Cinemax, CNN, HBO, TBS, TNT, Time Magazine, Warner Brothers, Bleacher Report; $4.57 billion
Sources: Selyukh, Hollenhorst, and Park (2016), Meme Policeman (2016).
The media conglomerates are not only large and wealthy, but they also have interlocking directorates. In 2004 the five giant media groups and the five largest newspaper corporations had 118 directors who sat on the boards of 288 national and international corporations. These interlocking directorates provide the opportunity for media leaders to exchange information with and to influence prominent leaders from the general corporate community. In addition, these prominent media groups extend their sources of information and potential influence by appointing prominent ex-politicians to their boards (Thornton, Walters, and Rouse 2006, 245–47).
With 90 percent of the American media under the control of a half-dozen massive structures, it hardly seems likely that TV, radio, and print media consider ordinary citizens’ interest a priority. FAIR (Fair & Accuracy in Reporting) is a national media watch group focusing on that reality, “examining media practices that marginalize public interest, minority and dissenting viewpoints.” FAIR personnel believe “that structural reform is ultimately needed to break up the dominant media conglomerates, establish independent public broadcasting and promote strong non-profit sources of information” (FAIR 2018).
A final comment about elite influence is that a small number of newspapers, particularly the New York Times, USA Today, the Wall Street Journal, and the Washington Post, are “must” reading for high-level government officials, who require a steady stream of major news stories and opinion pieces to engage in informed discussion with their peers. In addition, these four dailies and a few others, which constitute the national press, disseminate their articles, producing many of the news stories and most of the opinion pieces on national issues published in the nation’s 1,800 newspapers (Dye 2002, 100).
In spite of the wealth and power the major media groups maintain, one should not conclude that media reports always serve the corporate elite’s interests. For instance, at times the media leadership is unwilling or unable to squash stories involving such topics as corporate corruption, environmental accidents, illegal lobbying, or military personnel’s murder of civilians or torturing of prisoners (Domhoff 2010, 128). However, major media’s focus is usually elsewhere, with their personnel pursuing their established agenda.
MEDIA DOING BUSINESS The major media establish policies that champion the corporate community’s interests, often subordinating the public’s welfare. Two major means to accomplishing this goal are media hype and an opinion-shaping strategy.
HYPE ABOUT THE NEWS The underlying issue about hype and the news involves media companies’ need for large audiences. Without them the companies cannot sell expensive time segments to advertisers, who paid an average of $62,400 for a 30-second prime-time advertisement in 2016 (Statista 2018). The more people who watch, the more the media company can charge the advertisers. A fairly precise sense of the viewing audience’s size comes from the electronic boxes that the A. C. Nielson Company and other independent services place in a national sample of American homes.
For TV companies, therefore, drawing lots of viewers or listeners is critical. Most media executives believe that the way to do that is by hyping bad news. Whether the topic is government, business, the schools, the military, or politics, hype features violence, abuse, corruption, drugs, sexual debauchery, and various other negatives. The resulting public response has been cynicism, distrust, a sense of powerlessness, and disaffection toward political activism—in short, “television malaise” (Dye 2002, 107–08; Robinson 1976).
Hype about the news is fairly obvious to many people, but some of the tactics used in opinion shaping are hard to detect.
THE OPINION-SHAPING STRATEGY While it is often low-key, the major media companies show vigilant support for large corporations’ perspectives and policies. Three tactics include deck stacking, selective reporting, and spin control.
Deck stacking is the process of loading most of the positions in the media companies—the editors, managers, and reporters—with unshakably loyal personnel. The elite professionals, some of whom make multiple millions of dollars a year, strongly support corporate ownership’s interests and generally avoid issues that would be directly or indirectly critical of them (Demos 2018; Perrucci and Wysong 2008, 222–32).
In 2014 Media Matters conducted a detailed analysis of the guests on five prominent Sunday morning shows, finding that the media staff had made distinctly selective choices, with white men ranging from 67 percent of the total on Face the Nation to 55 percent on State of the Union—well over their 32 percent portion of the population. Furthermore nearly half these white male guests (47 percent) were either neutral or conservative politically, with just 14 percent considering themselves liberal. In addition, the conservative individuals were distinctly more likely to receive a one-on-one interview. Finally among politically elected guests, 8 of the 11 were white male Republicans (Savillo 2015). All in all, the demographics cited here suggest individuals likely to promote media conglomerates’ wealth and power.
A second tactic in the opinion-shaping strategy is selective reporting, which is a biased coverage of news issues that promotes corporate interests and downplays, denigrates, or ignores issues and groups challenging these interests. Selective reporting involves both corporations and their frequent adversaries—labor unions. A survey conducted with CEOs of the 1,000 largest industrial corporations in the United States indicated that two-thirds concluded that mass-media coverage of their businesses was good or excellent, and only 6 percent felt it was badly done (Bagdikian 1997, 57). Obviously these executives did not feel that selective reporting victimized them.
In contrast, evidence exists supporting the idea that mass media vary in their responses to corporate misbehavior. A study of six large accounting scandals indicated that newspapers’ political affiliation clearly suggested whether or not they were likely to cover the scandals. Supporters of the Democratic Party were about twice as likely to cover these events as their Republican counterparts (Benediktsson 2010).
Unions too can encounter media bias. Labor scholar William J. Puette examined television news programs from the 1970s and 1980s. He found that the media’s presentation of unions was largely unsympathetic, even harsh, conveying the idea that these organizations were narrow-minded special interests whose presence hurt the country. The prominent mass media, notably television, often stereotyped union members as lazy, insubordinate, and unproductive. Above all, media critics of organized labor claimed, the unions’ demands for ever-rising pay and benefits have undermined the country’s ability to compete in the global economy. Puette concluded that “television portrayals tend to emphasize the pettiness or foolishness of union bargaining goals” (Puette, 1992, 153).
Frequently politicians and the mass media covering them can differ about whether or not the reporting provided is or is not selective. In August 2017 Gerald Baker, the editor-in-chief at the Wall Street Journal, contacted reporters covering President Trump’s campaign rally in Phoenix at which time he sharply criticized the media and Congress while pushing for the construction of a border wall with Mexico. Baker said, “Could we please just stick to reporting what he said rather than packaging it … [as] selective criticism?” The specific points Baker mentioned included Trump’s speech being ad-libbed and also deviating from an earlier, heartfelt call for unity—references that don’t appear to have been criticisms but were simply allusions to the content of the speech. It wasn’t the first time that Baker had told reporters to restrain their references to Trump, who has close ties to Rupert Murdoch, the Journal’s owner (Herreria 2017).
Like selective reporting spin control is subtle and largely hidden from the general public. Spin control involves various media practices meant to mobilize an audience’s support for a corporate or superclass outlook. It includes the use of persuasive terms, references, and images as well as forms of advertising or public-relations activities. Spin control often confuses or muddles public thinking (Perrucci and Wysong 2008, 230). In Marxist terminology it is an attempt to promote false consciousness.
In April 2008 the New York Times broke a story that represented a fairly elaborate effort at spin control, where the media were in partnership with politicians, government officials, and retired military officers. Several years earlier criticism had been widespread about the detention center for terrorism suspects at Guantanamo Bay (Cuba), with Amnesty International referring to it as “the gulag of our time.” The Bush administration’s response was to send a plane load of prominent ex-military officers to the detention center for a carefully orchestrated tour that avoided exposure to any unpleasant, disturbing settings or information. The men on the flight along with several dozen others represented more than 150 military contractors as either lobbyists or consultants, and, in addition, many were affiliated with prominent television networks or radio stations or wrote frequent op-ed pieces. The ties to contractors were seldom revealed to the public and sometimes not even to the networks. A reporter concluded that available evidence demonstrates that Bush officials had pressured the press “to transform the analysts into a kind of media Trojan horse—an instrument intended to shape terrorism coverage from inside the major TV and radio network” (Barstow 2008, 1).
All the major networks employed individuals from this group of ex-military officers, with Fox News having the largest contingent. In interviews participants spoke about the powerfully seductive atmosphere in which their contact with the Bush administration took place. They met with Secretary of Defense Donald Rumsfeld in his private conference room, where the media analysts obtained embossed name tags, were served with the best government china, and received requests for advice and counsel along with warmly grateful thank you notes from Rumsfeld himself. Paul E. Vallely, a former Fox News analyst and retired army general, was responsible for this episode of spin control. He called his plan “MindWar”—using network TV and radio “to strengthen our national will to victory” (Barstow 2008, 25). The operation featured spin control where the government, major TV networks, and retired military leaders were all basic components in the administration’s concerted public-relations effort to mobilize TV audience’s support for its military policy. In the months leading up to the Iraq invasion, this group of widely respected ex-officers emphasized in the national media what became a familiar set of conclusions: “[that] Iraq possessed chemical and biological weapons, and might one day slip some to Al Qaeda; an invasion would be a relatively quick and inexpensive ‘war of liberation’ ” (Barstow 2008, 25).
The Trump administration has also encouraged spin control with the media. Since the president’s inauguration, his team has publicly been hostile to TV and newspaper personnel. For instance, Sean Spicer, the newly appointed press secretary, appeared in the White House briefing room to condemn the news media’s reporting of the size of the inauguration crowd, inaccurately claiming that Trump’s turnout was the largest ever (Robertson and Farley 2017). Spicer’s action was consistent with Trump’s own behavior. During the campaign he had referred to the mainstream media as “dishonest” and “scum” and most ominously as “the enemy of the American people” and having assumed the presidency, he not only refused to attend the White House Correspondents Association dinner but announced that he’d hold a rally that evening, meaning some of those reporters would need to miss that high-profile gathering (Schreckinger and Gold 2017).
It is almost inevitable that presidents and members of their staff are inclined to criticize and oppose the media, while believing that their supporters need to be kept informed of what they consider the key facts. However, in the Trump case the writers of the previously cited article interviewed members of the White House staff and about three dozen members of the White House press corps, and they learned that Trump’s view of the press and his condemnation of them simply did not fit the facts. While the Trump administration seemed to believe that it was in their interest to suggest to the public that they were constantly at war with the press, that clearly was not the case. Behind the scenes Trump has often connected courteously with reporters, sometimes displaying more politeness than he has shown his own staff members. The reality is similar with other White House staff members, including the top leadership. While Chief Strategist Steve Bannon might publicly refer to the media as “the opposition party,” he kept in touch with many mainstream journalists, congratulating them when they wrote what he considered quality stories. All in all, many Trump staff members would like to undermine the established media, but it is a precarious business, with media personnel well situated to either advance or hinder both their personal and the administration’s agenda (Schreckinger and Gold 2017).
As we have noted, the mainstream media give little or no effective coverage of many issues that impact on social inequality. Topics dealing with public policy are often cases in point. One might argue that just as we as individuals need experts’ information about our physical condition to stay healthy, the citizenry requires thorough communication about public-policy topics to develop an informed understanding about the health of the nation. As it stands, most people have neither knowledge nor interest in public-policy issues, and so superclass domination persists with limited opposition.
Three issues directly or indirectly involving the federal government affect who gains or loses income or wealth. The topics are taxation, the budget, and regulation, with business oversight included within the last topic.
TAXATION Extensive lobbying occurs in this area, and the results usually serve superclass interests. Historical evidence shows that the proportion of income tax paid by individuals and corporations has altered dramatically between 1934 and 2010, with the percentages paid by individuals more than tripling and the corporate segment remaining fairly steady (Office of Management and Budget 2010, 5–7). The distribution of taxes has been a formidable obstacle to reducing economic inequality in the United States, and that trend continues.
Figure 4.2 indicates that since about 1950 individual income tax, most of which middle-income citizens must pay, has increased appreciably, compared to corporate tax for which affluent people are primarily responsible. While wealthy, corporation-linked people have been gaining over time, the 2017 tax law designated the Tax Cuts and Jobs Act was particularly beneficial for them.
FIGURE 4.2Individual and Corporate Taxes as Percentages of Federal Revenues over Time.
In 1934 the contributions made by individual and corporate taxes were within two percentage points. From 1950 on, however, the portion contributed by individuals, most of whom were not affluent, rose steadily with, by 2016, the individual tax contribution more than five times greater than the corporation input.
Source: Office of Management and Budget (2018, Table 2.2. “Percentage Composition of Receipts by Source 1934–22”).
House Speaker Paul Ryan said, “This plan is for the middle-class families in this country who deserve a break” (Ydstie 2017). The statement hardly jives with the content of the legislation. The central element in the Republican-engineered tax plan is a sizable reduction in corporate tax from 35 to 20 percent, primarily benefiting wealthy tax payers. In addition, the new law added cuts in estate and personal income tax, primarily benefiting the rich (Institute on Taxation and Economic Policy 2018; Ydstie 2017).
Several specifics of the tax bill are notable. While the Republican leadership had promised to simplify the tax code, the persistent use of the Alternative Minimum Tax has kept the system complicated. In addition, indications are that the new tax plan will add more than $1 trillion in deficits, hurting the economy and particularly the less affluent citizenry. Finally Republican leadership has claimed that the middle class would be the chief beneficiaries of tax reform. Neutral analysts have indicated that while middle-income people would receive some tax breaks in the first half of the decade, the affluent will benefit much more in its second half. Donald Trump has claimed that under the new tax plan he would pay more taxes than previously, but that seems unlikely because most of his 500 or more businesses are structured in a manner that will benefit from the revised tax system (Sahadi 2017). An expert on the topic concluded that the best move Congress could make in the public interest would be to engage in major tax reform, starting over from scratch. He declared, “Hastily passed and sloppily assembled, the Tax Act seems likely to stir growth only in one area of the economy: the tax-planning industry, for whom the new law resembles a full-employment guarantee” (Gardner 2018, 12).
When asked who the tax bill would benefit, a national sample of Americans was decisive, with 76 percent saying large corporations and 69 percent wealthy Americans. Obviously the numbers on benefits favoring less affluent individuals were much lower (CBS NEWS Poll 2017).
While it appears that wealthy people are the major beneficiaries of the recent tax reform, some average-income workers might gain some advantage. One provision of the new law is that funds that companies have held abroad can be returned to the United States for a lower tax rate than previously (Sheppard 2017). Apple has decided to repatriate $38 billion dollars from abroad, allowing the company over five years to create 20,000 new jobs in the United States and a significant extension of facilities (Newsroom 2018). Tim Cook, the Apple CEO, said that the company was
focusing our investments in areas where we can have a direct impact on job creation and job preparedness. We have a deep sense of responsibility to give back to our country and the people who help make our success possible.
Thomas Dye, an expert on public policy, commented on federal taxation, indicating that the version that is most beneficial for the majority of American citizens “is universal, simple, and fair … But the federal tax system is very nearly the opposite: it is complex, unfair, and nonuniversal” (Dye 1998, 241).
Arguably the most significant word in the preceding statement is “complex.” The quality about the federal tax system that promotes both false consciousness and spin control is its complexity—that it contains extensive technical detail that only accounting experts can understand. Dye suggested that the system could be simpler, but that would be unlikely to appeal to influential wealthy groups.
In fact, changes in the federal taxation system favoring average citizens are hard to enact. A major consideration is that the United States has a cumbersome federal system of taxation: Three governmental authorities exist—the presidential administration, the Senate, and the House of Representatives—and on any proposed change in the system, certainly on any bill supporting the controversial possibility of a more progressive income tax, these three authorities would probably produce sufficiently different versions that a compromise measure would prove difficult to attain (Messere, Kam, and Heady 2003, 208).
Like taxation, budgeting is high on the superclass agenda.
BUDGETING Many individuals and groups develop budgets, but public varieties including the federal budget differ from others in several respects. First, a public budget, unlike those produced by families or businesses, involves a number of individuals and groups with varying positions and amounts of influence about the budgetary choices. The presidential administration, which provides the initial budget, the Congress, which can alter its particulars, and various lobbying groups all influence the content of the federal budget. Second, unlike a private budget, a public budget such as the federal version revised each year involves a distinction between those who produce the budget—the politicians—and those who must pay for it—the citizenry. The politicians can force the people to pay for expenditures they do not approve, but the citizenry can vote those politicians out of office. Finally a public budget such as the national budget is a vehicle for public accountability (Rubin 1995, 190), with the Office of Management and Budget website now issuing yearly reports providing data extending from the past, usually 1940 on most issues, to the present.
Two major conditions currently influence budgetary activities. First, party differences are often apparent. Republicans are less likely than Democrats to support increased health and welfare programming, funding for family planning, and reduction in defense spending (Republican Views 2015; Young 2015). Second, the federal budgetary office has become considerably more active since the Reagan administration. Reagan, in fact, took an active lead on budgetary issues, providing significant program limitations as well as a $25 billion increase in defense spending. In addition, Reagan initiated a tax cut, with Congress voting just six months after he took office to cut taxes by 25 percent within three years (Heubusch 2011).
One significant outcome of the American federal budget is that low-income citizens are particularly vulnerable economically, worse off than their counterparts in other fairly affluent nations. An examination of 21 countries belonging to the Organisation for Economic Co-operation and Development indicated that earnings for Americans at the 10 percentile level were less than half (47.4 percent) of a worker with a median income. This outcome was the lowest among the nations included in this analysis. For comparison Irish inhabitants in the lowest 10 percentile earned 72.8 percent of median-earning workers and for Belgians in that poor category the number was 72.7 percent (Gould and Wething 2012). Practically all developed nations have a lower poverty rate than the United States. The reason is simple—that those nations budget extensive assistance to people at risk, offering cash supports, housing subsidies, pensions, and various assistance programs for children (Horowitz 2015).
In contrast, the federal government spends huge sums on defense. Beyond the real issue of national security, sociologists Robert Perrucci and Earl Wysong contended that a primary effect of military spending is “to juice the profits of military contractor firms and to feed … [the] highly paid scientists, engineers, and civilian employees who work in government, industry, and universit[ies]” (2008, 184–85).
The 2017 tax plan decisively benefits a number of military contractors. Lockheed Martin, the aerospace manufacturer, exceeded Wall Street estimates of revenues in the fourth quarter of 2017, primarily because of accelerated sales in the F-35 fighter jet program, which the Trump administration has strongly supported. The expectation is that over 15 years Lockheed and its fellow aerospace contractors will provide the military 2,456 warplanes at a cost of about $391 billion (Ajmera 2018).
Compared to other nations, the American budgetary allotment for military spending is enormous. The United States’s expenditure on defense is more than the total combined for the following seven prominent countries—China, France, India, Japan, Russia, Saudi Arabia, and the United Kingdom (Peter G. Peterson Foundation 2017).
Toward the end of 2017 when 1,000 Americans were asked about the federal budget, the item producing the greatest opposition was military spending—with women on average wanting to reduce it 27.6 percent and men 23.9 percent. Veterans’ benefits, education, and medicare and health were areas where the respondents supported about a 5 percent budgetary increase (Govspend 2017). Table 4.4 indicates that US defense budgetary allotments over time have remained robust.
While the budget and taxation are subjects of public policy receiving some media and public attention, the third topic, regulation, has often been a largely invisible reality. That obscurity, however, does not mean that it is an insignificant issue.
REGULATION AND BUSINESS OVERSIGHT The government creates organizations that are supposed to engage in regulation. A regulatory agency is an independent governmental investigatory commission established by Congress to develop standards for some specific commercial activity and then to enforce those standards. The first regulatory agency was the Interstate Commerce Commission, which was formed in 1887 because of widespread complaints that the railroads were abusing their economic power, setting exorbitant rates in some areas and flagrantly bribing state and city governments. The sitting president appoints replacements for departing commissioners serving in 50 regulatory agencies, and the Senate must give its approval. Invariably these individuals share the president’s values and aims and are often business people from the areas they are supposed to regulate.
Two broad perspectives on the regulatory agencies exist. One view suggests that these organizations possess considerable discretionary power, allowing them to play a major, even dominant role in the regulatory process. Supporters of this viewpoint would argue that agency professionals’ elevated values and their expertise are qualities that promote their effectiveness. A second position claims that the political environment dominates agency personnel. Interest groups, congressional committees, and changing economic and technological conditions have more impact on regulatory outcomes, backers of this viewpoint say, than independent agency decisions (Meier 1995, 265–66).
Without a doubt political factors are influential. Regulatory agencies, which Congress creates, are supposed to control powerful forces in society, particularly corporations. Often, however, they make little headway, running up against formidable adversaries who can enlist major political forces to oppose them. A former staff member for the Environmental Protection Agency (EPA) contended that one highly effective step regulatory agencies could take is to simplify and focus their regulations. He noted that British Petroleum (BP) leaders admitted to breaking many environmental laws and committing fraud, and they paid $373 million in fines, but that hefty penalty failed to stop BP’s Deepwater Horizon oil rig from blowing up and creating massive environmental pollution in the Gulf of Mexico.
The former EPA staff member suggested that a more effective type of regulatory requirement would feature a massive insurance policy for an oil spill. Once the spill occurred, the insurance company would become involved, undoubtedly avoiding the skimpy shortcuts that the regulators endorsed and producing a much more effective cleanup of the massive pollution than actually occurred (Sanjour 2012).
In the twenty-first century, activities within many regulatory agencies often make significant concessions to the corporations within their jurisdictions. Prominent agencies include:
The Federal Communications Commission (FCC): The FCC is a federal agency possessing five members appointed by the president. Staff members are supposed to regulate interstate and international usage of the telephone, radio, TV, satellite, and cable. The FCC is required to insure that the American citizenry has the array of media available to them at reasonable cost and without any groups forced to face discriminatory treatment (Figliola 2017).
On occasion the FCC has produced regulations that have been controversial. In 2017 the FCC board voted three to two to eliminate net neutrality, allowing telecommunications companies the right to charge web businesses for “fast lanes,” greatly expanding their revenues but proving harmful for smaller organizations which are unable to pay the accelerated fees. Ordinary consumers are also likely to feel the effect as the impact of rising Internet charges gets passed on to them (Cohan 2015; Salzberg 2017).
Over time the FCC can be a setting for highly divided opinion on this issue. Former Commissioner Michael Copps, who felt strongly about it, said
There can be no truly open internet without net neutrality. To believe otherwise is to be captive to special interest power brokers or to an old and discredited ideology that thinks monopoly and not government oversight best serves the nation.
The Food and Drug Administration (FDA): Responsibilities concern the establishment of safety standards for most kinds of food, drugs, vaccines, construction, and veterinary products. In 2006 a survey conducted with 5,918 FDA scientists found that hundreds of these individuals felt that the agency’s mission to protect public health and safety was compromised when high-level bureaucrats pressured investigators to approve drugs in spite of the latter group’s reservations about their safety. Disillusioned by these working conditions, many first-rate scientists left the agency (Union of Concerned Scientists 2007). In recent years the FDA has continued to approve drugs that are not only more expensive but are less effective than cheaper alternatives or end up producing troublesome complications (Zuckerman 2017).
The Environmental Protection Agency (EPA): Their primary task involves safeguarding the natural environment, namely air, water, and land. Under Christine Todd Whitman, the former governor of New Jersey, the EPA became politicized, covering up the dangers of asbestos and electronic waste in the dust following the 9/11 attacks in New York City. In addition, energy industry leaders, who had been big donors to George W. Bush’s campaign, pushed the administration to relax clean-air standards, and they usually succeeded, with Bush engaging in several initiatives to help the energy industries, most notably breaking his campaign promise to regulate carbon-dioxide emissions. Isolated and disillusioned, some EPA officials resigned (Drew and Oppel 2004; Guardian 2009). In recent years policies in the agency have hardly become more environmentally supportive. While the EPA faces increasingly complex challenges involving such issues as climate change and the protection of air, water, and food, members of the Trump administration have called for the elimination of the agency’s scientific research along with sharp cuts in the EPA’s staff of experts (McCarthy and Burke 2017).
The Nuclear Regulatory Commission (NRC): This agency focuses on the over-sight of all activities involving nuclear reactors, materials, and waste. According to the Union of Concerned Scientists, which has studied nuclear-power safety issues since the early 1970s, the NRC has done a good job establishing safety regulations but a poor job enforcing them. For instance, the Inspector General’s office issued a report highlighting the NRC’s repeated failures to enforce fire regulations. Since 1994 the NRC had known that 17 US reactors had inadequate fire protection, but it has failed to resolve the problem. In the future this safety issue is likely to be magnified as a number of companies encouraged by subsidies and incentives in the 2005 Energy Bill apply for licenses to build new plants. The NRC staff need to reassess their responsibilities, currently paying too much attention to matters that minimally influence safety and not enough to such critical dangers as fires or leaks (Lochbaum 2008; Pietrangelo 2008). A case in point involves the Pilgrim Nuclear Power Plant, which received an internal inspection that recorded a long list of problems at the aging facility. Inadvertently a copy of the memo about the plant went to Diane Turco, a citizen activist, who sent it to the Cape Cod Times. While the installation has provided a host of good jobs and a tax boost to the area, this information set off tremors throughout the state. The NRC, however, decided that in spite of violations, the plant was safe enough to remain open (Seelye 2017).
The Minerals Management Service (MMS): This obscure group’s focus involves the regulation of oil and gas exploration and development. During the Bush administration, the agency was renowned for its wild parties and widespread absenteeism. Steady, conscientious work was hardly the order of the day. Leaders’ prevailing position was that costs were too high and benefits too low to justify what independent experts considered critical equipment improvements—in this particular case, $500,000 for a mandatory shutoff switch, which would have prevented the massive Gulf oil spill (Elliott 2010; Skrzycki 2010). Frequently the issues involving agencies are highly contentious. During the Obama presidency, the administration issued orders to restrict drilling off the Alaskan coast. While such directives fell short of many environmentalists’ requirements, they invariably found opposition from oil companies as well as politicians, who recognize that oil production represents a substantial portion of the state’s revenues (Bourne 2015).
While issues linked to regulatory activity generally receive little public attention, one distinct exception exists—the subprime mortgage crisis. “Subprime mortgage” is a euphemistic financial term for high-interest loans to individuals who normally are unable to qualify for loans—middle-class families with too much debt or working-class or poor families with unstable work histories or little collateral. Lenders compensate for the greater risk they take either by charging higher interest rates or offering adjustable loans that increase over time. In the 1990s subprime lending was rare but began to surge— from 8.6 percent of all loans in 2001 to 20.1 percent in 2006.
Then the Great Recession hit. The combined impact of rising interest rates on mortgages and a deteriorating economy featuring layoffs, stagnant wages, and rising cost of living made it impossible for many home buyers to meet their mortgage payments (Atlas and Dreier 2007). In the course of this debacle, financial markets stagnated, with the government eventually forced to use over $700 billion of federal money to stave off corporate bankruptcy so widespread that the international economy could have been thrown into chaos.
In the housing crisis, many individuals and families suffered financially. A typically troubling case involved Milagros Munoz, a dental assistant who bought a brick duplex a short distance from the clinic where she worked. “When I did the closing,” she said, “instead of being happy … like some people, they’re ecstatic, they wanna pop the champagne and say ‘Look, I got a house!’ … all I did was cry. I said, ‘Mom, I don’t feel right … something’s wrong’ ” ( Jahr 2008). Unfortunately she was right. Her broker must have realized that she was a poor financial risk, and so to bolster her loan eligibility, he listed her yearly income, which was under $30,000 a year, as $65,000. Like many others Munoz was the victim of an “Exploding ARM” or Adjustable Rate Mortgage, which starts with a low interest rate that “resets” after two years and then zooms upward dramatically in the remaining 28 years of the loan. Munoz’s broker never explained about the Exploding Arm, and suddenly she faced a monthly mortgage increase of $700. “[T]here’s no way in the world I can catch up,” she said ( Jahr 2008). A critical but common omission was that no regulatory official carefully reviewed this case, seeking to protect the buyer.
Unregulated business activity lies at the foundation of the housing crisis. From 1945 until the late 1970s, the banking system was well organized, with at least five agencies playing a prominent role in the process of helping people to make safe and satisfying home purchases. However, the wealthy and powerful banking community lobbied for change. They got it—the Depository Institutions Deregulatory and Monetary Control Act of 1980, which, among other things, minimized and simplified regulation and made subprime lending more feasible (Atlas and Dreier 2007; Francis 2007). Inexperienced clients now lost most protection from regulators, and unscrupulous lenders could often forget about oversight.
Congressman Barney Frank, a long-time crusader for low-cost housing, observed that in the portion of the banking industry that is regulated, no significant difficulties for mortgage holders have occurred. It is a very different matter, however, in the unregulated portion, where subprime lending has concentrated. Frank wrote, “To the extent that the system did work, it is because of prudential regulation and oversight. Where it was absent the result was tragedy for hundreds of thousands of families who have lost, or soon will lose, their homes” (2007).
Besides the area of governmental regulatory protection, another realm where the oversight of business has been mishandled has involved the credit-rating process, where such private agencies as Moody’s and Standard & Poor’s provide the ratings. These organizations, which oddly enough are paid by the businesses they evaluate, provide ratings that convey to investors a supposedly accurate sense of the financial soundness of the corporation in question. A high rating means that when individuals buy a company’s bonds or stocks, they can feel secure that the business will survive and prosper and that their investment will be a sound one. Moody’s and Standard & Poor’s most publicized mistake was their failure to make an accurate, honest evaluation of bonds backed by home mortgages, contributing significantly to the economic woes within the housing industry.
However, credit-rating agencies’ larger failure has involved their flawed assessment of top financial corporations. They have provided many prominent companies with high-grade ratings even though they consistently took on increasing debt and risk. Why were the credit-rating firms such pushovers? The answer is painfully simple. Had they thoroughly evaluated the top financial organizations and in many instances downgraded them, it would have required a costly, time-consuming reevaluation of thousands of other firms whose own ratings derived from their relations with the highly rated top organizations.
The result would have been a slowdown in short-term profit-making, which as we have observed several times, has become a fixation of American business. In the past outside regulation was effective, but as preceding examples suggest, this pattern no longer prevails. A pair of financial writers concluded, “The tyranny of the short term has extended itself with frightening ease into the entities that were meant to, one way or another, discipline Wall Street, and force it to consider its enlightened self-interest” (Lewis and Einhorn 2009, 9).
Notably, survey data demonstrate that overall Americans do not support government regulation of business. In 2017 a Gallup Poll indicated that for the 12th year in a row more Americans preferred the view that there was too much government regulation of business than supported either the option of too little or the right amount of regulation (Swift 2017).
David Ruder, an expert on financial regulation, would strongly agree with people supporting more of it both in the United States and in other core nations. However, Ruder indicated, it is not going to be easy to achieve this goal. The finance, insurance, and real-estate industries, which make major contributions to lobbying, are fierce opponents of increased regulation. Battling over this issue lies ahead. Ruder concluded, “We very well may come out of this horrible situation with a better version of American capitalism—it’ll be a little tamer; it’ll be a little more regulated” (Berenson 2008, 4).
PHOTO 4.2 Some of the families that lost their homes because of the housing crisis ended up in tent cities like this one in Sacramento.
Source: Melissa Browne/Aurora Photos/Alamy.
In the years that followed, surveys produced somewhat differing results about the public’s outlook on government regulation of big business. One long-term examination indicated that Americans’ views on the subject remained quite stable between 2002 and 2017 (Swift 2017). In another poll about half (49 percent) said that the government has not gone far enough in regulating economic structures. Thirty-one percent of Republicans and 62 percent of Democrats (twice the proportion) indicated that the government had not done enough to promote regulation. Young people and college grads are more inclined to believe that regulation has not gone far enough (Smith 2017a).
Moving through the murky territory of American policy making, we have seen few areas where the superclass interests have not dominated, often to the detriment of the general American public. Briefly I review what has been covered.
This chapter analyzes the concepts and structures underlying social inequality. The three principal concepts are social class, ideology, and social mobility. The text uses a six-class scheme. Overall Americans have tended to ignore or downplay class, more strongly emphasizing individuals’ autonomous impact. Discussions of ideology focus on specific segments of it like individual achievement and the preeminence of liberal capitalism, which not only receive widespread support but appear to sustain current types of social inequality. The situation involving social mobility is less optimistic than in the past. Recent studies indicate both less upward mobility than in the 1960s and 1970s and less upward mobility than in various other developed nations.
In examining the invisible government, this chapter seeks to reveal important information about its central structures and activities. The elite’s policy-making process involves four types of wealthy and powerful groups—foundations, think tanks, universities, and policy-making groups. Lobbying and campaign giving are activities in which the power elite is heavily involved, using its influence and money to promote preferred policies. In addition, corporate and political leaders support the major mass media and, in turn, those organizations establish policies and practices that serve the elite.
The public-policy issues of taxation, budgeting, and regulation and business oversight harvest the fruits of the power elite’s effort to shape public policy. As far as their own financial interests are concerned, they have largely been successful. On the other hand, the results for the nation and other countries have often been destructive.
Throughout the chapter social reproduction plays a robust role. The superclass with its corporate and top political underpinnings possesses the lion’s share of precious resources, namely types of capital, which its members use not only to enrich and empower themselves but to enact laws and practices promoting policies that entrench social inequality. Consider:
•Financial capital: Great wealth is central. Without huge sums of money available to them, the media giants could not expand their holdings. Paying large sums for lobbying and campaign spending, major corporations are able to purchase support for legislation and help elect candidates promoting their goals in various areas of public policy. Superclass wealth also subsidizes the policy-making process that is the foundation for neoconservative political activity.
•Social capital: Two types:
a.Internal: Within the corporate community, superclass members have interlocking directorates which facilitate information sharing and cooperative decision making. Four types of elite organizations—universities, foundations, think tanks, and policy-making groups—are the settings for developing superclass social capital, which promotes well informed, cohesive, self-serving decision making.
b.External: Superclass members use lobbying and campaign giving to purchase political support, especially from incumbents.
•Cultural capital: Beginning in their preschool years, superclass individuals start obtaining the manners, perceptions, values, and skills necessary to function well in their elite world. Chapter 5 examines these issues.
•Human capital: As both Chapters 2 and 5 indicate, the superclass can afford high-quality schooling, which provides its members important credentials for top corporate and political positions and access to other elite individuals and groups.
The superclass has many capital resources available to promote its favored policies. However, as upcoming chapters indicate, other social classes have capital assets that can contribute to positive economic and political outcomes. In 2007 the United Auto Workers (UAW) signed an innovative contract with General Motors (GM). Recognizing that GM had been losing money, the union made concessions, backing off on desired pay raises and settling for bonuses, and not holding GM responsible for retirees’ health care but insisting GM pay billions of dollars into a trust fund for those health costs. It was a compromise contract both sides could accept—a positive outcome.
Such an outcome, however, is not likely to be a widespread occurrence because unionization has been declining. In 2017 just 10.7 percent of wage and salary workers were unionized, barely half the 20.1 percent in 1983, the first year such data were gathered (Bureau of Labor Statistics 2018).
In the chapters ahead, it is apparent that Americans’ varied access to capital types means diverse opportunities and outcomes.
Key Terms in Glossary
Equality of opportunity
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