Neo-Liberal Economic Policies in the United States:

Although most discussions of the impact of neo-liberal economic policies focus on the countries of the Global South, these policies have been implemented in the United States as well.  This began in 1982, when the Chairman of the US Federal Reserve, Paul Volcker, launched a vicious attack on inflation in the US money supply: and caused the deepest US recession since the Great Depression of the late 1920s-1930s.


However, these neo-liberal policies have been implemented in the US perhaps more carefully than in the Global South.  Instead of imposing these changes "in your face," these policies have been hidden "under" the various and sundry "cultural wars" (around issues such as drugs, abortion, marriages for gays and lesbians, gun control, etc.) that have been used to divert people’s attention away from the real issues.  In other words, if Americans can have their attention focused in "other" directions, then both the corporations and their friends in government can enact laws and policies: tax cuts for the rich, for example: that both work for the corporations and the rich, against the economic interests of the large majority of Americans.  Thus, while there is a lot of attention focused on ____________ (gay marriage is the latest), the overwhelmingly large number of people are not aware of the extent to which economic changes are going on in the country; changes, as I detail below, are hurting the overwhelmingly large number of Americans in this country.


It is believed that the implementation of these neo-liberal economic policies and the cultural wars are part of a two-part project:  the first part is to improve the economic well-being of the already well-off, as already suggested.    But there is another, a second part that is perhaps even more important.  These laws and policies are also being used to attack our unions and other organizations that can mobilize people to fight back.  In other words, the corporations, their friends in government and the elite in general, are using these policies to attack the American public, in an effort to prevent re-emergence of the collective solidarity among the American people that we saw in the late 1960s-early 1970s, of which the internal breakdown of discipline within the US military, in Viet Nam and around the world, was probably the most crucial.[1]  Let me put it this way:  the "cultural wars" are being waged to divert our attention away from the improving economic well-being of the already well-off, and to keep us from noticing that these same policies are also disemboweling our organizations, so that even when we wake up, when we recognize the systematic attack on our economic well-being, we will be unable to fight back:  the longer we wait to see this, the weaker the position we will be in from which to fight back.


In other words, the elite saw the upsurge of the "60s" as being a threat to the established social order, both internationally and in the United States itself, and they don’t want that to happen again.  This fear of "the left" is perhaps even greater today, because it is an internal challenge to their efforts to keep dominating the world, their Empire.  The elites thought they had achieved "nirvana" with the fall of the Soviet Union, which had previously created its own empire to challenge that of the US, and US elites were ecstatic, believing that they could now dominate the world without any problem.  Yet the US Empire is being challenged to a greater and greater extent outside of and external to the US:  think of the deer-in-headlights reaction to the recent Chinese missile test where they destroyed one of their old satellites in space (which was the Chinese way of saying, "YOUR satellites, upon which the US military is dependent, are not safe"); think of the massive media reaction to developments in Venezuela under Hugo Chavez; the resistance in Iraq; or the challenge by Iran, etc., etc.  And both the Republicans and Democrats want to maintain the US Empire: and they are worried that they can no longer dominate the rest of the world like they thought they could as recently as early 2003.


In the face of these external challenges: making the Empire’s domination less stable: the elites are not wanting people from within the US to join with people around the world to challenge their efforts to dominate the rest of the world, too.  They do not want people in the US to question this domination: they want us to remain asleep, to allow them to be able to maneuver unhindered.  But what we find, when we look, is that they are destroying the economic well-being, the social security, on which our country prides itself.  And this crazed desire to dominate the world threatens the well-being (socially, culturally, politically, and economically) of all of us.  This threat to the people in the US is different than even those in the other "advanced" capitalist countries.  Obviously, Americans can continue to "do nothing" against this threat: but doing nothing has some pretty extreme social consequences than need to be considered.  Conscious political decisions have been made that produced social results that make the US experience: at the center of a global social order based on an "advanced" capitalist economy: considerably if not qualitatively different from experiences in other more economically-developed countries.


So, what has been the impact of these policies on workers in the US?


To answer this question, this paper focuses on several interrelated issues:  (1) it discusses the current economic situation for workers; (2) it provides a historical overview of US society since World War II; (3) reports the results of US Government economic policies; and (4) comes to a conclusion about the foreseeable future, but also argues the need for qualitative social change.




1)  The Current Situation for Workers and Growing Economic Inequality


Steven Greenhouse of The New York Times published a piece on September 4, 2006, writing about entry-level workers, young people who were just entering the job market.  Mr. Greenhouse noted changes in the US economy; in fact, there have been substantial changes since early 2000, when the economy last created many jobs.


Median incomes for families with one parent age 25-34 fell 5.9% between 2000-2005.  It had jumped 12% during the late ’90s.  (The median annual income for these families today is $48,405.)


Between 2000-2005, entry-level wages for male college graduates fell by 7.3% (to $19.72/hr).


Entry-level wages for female college graduates fell by 3.5% (to $17.08).


Entry-level wages for male high school graduates fell by 3.3% (to $10.93)


Entry-level wages for female high school graduates fell by 4.9% (to $9.08)


Yet, the percentage drop in wages hides the growing gap between college and high school graduates.  Today, college grads earn 45% more than high school graduates, where the gap had "only" been 23% in 1979:  the gap has doubled in 26 years.[2] 


A 2004 story in Business Week found that 24 percent: one of every four: of all working Americans received wages below the poverty line.[3]  In January 2004, 23.5 million Americans received free food from food pantries.  "The surge for food demand is fueled by several forces: job losses, expired unemployment benefits, soaring health-care and housing costs, and the inability of many people to find jobs that match the income and benefits of the jobs they had."  And 43 million people were living in low-income families with children.[4] 


A 2006 story in Business Week found that US job growth between 2001-2006 was really based on one industry:  health care.  Over this five-year period, the health-care sector has added 1.7 million jobs, while the rest of the private sector has been stagnant.  Michael Mandel, the economics editor of the magazine, writes:


… information technology, the great electronic promise of the 1990s, has turned into one of the greatest job-growth disappointments of all time.  Despite the splashy success of companies such as Google and Yahoo!, businesses at the core of the information economy: software, semi-conductors, telecom, and the whole range of Web companies: have lost more than 1.1 million jobs in the past five years.  These businesses employ fewer Americans today than they did in 1998, when the Internet frenzy kicked into high gear.[5]


In fact, "take away health-care hiring in the US, and quicker than you can say cardiac bypass, the US unemployment rate would be 1 to 2 percentage points higher."[6] 


There has been extensive job loss in manufacturing.  Over 3.4 million manufacturing jobs have been lost since 1998, and 2.9 million have been lost since 2001.  Additionally, over 40,000 manufacturing firms have closed since 1999, and 90% have been medium and large shops.  In labor-import intensive industries, 25 percent of laid-off workers remain unemployed after six months, two-thirds of them who do find new jobs earn less than on their old job, and one-quarter of those who find new jobs "suffer wage losses of more than 30 percent."[7] 


The AFL-CIO details the American job loss by manufacturing sector in the 2001-05 period:


Computer and electronics:  543,000 workers or 29.2 percent


Semiconductor and electronic components: 260,100 or 36.7 percent


Electrical equipment and appliances:  152,500 or 26 percent


Vehicle parts: 153,400 or 18.6 percent


Machinery: 289,400 or 19.9 percent


Fabricated metal products: 235,200 or 13.3 percent


Primary metals:  144,800 or 23.5 percent


Transportation equipment: 246,300 or 12.1 percent


Furniture products: 58,500 or 13.4 percent


Textile mills: 158,500 or 43.1 percent


Apparel 220,000 or 46.6 percent


Leather products: 24,700 or 38.3 percent


Printing: 159,300 or 19.9 percent


Paper products: 122,600 or 20.4 percent


Plastics and rubber products: 141,400 or 15 percent


Chemicals: 94,900 or 9.7 percent


Aerospace: 46,900 or 9.1 percent


Textiles and apparel declined by 870,000 jobs 1994-2006, a decline of 65.4 percent.[8] 


As of June 2006, there were only 14.259 million manufacturing workers, down from 19.426 million at the high point in 1979.  This means that only 9.86 % of all US employment was in manufacturing: down from 21.6 % in 1979.[9]  The number of production workers in this country at the end of 2005 was 9.378 million.