Higher Wages Threaten Stability? id DAA00479; Fri, 17 Oct 1997 03:16:13 -0400 Via NY Transfer News Collective * All the News that Doesn't Fit ------------------------- Via Workers World News Service Reprinted from the October 23, 1997 issue of Workers World newspaper ------------------------- HIGHER WAGES THREATEN WHOSE ECONOMIC STABLITY, MR. GREENSPAN? By Deirdre Griswold lan Greenspan, chair of the Federal Reserve, temporarily shook up the stock and bond markets Oct. 8 when he declared: "The economy has been on an unsustainable track. If labor demand continues to outpace sustainable increases in supply, the question is surely when, not whether, labor costs will escalate more rapidly." The markets reacted out of fear that when the Fed's Open Market Committee meets on Nov. 12, it will raise interest rates, thereby tightening credit and choking off business expansion. This same scenario has already occurred many times over the last few years. Interest rates have been relatively low. So has inflation. But a word from Greenspan indicating that this country's central bank might raise the prime interest rate and investors get worried--at least temporarily. Greenspan's pronouncement, however, wasn't aimed at the markets, and the investors knew it. It was clearly and unambiguously aimed at the working class. If wages keep going up, he was saying, we'll have to cool down the economy. It might seem incredible that the biggest banker in the country could say that the trouble with the economy is not enough unemployment and wages that are too high. Unemployment too low? But millions can find only part-time and temporary jobs, if any at all. Rising wages? But wages for most workers have actually fallen, in real value, since 1979. Everyone knows that. The labor movement's current struggle is primarily a defensive one, brought on by the ruling class's slash-and- burn tactics ever since it began the high-tech restructuring almost two decades ago. Most workers are still fighting to catch up with where they or their parents were then. The stock market, on the other hand, has more than quadrupled since its low 10 years ago. Corporate salaries have gone through the roof. CNN's Ted Turner made a billion dollars this year and doesn't know what to do with it. So did Microsoft's Bill Gates. Surely, Mr. Greenspan, you're not counting this as rising wages? Whether it's Gates and Turner or more mundane billionaires like the Rockefellers and Du Ponts, they all keep a close watch on the workers' mood. While higher wages don't cause capitalist economic crisis, they do bite into the bosses' profits. The rich will hire the best politicians and lobbyists to try and keep that from happening. So it's interesting to note that the recently released minutes of a Federal Reserve Open Market Committee meeting held in August show these central bankers keenly interested in the UPS strike. Yes, that's what they talk about over those long, gleaming tables. One can see the deep frown lines in their faces as, according to the minutes, they express their concern that the strike "might well be a harbinger of more militant labor negotiating attitudes." DIFFERENT THEORIES, SAME GOAL There are different theories within the capitalist ruling class that shape government economic policy. Green span is on the conservative side, preferring high unemployment and low inflation. Others who are more liberal, generally known as Keynesians, think that the economy performs better when more workers have more money to spend. One such liberal economist, Robert Eisner, recalled in an Oct. 11 opinion piece in the New York Times that today's level of unemployment, around 5 percent, is actually higher than the 4 percent target mandated by the Humphrey-Hawkins Full Employment and Balanced Growth Act of 1978. This legislation, however, has no teeth. Both the liberal and conservative camps of capitalist economists have the same goal: to keep profits growing and prevent a serious collapse of the economy. If they are concerned about the workers at all, it is only as necessary elements in the process of production and producers of surplus value. But in fact, neither school gets to the heart of the matter. Neither of them addresses--nor can they--the real problem, which is the very system of commodity production itself and the drive for profits. Nor has either school been able to predict or tame the capitalist economy, which has a life of its own. What they really boil down to is different political approaches to government spending, taxation, and other areas of intervention into the economy. When the capitalist government has shifted from one approach to another--for example, when it adopted Keynesian spending on public works during the Great Depression--it was not because this was a proven cure for the generalized economic collapse that had hit the whole capitalist world, but because big business feared the revolutionary potential of a desperate working class. Greenspan and his fellow bankers are not that afraid of the workers yet. So they think they can put over their cockamamie theories about high wages threatening economic stability. They'll have plenty of support from those in big business who see this approach as a club to threaten the labor movement. The workers' movement shouldn't be alarmed. If the conditions are ripe to fight and win higher wages, organize new workers, get better contracts--they should go for it. - END - (Copyright Workers World Service: Permission to reprint granted if source is cited. 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