Jeff Faux, Distinguished Fellow at the Economic Policy Institute (EPI), joined us here today at the AFL-CIO to discuss his new book, The Servant Economy: Where America’s Elite is Sending the Middle Class. The event launches the AFL-CIO summer book series, which includes discussions with noted economists who will talk about their new books on jobs, inequality and the U.S. financial crisis. (Get details and RSVP here.)

In his last book, The Global Class War, Faux in 2006 correctly predicted the permanent decline of our debt-burdened middle class at the hands of our off-shoring executives, out of control financiers and their friends in Washington. So we asked Faux a few questions about what his latest analyses and predictions in The Servant Economy.

Q.: In The Servant Economy, you write that “the economic problem at least 80 percent of Americans now face is not simply a severe business cycle, it is a profound and historic decline in their economic and political bargaining power.” Briefly, what are some of the factors behind this decline?

Faux: Hourly wages (adjusted for price changes) of the majority of American workers flattened out after 1979, even though their productivity continued to rise. The four most important reasons were: 1) trade policies that multinational corporate investors over workers; 2) financial deregulation of finance that allow bankers and brokers to divert America’s capital from productive investment to short term speculation; 3) the corporate war to undercut trade unions 4) the weakening of New Deal worker protections such as the minimum wage.

Yet for several decades, workers were able to maintain spending to support their living standards. One reason was that family income kept up by sending more workers (usually the wives) to work. Now that there are more women than men in the workforce, that strategy is exhausted. The second reason was easy credit. When the Wall Street debt bubble burst in 2008-2009 easy credit disappeared. It will be a generation if ever, before we can expect another debt balloon large enough to overcome declining wages.

Real wages are now declining across the board—among men and women, college and non-college, young and old. So either we reverse the policies of the past thirty years, or we face a future of lower wages and benefits, deeper class divisions and an erosion dignity on the job—what I call the Servant Economy.

Q.: The main argument of The Servant Economy is that the corporate and political elite (which many say are the same) are unwilling to make the changes our nation needs to put the U.S. economy on strong footing. Why is that?

Faux: Media talking heads complain that Washington is “dysfunctional.” But it is functioning very well—in the interests of those at the top of
the economic pyramid. Growing inequality is not an accident. The rich are getting richer from the same policies that are making American workers poorer. The Republicans of course almost always represent the interests of the financial elite. But over the last 30 years, Democrats have become more dependent on corporate money and less willing to challenge their economic interests. So while Democrats have remained liberal on social issues that corporations don’t much care about, they have backed off the economic issues that affect working people.

Many even blame the victim, telling workers that their problem is that they don’t have enough education and training. Educated workers are obviously more competitive than uneducated workers. But Americans are more educated than ever. The problem is that America is not creating jobs that pay enough to justify their education. For example, the Bureau of Labor Statistics projects that of the 10 largest and fastest growing occupations between 2010 and 2020, only one requires a four-year college degree. One requires two years of college, and not even a high-school diploma.

All politicians these days repeat the rhetoric: “Jobs. Jobs. Jobs.” But in the absence of serious policies for change, the strategy for jobs that the country is now actually pursuing is “Low wages. Low wages. Low wages.”

Q.: You see the Occupy Wall Street movement as one brimming with concepts for addressing our nation’s ills but incapable of moving toward concrete change. Can you explain? 
Faux: Despite the criticism of the mainstream media, Occupy Wall Street does have ideas. In fact, much of their time is spent is long detailed discussion of idea to produce consensus. Compare this with the empty-headed slogans of the Tea Party, which the media gives much more space and respect. Polls show that a majority of Americans agree with Occupy’s most important points – about corporate power, inequality and a strong safety net. Yet there was no rush of support. Part of the problem is cultural style. A picture is worth a thousand words, and the —and Occupy’s words were blurred by the TV news images emphasizing a shaggy counterculture, which most Americans could not imagine to be a serious political force. A bigger problem is that people still think of politics as a TV reality show – Republicans vs. Democrats. So things that happen outside that two-party box don’t seem “real.” This is not Occupy’s fault. They were trying to catalyze a new movement, not lead it. I think they moved the issues forward. But we still have a long way to go.

Q.: Although data shows there is little class mobility when it comes to Americans’ ability to surpass their parents in wealth and income, you note people believe that even if the country is headed in the wrong direction, their personal circumstances will improve. With this prevalent “Lake Wobegon effect,” what can progressive activists do to make people aware of our country’s economic reality?
Faux: Our country’s political elite are counting on people to stay passive. They’re betting that Americans will continue to swallow the  propaganda that if you are not getting ahead, it’s your fault. But all the evidence in front of our eyes tells us that this is not so. James Baldwin once wrote, “Not everything that is faced can be changed, but nothing can be changed until it is faced.” So activists themselves must face the gravity of our situation. In the course of their every day organizing work, they must tell the story of where the average Americans’ living standards are headed without radical change.

People of course want to hear good news— that without too much effort on their part, our political leaders will eventually do the right thing. Given the influence of the rich and powerful on our politics, this is a fairy tale—and deep inside most people know it. The system will not act on its own. It must be forced to.

Among other things, this means that the issue of corporate money in politics must be tackled head-on. The Supreme Court’s Citizens United decision has made this a matter of survival for labor unions and other progressive organizations. My own view is that we need a national obiligation for a constitutional amendment, ending once and for all the claim that money equals free speech and that corporations are people with rights of citizens. Progressives start with a great advantage: the people. Seventy-five percent of voters (including 71 percent of Republicans!) believe that campaign contributions buy votes in Congress. But they don’t think that much can be done, which increases their cynicism about government. And makes it even harder to make the case for the kind of government initiatives we need for raising wages.

Such a campaign would give progressives a powerful issue with which to educate the public about the root cause of our political system-—indifference to their future. Unless we can dramatically reduce the influence of big money in our politics, the servant economy is inevitable.

Interview by Tula Connell,   http://www.aflcio.org/Blog/Economy/Are-We-Headed-Toward-A-Servant-Economy