Class Warfare, Slavery and Company Towns

"There’s class warfare, all right, but it’s my class, the rich class, that’s making war, and we’re winning.” 

– Multi-millionaire Warren Buffet

Listening to GOP leaders, one might think the Democrats were waging nuclear class warfare. Because progressive Dems wants the richest one percent of Americans to pay their fair share in taxes, multi-millionaires Mitt Romney and Newt Gingrich, along with their cohorts in Congress, want Americans to think the Democrats are preaching the “politics of envy.”

Nothing is further from the truth. The fact is the Republicans have been waging a vicious, no-holds-bar war against the American worker for the past 30 years, since the election of their vaunted leader, Ronald Reagan.

Company scrip token.
Photo: Jerry Adams

In school, we are taught that America is the Land of Opportunity. America, in fact, has been the Land of Opportunity for many years of its existence – for some. In the 1700 and 1800s, yes, migrants from Europe had a chance to make something of themselves – assuming you weren’t Irish or Italian. God help you if you were Chinese – or African.

Even though slavery supposedly ended after the Civil War with the adoption of the 13^th Amendment, involuntary servitude did, in fact, continue in this country in the form of the truck system. Under the truck system, workers were paid in company scrip rather than real money. That scrip could only be used in company-owned stores to buy over-priced goods, or to pay excessive rent in company-owned housing in what came to be called “company towns.”

Also known as debt bondage, the truck system resulted in workers becoming indebted to the very companies they worked for, forcing them to stay in the company’s employ to pay off their debt. This, the companies contended, produced employee “loyalty.” Workers felt otherwise, as Tennessee Ernie Ford lamented when he sang:

“Load sixteen tons and what do you get?

Another day older and deeper in debt.

St. Peter don’t you call me, ‘cause I can’t go.

I owe my soul to the company store.”

The truck system was ruled slavery by the U.S Supreme Court in the early 1900s, but the concept hasn’t died. In 2008, Wal-Mart’s Mexican subsidiary was blocked by the Mexican Supreme Court of Justice for trying to pay its employees, in part, with company vouchers. The Mexican court ruled the vouchers were scrip, and in violation of Mexico’s prohibition of the truck system.

Debt Bondage Today

The concept of debt bondage hasn’t died in the United States either. One of the foundations the Founding Fathers conceived for this country was accessible higher education for its citizens. Thomas Jefferson’s pride in creating the tuition-free University of Virginia in 1819 surpassed his pride in being the third president of the United States. So much so, he made sure the epitaph on his head stone after he died would identify him as the author of the Declaration of Independence and the founder of the University of Virginia.

Today, the idea of a free college education is merely a memory for those of us old enough to remember what the education system of this country was like before Ronald Reagan was elected governor of California and, after destroying that state’s education system, being elected to the U.S. presidency to do the same nationwide. These days college graduates are so deeply in debt, they are largely incapable of movement up the class ladder – unless they happen to be another George W. Bush or Mitt Romney.

Keeping Americans in debt – and under control – has been the battle plan for conservative politicians of both parties and their oligarch overlords for the past 30 years. During that time, labor union membership – the greatest way to level the economic playing board – has declined as much as 30 percent, thanks to Reagan’s war on labor and GOP legislation making it harder to recruit members. That continues today with the anti-labor legislation being seen in states like today’s Walkerstan (Wisconsin) and Kasichstan (Ohio), where Tea Party governors and legislatures are passing repressive anti-middle-class measures.

Republicans would like you to believe that capitalism is synonymous with freedom. It isn’t. Recent history is rife with authoritarian governments ruling over capitalistic systems – Argentina under Peron, Spain under Franco, the Philippines under Marcos, Italy under Mussolini and, last but not least, Germany under Hitler. In each case, these dictators were put in power by industrialists and financiers. After all, fascism by definition is an authoritarian form of capitalism. For that matter, many economists argue that communism is simply a form of state capitalism.

Contrary to what many have been taught, capitalism is not synonymous with free enterprise and a free market place. Free enterprise is the provision of a service or product in exchange for a price. Capitalism is simply the accumulation of wealth and the power it brings.

To be truly successful, free enterprise requires two things, the free movement of money and a level playing field. Money is like blood to the economic body; if it doesn’t flow freely, the body dies. When the bulk of the wealth of a country is held by a small percentage of individuals – as it is in this country today – it doesn’t flow freely and the economy stagnates, contracts and dies, at least for the rest of us.

Taxation stimulates the excessively wealthy to spend their money through investment in new companies and the workforce. Taxes force the wealthy to convert the form of their wealth from offshore accounts to U.S. holdings, circulating that money through the economic body. Taxes paid to the government are reinvested in public infrastructure and public services, further encouraging the circulation of wealth.

A Level Playing Field

Along with circulating wealth, free enterprise requires a level playing field to allow those with enterprising abilities to rise to well-deserved levels of success. That can only be done by legislation that prohibits the kind of Mitt Romney vulture capitalism that destroys U.S. companies for the sake of short term benefits; legislation that prohibits exporting U.S. jobs for the same reason; legislation that regulates the business environment so predator corporations can’t wantonly destroy their competitors to establish anti-competitive trusts.

Yet for 30 years, Republicans and conservative Democrats have pushed through legislation that has torn middle class and worker rights to shreds, gave tax breaks to corporations that shipped U.S. jobs abroad, destroyed true competition, and left the burden of paying off the national debt that quadrupled under Reagan and Bush Jr. on the middle class.

Over the past 30 years, American wages have declined roughly a percentage point each year, while the wealth of the richest Americans – people like Romney – has grown exponentially. Republicans say the middle class has to carry the brunt of the tax burden because taxing the wealthy – the so-called “job creators” – would cost the country jobs.

That, as I’ve said, is nonsense. The economic engine of this country is small business, the mom and pops which are responsible for 95 percent of this county’s job growth. In other words, large corporations and mega-naires don’t have that much impact on the economy.

Don’t believe that? Then ask yourself this: George W. Bush and his Republican-controlled Congress gave every tax break they could to Big Business and the rich, yet the Bush administration was already suffering a net loss of millions of American jobs long before the recession hit us in 2007.

If high taxes destroyed jobs, then Germany, with Europe’s highest taxes, should have the Continent’s highest unemployment rates instead of its lowest. In fact, German unemployment is lower than any other industrialized nation. On the other hand, every European country that adopted neo-conservative “trickle down” tax policies is now experiencing extremely high unemployment rates and economic collapse.

In fact, when one looks at taxation vs. employment among industrialized nations, there is a distinct converse relationship – the higher the tax rate, the lower the unemployment. The United States, with one of the lowest tax rates in the world, also has one of the highest unemployment rates.

What more do Americans need to understand that they are, and have been, engaged in class warfare for three decades? And as Warren Buffet said, we, the middle class, are losing.