The Corporate Culture and The Social Contract

By C. River Smith

The President recently proposed an extension of the tax cut which benefits only those who earn annually around $300,000 and above. The president has also proposed an extension of the so called death tax, which really only benefits the richest 1% of the population. Even in the homeland security bill, at the behest of the president, a provision protecting drug companies against state suits for childhood vaccines that have caused autism, was inserted. This will save the drug companies millions. In the mean time, he and the republican leadership in congress have blocked any effective prescription drug program for medicare recipients. They have also effectively blocked any congressional effort to expand affordable medical coverage to the millions of working poor. Further, the president has opposed any increase in the minimum wage. As we look at these behaviors, it might be of interest to examine the social contract that another president envisioned at the close of World War II.

In a fireside chat delivered to the American people in January of 1944, President Franklin Roosevelt said that the new social contract must provide:

The right to a useful and remunerative job…;

The right to earn enough to provide adequate food and clothing and recreation;

The right of farmers to raise and sell their products at a return which will give them and their families a decent living;

The right of every businessman, large and small, to trade in an atmosphere of freedom from unfair competition and domination by monopolies …;

The right to every family to a decent home;

The right to adequate medical care and the opportunity to achieve and enjoy good health;

The right to adequate protection from the economic fears of old age and sickness and accident and unemployment;

And finally, the right to a good education.

So how has our culture done with that social contract in the almost sixty years since President Roosevelt proposed it? In real terms close to ten percent of our adult population is unemployed or under employed at any time during the year. Because millions of manufacturing jobs have been replaced with lower paying service sector jobs, most wage workers are not making a wage adequate to create any security. Over eight hundred thousand workers will be without unemployment next month because the president and the congressional leadership decided it was more important to pass a bill to protect insurance companies than it was to pass a thirteen week extension for unemployment insurance. Due to credit cards, most families can afford entertainment even if they can’t afford economic security.

While there has been much legislation passed to protect farmers, most of the money has gone to the largest corporate farms, while more and more family farmers go bankrupt each year.

Almost sixty years since Roosevelt’s social contract called for a fair marketplace, in almost every industry the largest corporations have shut off the market for small businesses, making it harder than ever for the capital poor but creative entrepreneur to succeed.

While more people than ever now own homes, there are also more foreclosures and more homeless families than at any time since The Depression. In the mean time, every major industrialized democracy in the world except The United States has a cradle to grave medical system that guarantees adequate health care for all it’s citizens. Almost sixty years after Roosevelt’s commitment, every year we hear threats about how the social security system is not going to be there for future workers. People who have toiled their whole life cannot feel secure about their retirement years. Finally, the good education that Roosevelt referred to was one that helped to guarantee a decent job. High school graduation no longer guarantees that, and unlike our democratic allies, we do not insure that all children can afford college.

Franklin Roosevelt made that social contract at a time when the typical CEO made less than twenty times what their typical worker made. Today corporate bosses make over four hundred times as much. When Roosevelt made the contract, corporations paid on average 40% more in taxes than they do now. At the time of Roosevelt’s contract the minimum wage was much higher as a percentage of average income, and if one took the minimum wage in 1966 and gave only increases for cost of living, the minimum wage now would be well over $10.00 an hour, instead of under six dollars.

So how have we done? You be the judge.

C. River Smith is a former economics teacher and Associate professor of humanities, now in private practice as a psychologist.