Letter 2 America for December 11, 2012

Dear America,

Free market economics is dead, and the evidence keeps rolling in.  There are big pieces, like energy production.  The Rcc persists in claiming that the way to keep energy prices down and our economy thriving is to produce more oil, coal and gas, which is how they justify their efforts to ease environmental and financial restrictions on businesses involved in energy production.  But a laboratory experiment to prove or disprove that premise has already been conducted, and it is ongoing in the United States.  Energy production...and that includes oil...is at its highest level in over a decade, and it continues to go higher with the new technology that allows economical production of oil and natural gas from shale.  Projections are that we are headed for energy independence not next century, but in a few years...maybe as soon as next decade.  But the better our energy position in the world becomes-- and there is talk that by 2020 the United States will be exporting oil--the higher oil prices go and the more we pay for gasoline.  The explanation given by the industry is that energy is traded in world markets and those markets dictate our costs.  But if that is the case, the dearth of petroleum in the rest of the world will continue to dictate our prices no matter how much more we produce.  So why produce it?  Why traumatize the environment over oil that we will never benefit from anyway.  Why run a pipeline across environmentally sensitive areas rather than just building refineries where the petroleum needs to be for refining and use by the public?  But that is all digression.  The point is that the pricing advantage we were supposed to get from increased supply just hasn't materialized, and we can safely presume never will.  So the energy industry's continued reliance on free market theory, which now appears to have been a myth all along, to justify its ever increasing demands of our society in the form of tax treatment, environmental liberties to be taken and freedom from market regulation is nothing but a scam.  The evidence is in.  Free market theory doesn't work as demonstrated by the petroleum industry in particular.  And here's a small piece of the evidence against free market theory.

It appears now that the big box stores in North Dakota, where the enormous shale oil fields are humming with activity, can't find people to work for the wages they want to pay.  That should mean that wages go up and the people who hold those poorly paid jobs get a little closer to earning a living wage.  But the stores would rather bring in employees from elsewhere to take those jobs.  They are not however, increasing their wages.  In a free market for labor, the scarcity of workers would tend to require higher wages, but that is not what is happening.  You have to consider that these imported workers are going to have to live in the booming oil fields where the costs of housing and everything else are rising as people pour into the area to take the relatively well paid jobs in the petroleum industry.  So what will happen when the imported workers arrive is that they will become an under class and will be forced to live in conditions that the indigenous workers would not accept, unless of course the stores' managements follow the Chinese route to profit and feed and house them in dormitories.  Thus, just as in the case of petroleum, there is no real free market for workers either, and speaking of the Chinese, this isn't the first time that such has been demonstrated in this laboratory study to which I referred above.  In fact, American business and industry has been putting the lie to the free labor market myth for decades.  When American labor insisted on being paid a living wage, American management didn't just import workers, they exported both the jobs and the facilities in which they were performed to lower-wage-paying countries.  You no doubt heard about the garment factory fire in Pakistan last week in which more than 300 workers died because they had been locked in to keep them working.  Among the aspects of the news coverage was the fact that some of those workers were earning as little as nineteen cents per hour.  Barely a week earlier there had been a similar fire in a Bangladesh textile factory where over 100 people died making clothes for labels sold by Walmart and Sears among others.  But the textile and garment industries in this country are moribund, if not already dead, because American management didn't want to pay a living wage...especially when they could get some child in the third world to do the work almost for free.  No one in this country could live on the kinds of wages paid in the countries that attract American industry these days, so there is no free market for labor here.  There just aren't any jobs at all because, once again, we are not competing among ourselves in a free market.  Just as in the case of petroleum, the free market for labor is being controlled by conditions abroad, in the case of textiles by crushing poverty that makes any job worth having, and thus there is nothing free about the labor market here or there.  Americans are out.  Black and brown children living and being exploited in poor countries are in.

The bottom line--that's what the free market is all about--is that corporate America has made an assiduous effort to eschew the pressures that an actual free market would put on them to make a fair distribution of the wealth that is being accrued in unimaginable proportions among the privileged in the executive class and the plutocratic elite because of the labor of others.  They have succeeded in finding ways to control price by manipulation of the system in various ways such as subverting anti-trust laws to allow both horizontal and vertical integration, the latter in particular when it comes to the petroleum industry.  As to industries like the textile industry, management has effectively locked American labor and their unions out of their manufacturing facilities by moving them to poorer countries, or they are not even making what they sell anymore, leaving contractors and others to commit the sins that are necessary to take the obscene advantage of poor people that is the major ingredient in the greed laced mix of measures designed to maximize profit without sharing it with those who create it.  So, as the management of American Airlines demands $60 million in bonuses just to go away, it is becoming clear that you can get rich by doing your job badly, but if you produce a quality product with your own hands as used to be done here in the textile factories of so many small towns across our country for example, you can expect to lose your job if you demand to get paid a fair wage for your effort.  That isn't a free market...at least it isn't a market that I want to be free in.

Your friend,

Mike