What is equitable "shared sacrifice"?

In a world where Republicans – from members of Congress to governors – are talking about "shared sacrifice," it is increasingly clear they really mean more sacrifice for working families to pay for more tax cuts for the rich. The House Republican's budget plan, for example, contains trillions in tax cuts for the rich, while cutting trillions from programs and agencies that benefit or aid working families.

The class financial motivations for such a policy are self-evident, but the ideological wrapping – in "free market" blather (sometimes referred to as neoliberalism) – often obscures this fact.

I see "shared sacrifice" bunk as part of a package of economic policies that  Ha-Joon Chang explains in his book 23 Things They Don't Tell You About Capitalism designed to ensure "lower inflation, greater capital mobility and greater job insecurity (euphemistically called greater labour market flexibility)" (60).

I know you're thinking, "Joel, why are writing about this book again? You've written about here and here."

Chang's book examines "free market" ideology from a number of angles, and he offers evidence that explodes those myths in concise and accessible chapters (23 of them to be precise).

For example, on this particular issue, he points out that "free market" policies – and here I add the "shared sacrifice" foolishness in the time of crisis – "is mainly geared towards the interests of the holders of financial assets" (60).

We know that for the typical household capital holdings represent less than one percent of income, so the phrase "holders of financial assets" directly reflects a huge class divide.

Essentially, the goal of deficit reduction is to control inflation in order to improve the prospects of realizing a higher rate of financial gain on those holdings. Disproportionately higher rates of returns on financial holdings go to the very richest people (in the U.S. the top .1% of households get some 50% of their income from capital holdings, according to recent data from United for a Fair Economy.)

"Capital mobility" (something many people call globalization) allows holders of financial assets to realize higher rates of return if they can move them around the world more quickly – regardless of the sacrifices and instability such movement causes in your community.

Labor market flexibility, aka job insecurity, has produced speed-ups, increased numbers of short-term jobs, and growing rates of "involuntary job terminations." As Chang writes, "from the point of view of financial investors, making hiring and firing easier allows companies to be restructured more quickly, which means that they can be sold and bought more readily with better short-term balance sheets, bringing higher financial returns" (60).

Though profit margins may be higher for the financial sector of capitalism most interested in these three strategies of capital accumulation, none of these policies have improved economic stability or guaranteed greater wages, wealth, or social welfare to the communities they have impacted, Chang points out – not in the rich countries and certainly not in the developing countries.

To a great extent the ideology of the "free market" and "shared sacrifice" has been so ingrained that for far too many people it is accepted as natural or the only alternative. (Though recent polls show Americans are increasingly discontented with it.)

In no small part, the upsurge of the labor-led movement against anti-union, budget slashing policies in states like Wisconsin, Indiana, Michigan, Ohio, and New Jersey is the beginnings of a tremendous counter to the "free market" ideologies dangerously emanating from the bastions of finance capital.

A working-class perspective on "shared sacrifice" isn't fundamentally about balancing federal or state budgets, reducing deficits or paying off debts. It's about the priorities in the budgets and about how to ensure equitable shared sacrifice. This means the sacrifices that working families have endured in the form of stagnant real wages, higher costs of energy, healthcare, education, and other basic necessities should be shared in relative proportion by the class of people and corporations that Chang refers to as the "holders of financial assets," the people who talk loudest and shrillest about "shared sacrifice" and who have remained the richest.

Three ways to begin to accomplish this:

1) Implement a more sustainable tax policy (on incomes, capital gains, speculation, and capital mobility) that resembles the tax brackets proposed in the People's Budget authored by the Congressional Progressive Caucus.

2) Make a dramatic shift in military expenditures and priorities. Currently, the "defense of American interests" abroad is a euphemism for protecting and ensuring capital and labor market flexibility. No seriously. It is. This priority shift is also contained in the People's Budget.

3) Protect the rights of workers to organize labor unions, to collectively bargain, and build political power – as a federal policy, not a state-by-state mishmash of violations of basic civil rights.

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  • It sounds like a must read.... wish I had couple more heads, not to mention eyes.
    So much important stuff to read when it comes to the deficit hawks.... except tax cuts to the corporations and rich..... and of course too many wars to mention!

    wage peace

    Posted by Gabriel Falsetta, 04/21/2011 11:02pm (7 years ago)

  • Thanks, Joel. Your writing as usual is succinct and powerful. Thanks for recommending the next book on my reading list. Keep up the good work!

    Posted by Patricia VerStrat, 04/18/2011 8:59pm (7 years ago)

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