Labor Day? Let’s Tell The Truth And Call It “Assets Day”

By Douglas K. Smith, author of On Value and Values: Thinking Differently About We In An Age Of MeCrossposted from Naked Capitalism by permission of the author. 

Come on, face it. “Labor Day” is a national fiction — right up there with “anti-trust enforcement” and “regulating Wall Street.” The only parades that matter this September 7th will trudge through Wal-Mart, Gap, Radio Shack and other retailers in mad pursuit of holiday price reductions that come from eviscerating labor, not investing in it. The grandest pageant of all is going to be virtual: a mass frenzy of online deal seekers surfing eRetailers fixated on cutting labor costs while pushing, prodding, and electronically monitoring warehouse and office employees to get the last possible ounce of productivity.”

Don’t be surprised if some executive at Wal-Mart imagines observing “Labor Day” with a one-time offer of unpaid internships to debt ridden college kids — giving them the chance to build their “personal brands”‘ as a step toward, say, becoming an Uber driver.

Celebrate labor? Are you kidding me? Labor is an obscenity in executive suites, boardrooms and among the 1% generally — including the innumerable elected officials bought and paid for with the 1%’s assets.

Labor is not to be commemorated. Ownership is. Ownership is one of Jeff Bezos’ 11 Commandments at Amazon. Ownership makes America exceptional. The liberty and freedom to own is why our brave and underpaid service men, women and drones battle terrorists who hate our exalted financial wizards — people like Lloyd Blankfein of Goldman Sachs who “do Gods work” by making, selling, securitizing, swapping, re-securitizing, and under-collateralizing assets.

Assets are the “be all, end all” of our economy. Labor? Cue the canned laughter.

Look no further than corporate values statements and you will see this: “Our people are our most important assets.” Assets. Got that? And, it gets even creepier. What are employees? Human capital.

Trust me. Before the Emancipation Proclamation, Americans knew about human capital — and they did not dress it up once a year with a euphemism called “Labor Day.”

So, why do we?

“We’re creating,” President George W. Bush said in October 2004, “an ownership society in this country, where more Americans than ever will be able to open up their door where they live and say, welcome to my house, welcome to my piece of property.”

The same George W. Bush who — just like Clinton before him and Obama after him and asset lovers in both major parties — all have watched Labor Days come and Labor Days go over a now two-decade long series of what we call “jobless recoveries.”

It’s not for nothing that Ambrose Bierce wrote in The Devil’s Dictionary: “Labor: One of the processes by which A acquires property for B.”

Hey, you don’t want to be A. So don’t party about it.

Labor Day never sat well with America’s leaders anyway. Grover Cleveland and a unanimous House only enacted Labor Day in 1894 to quell rising unionism and violent strikes. They also made sure to time it in September instead of May to avoid any association with the asset-loathing ideologies of socialism and communism. Better to cordon off and confine Eugene Debs and other unionists to a single day of the year — and make the other 364 safe for the American Dream of Ownership.

Today it is “all assets all the time”‘ for the elites who, like Bush, Clinton, Obama and Blankfein, have drunk the anti-labor Kool-Aid for more than forty years. Free markets make America great. And free markets are freest when labor is free.

Why? Because free markets maximize efficiency. If you’re among the tens of millions of Americans whose jobs have disappeared, been downsized, and outsourced — if you’ve lost benefits, seen wages stagnate and even rely on public welfare to get by a member of the working poor, then you know what market efficiency means.

It means, to paraphrase Bierce, you’re A. Not B.

Take heart. Through your self-denial, executives, owners, and shareholders have grabbed all the productivity gains of the past quarter century for themselves.

No one is calling them “asset-less recoveries.”

Yet, this is just a part of our asset-driven society! Even as labor is gutted and life for tens of millions becomes ever more precarious, you get to do your part as a consumer and a taxpayer.

How, though, you might ask, do you help create assets as a consumer? I mean, you don’t really have any money since you get paid practically nothing for work.

Simple. You borrow it! “Consumer” is yet another fiction to today’s financiers. Just like “Labor Day.”

“Consumer” actually means “Borrower.” Let me explain. To our God-not-Mammon inspired financiers, you are no more and no less than a potential piece of cash flow. Need a car? Or a house, a refrigerator, a cell phone, a college education — or anything whatsoever that, of course, you cannot afford because of paltry and undependable wages? Call 1-800-GETLOAN!

When you — and zillions like you — cannot afford a car, home, college education, or whatever, just open your mail or answer your phone for a loan offer. One that will surely come with usurious interest rates, too! (Banksters get zero interest rates. That’s called “quantitative easing.” Everyone else? 10% to 30% or higher.)

Your interest rate payments are cash flows — and they get bundled up with lots of other cash-flows-formerly-known-as-people. Presto! We have mortgage-backed securities, student debt backed-securities, car loan-backed securities, credit card debt securities and pretty much anything that can get financed-backed securities.

Assets, my friends, assets!!

These assets are what get swapped, re-securitized several times over and always always always are under-collateralized. Then, whenever the utterly fictionalized values of these under-collateralized assets even come close to a dose of reality? Well, that’s when you come to the rescue in your role taxpayer!

Bailouts! Yeah, that’s what I’m talking about!

You, my friends, are truly champion asset creators! Your long-suffering self-denial of working for crap wages contributes to massive corporate profits that executives tap to buy-back company stock in order to keep those asset values high. Your low-to-no wages give you as consumers the God-given freedom to borrow and, thereby, fund securitized assets. And, when those asset values get threatened, your taxes come to the rescue through bailouts and mumbo jumbo (“quantitative easing”).

This is sweeeeeeet!

This is worth celebrating!


Get a life. Get some assets.

So, why don’t we call this September 7th what it actually is: Assets Day!

A time to celebrate your assets off.

What? Got no assets?

You’re screwed.

On Its 80th Birthday, Securing Social Security


Today is the 80th anniversary of Social Security; here’s our book reviewer Steve Pressman’s review of Social Security Works!, from our current issue:

Social Security Works! Why Social Security Isn’t Going Broke and How Expanding It Will Help Us All by Nancy J. Altman and Eric R. Kingston, with a Foreword by David Cay Johnston (New Press, 2015).


President Franklin D. Roosevelt signed the Social Security Act nearly 80 years ago, on August 14, 1935. Since its inception, Social Security has had both strong defenders and harsh critics. Defenders see it as a successful program that enables American workers to retire rather than work until they drop; critics see it as a government Ponzi scheme promising unsustainable entitlements.

The American public has also been of two minds regarding Social Security; they worry about the program going bankrupt, but also favor expanding it.

Social Security Works! makes a strong case for expanding Social Security. Its authors worked on the Greenspan Commission in the early 1980s (Altman was Alan Greenspan’s assistant). In this book, however, they criticize the Commission report, which led to higher Social Security taxes and lower Social Security benefits for all Americans.

The book’s great strength is its solid case that Social Security is an insurance program rather than an entitlement. With insurance, payments protect people from large future expenses. Social Security protects Americans from financial disaster as a result of becoming disabled or exhausting their savings during a long retirement. The program has been a great success in reducing poverty for the disabled and elderly in the United States, which is why it is so popular.

Social Security also provides life insurance. Initially, the system only covered workers, so when a recipient died, his or her family received no benefits. This flaw was soon corrected by adding survivors’ benefits. As a result, Social Security aids surviving spouses plus 4.4 million children today.

But the program does have problems. Retirement benefits will be 24% lower for those born after 1959 because Congress adopted the Greenspan Commission recommendations—increasing the age to receive full benefits from 65 to 67, delaying cost-of-living adjustments, and taxing benefits for most households. Future increases in Medicare premiums will add to these losses.

Another problem is the projected revenue shortfall (a bit more than 2% of annual wages subject to Social Security taxes). Beginning in the 2030s, Social Security taxes will not be able to pay all promised benefits and monies accumulated to fund the retirement of the baby boomers will be exhausted. General revenue could fund benefits; but this would transform Social Security from an insurance plan into an entitlement program, since benefits would no longer be linked to individual contributions.Entitlement programs typically have low political and popular support, which is why FDR insisted that Social Security be self-financing.

A third problem is insufficient insurance protection. To strengthen the program, Altman and Kingston want to increase monthly benefits and establish a minimum benefit so that Social Security provides at least 125% of poverty-level income for every eligible household. They also suggest adding paid parental leave to the program. Finally, they propose restoring college education benefits for the children of disabled or deceased workers, something eliminated in 1981.

Following FDR’s political instincts, Altman and Kingston suggest financing these benefits by eliminating the Social Security wage cap, investing some of the current surplus in corporate stocks (for their higher average rate of return than U.S. treasury bonds), and imposing a 10% millionaire’s tax and a 0.5% stock transfer tax, with the proceeds devoted to Social Security. For 2015, Social Security taxes only the first $118,500 of wage income (this figure increases each year with inflation). Removing the wage cap would help finance a significant expansion of the program.

While these are all reasonable extensions of Social Security, the book does have some flaws. First, it lacks historical detail. For example, it fails to explain why FDR insisted that Social Security taxes finance benefits. Altman’s The Battle for Social Security (Wiley, 2005) provides this background. It would have strengthened this book to include some of that material here. Second, it makes no case for adding paid parental leave, which enables parents to afford to take time off from work around the birth of a new child. This is a program that every developed nation has—except the United States. Third, its claim that Social Security faces no financial problem is a bit misleading. The retirement and disability portions should be fine (given the current structure of benefits and taxes), if the U.S. economy performs relatively well over the next half century (with low unemployment and greater wage equality). But the Medicare part of the program faces large projected deficits.

For me, however, the biggest problem is the uneven quality of its defense of Social Security. After clearly explaining why Social Security is not unfair to the young or to minorities, it quickly dismisses the claim that Social Security is a Ponzi scheme. This popular assertion requires a detailed rebuttal. And, strangely, Altman and Kingston assert that the annual Trustees report should convince people that the program is solvent; yet this actually generates public fear. The July 2014 report identified 2033 as the year that Social Security, as currently structured, will most likely no longer be able to pay all its obligations.

One doesn’t have to be an Einstein to realize the threat to Social Security if Republicans win the 2016 presidential election. With Republicans likely to maintain significant majorities in Congress, cutting Social Security benefits will likely be part of the political agenda in 2017 if a Republican takes the White House.

On the 80th anniversary of Social Security, a book defending the system and seeking to alleviate fears about its demise is most welcome. And in many ways Social Security Works! does a good job defending the program. But because Social Security does so much good, and because it has such a huge target on its back, it deserves a stronger defense than it gets from Altman and Kingston.

is a professor of economics and finance at Monmouth University and author of Fifty Major Economists(Routledge, 2013).

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