Tuesday, March 18, 2014

The Democratic Party's war on the Middle Class

Wags like to say that in Washington D.C. a "gaffe" is accidentally saying what you really think:
[Former Federal Reserve Chairman Alan] Greenspan, in an appearance at the National Association for Business Economics conference (See video), said the U.S. has an "unbelievably deteriorating" public school system.

"If we're not going to educate our kids, bring in other people who want to become Americans," said Greenspan, in arguing for an increase of H-1B workers. Greenspan told attendees at the conference that the H-1B visa "subsidizes the income of everyone in this room, including you and me."

In the context of income inequality, Greenspan put the H-1B program in his light: If the program were expanded, income wouldn't necessarily go down much, "but I bet you they would go down enough to really make an impact, because income inequality is a relative concept. People who are absolutely at the top of the scale in say 1925 would be getting food stamps today," said Greenspan.

"You don't have to necessarily bring up the bottom if you bring the top down," said Greenspan.
H-1B visas are work visas that allow a company to bring a non-citizen to the USA, provided they have a needed high tech skill set.  But unlike a Green Card, the visa is not permanent, or a path to citizenship.  Worse, the visa is held by the company, not the worker.  If the worker changes jobs, he has to leave the country (potentially to return under a different H-1B visa).

As you can imagine, this makes for a very compliant workforce for tech companies:
The other half of the story is that there aren't enough Green cards to give out for the H1-B's that are in line for them. So you end up with H1-B workers in essentially indentured servitude to their employer with no bargaining power driving down wages for everyone else.
Increasing Green cards for existing H1-B workers currently in the US will help the US economy a lot more than creating more indentured servitude.

A little background: The number of Green cards is set by Congress. In 1999 congress increased the number of H1-B's to 190,000 but left the number of employment based Green cards at 135,000. The rule of thumb is that you need 2.2 Green cards for every H1-B issued to satisfy demand (because H1-B workers normally come with spouses and kids). To satisfy demand, they should have increased Green cards to 400,000 when they increased the H1-B numbers to 190,000 - but they didn't.

This created a huge backlog of people waiting for their Green cards - including me. I am 31 years old, I did some math, I will be 62 by the time I get mine at the current rate.

The corporations LOVE the idea of creating more H1-B's but you don't hear a peep about increasing the number of Green Cards. They claim that increasing H1-B's will increase innovation and so on - but without a commensurate increase in Green cards, that is complete nonsense. Someone who has been stuck at the same job for decades can hardly innovate.
What is interesting about this episode is that Greenspan felt comfortable enough to let the mask slip.  Framing the issue in terms of income inequality is also a tell.  Greenspan is married to the famously liberal Democrat and former broadcaster Andrea Mitchell who described Virginia voters as "rednecks".  If Greenspan is thinking in these terms, it's a dead certainty that the rest of liberal Washington is, too.

This is perhaps the greatest damage that Bill Clinton did to the Party: by courting the campaign cash from Big Business, he sold out the Middle Class that used to be the Party's core.  So the Party seems to be willing to sell out the Middle Class (high tech jobs seem to now be "jobs Americans won't do") and sell out the poor (Illegal Alien Amnesty to permanently add 12 Million resident non-citizens to bid down wages).

It's quite strange to find myself continually in agreement with Pat Buchanan - the two political parties are simply the two wings of the same bird of prey.  Maybe Marx was right - the Proletariat is immiserated because business squeezes it to maintain their profit rate.  With help from both the Democrats and Republicans.
You don't have to necessarily bring up the bottom if you bring the top down.
- Alan Greenspan


abnormalist said...

This is part of why I hate to associate myself with the democratic party.

Bill figured it out, you dont win elections catering to the poor and middle classes, you win them with money. Money comes from business, so he sold out the party. In the process he did a lot for college students, sort term gains in manufacturing, and maybe meant overall to help, but lost his way.

NAFTA was the beginning of the end of the American Middle class. Student loan restructuring over the last 15 years undone much of what Clinton achieved.
If we want to actually improve the plight of those in the middle, we need to bring a measure of middle jobs back to America, IE manufacturing or some other skilled trade. Import tarrifs on good produced in countries that dont require a living wage is one way to do this, but no one wants to pay $25 for a barbie doll, or $600 for a 27" TV.

Elevating the bottom doesnt do anything to improve the middle. It just brings some of those who are in the middle back to the bottom.

Either we reestablish a manufacturing base, or we are waiting on our bread and circuses.

Windy Wilson said...

Why isn't an H-1B a Thirteenth Amendment violation?
Everything imaginable is protected by the First Amendment Freedom of Speech and Freedom of the Press (Freedom of Assembly not so much anymore, and there's that "Write Comrade Josef Stalin about your problems" aspect to the on-line petition system instituted by this administration), so why isn't the rest of the Bill of Rights interpreted so broadly?