Hedges Takes On Debt Peonage and Our Inadequate Minimum Wage


Posted by Bob Lord

Chris Hedges has a great post up at Truthdig today. He explains how debt is used by our corporate state to control the working poor.

Workers who are unable to meet their debts, who are victimized by constantly rising interest rates that can climb to as high as 30 percent on credit cards, are far more likely to remain submissive and compliant. Debt peonage is and always has been a form of political control. Native Americans, forced by the U.S. government onto tribal agencies, were required to buy their goods, usually on credit, at agency stores. Coal miners in southern West Virginia and Kentucky were paid in scrip by the coal companies and kept in perpetual debt servitude by the company store. African-Americans in the cotton fields in the South were forced to borrow during the agricultural season from their white landlords for their seed and farm equipment, creating a life of perpetual debt. It soon becomes impossible to escape the mounting interest rates that necessitate new borrowing.

And raising the minimum wage to $11 per hour, the same level as 1968 in real dollars, is the key to breaking the chains of debt peonage.

Debt peonage is a fundamental tool for control. This debt peonage must be broken if we are going to build a mass movement to paralyze systems of corporate power. And the most effective weapon we have to liberate ourselves as well as the 30 million Americans who make up the working poor is a sustained movement to raise the minimum wage nationally to at least $11 an hour. Most of these 30 million low-wage workers are women and people of color. They and their families struggle at a subsistence level and play one lender off another to survive. By raising their wages we raise not only the quality of their lives but we increase their capacity for personal and political power. We break one of the most important shackles used by the corporate state to prevent organized resistance.

Once liberated from debt peonage, workers will no longer be passive.

The former Federal Reserve Chairman Alan Greenspan, testifying before Congress, was quite open about the role of debt peonage in keeping workers passive. Greenspan pointed out that since 1980 labor productivity has increased by about 83 percent. Yet real wages have stagnated. Greenspan said this was because workers were too burdened with mortgage debts, college loans, auto payments and credit-card debt to risk losing a job. Household debt in the United States is around $13 trillion. This is only $2 trillion less than the country’s total yearly economic output. Greenspan was right. Miss a payment on your credit card and your interest rates jumps to 30 percent. Fail to pay your mortgage and you lose your home. Miss your health insurance payments, which have been spiraling upwards, and if you are seriously ill you go into bankruptcy, as 1 million Americans who get sick do every year. Trash your credit rating and your fragile financial edifice, built on managing debt, collapses. Since most Americans feel, on some level, as Hudson points out, that they are a step or two away from being homeless, they are deeply averse to challenging corporate power. It is not worth the risk. And the corporate state knows it. Absolute power, the philosopher Thomas Hobbes wrote, depends on fear and passivity.

The only way to break this fear and passivity is to organize workers to break the cycle of mounting debt. And the first step to achieving independence from debt—the primary form of political control by the corporate state—is to raise the minimum wage. There are other solutions—forgiving mortgage and student debt, instituting universal health care, establishing a nationwide jobs program to rebuild the country’s Third World infrastructure, and green energy—but none of this will happen until we are able to mount a sustained mass movement that discredits the corporate state. This mass movement will arise, as Nader says, when we mobilize around the minimum wage.

And, finally, it is not unions, but the 30 million working poor who must be the ones to rise up.

Nader is right when he warns that we are not going to be assisted in this effort by established unions. Union leaders are bought off. They are comfortable. They are pulling down at least five times what rank-and-file workers make. Nader says we have to mount protests not only outside the doors of Walmarts and General Electric plants, not only outside congressional offices, but outside the doors of the AFL-CIO. There is no established institution inside or outside government that will help us. They are all broken or complicit. But there are the 30 million working poor who, if we organize to break the system of debt peonage that holds them hostage, may be willing to rise up. We are bound with many chains and shackles. We will have to break them one at a time. But once we rise up, once we are able to threaten the corporate systems that keep us supine through fear, we will unleash a torrent of energy and passion that will confirm the worst nightmares of our corporate overlords.

I'm not sure that raising the minimum wage to $11 is the key to our salvation, but I sure don't see any downside. In fact, I can't think of a better place to start. 


  1. Wow, this is unbelievable. Did anyone in BfAZ land notice what just happened? I just came oh so close, tantalizingly close, just one tiny mouse click away, from connecting a conservative politician to Chris Hedges. If only. If only.

    But, John, be careful. If those teapartiers caught wind of you reading Chris Hedges they might mess you up. They’re not a tolerant bunch, you know. And anything could happen if they start to thinkin’ you’ve betrayed ’em. Just sayin’

    Seriously, had you clicked through, you would have seen that Hedges actually mentions the Federal debt as well:

    Debt peonage is a familiar form of political control. And today it is used by banks and corporate financiers to enslave not only individuals but also cities, municipalities, states and the federal government. As the economist Michael Hudson points out, the steady rise in interest rates, coupled with declining public revenues, has become a way to extract the last bits of capital from citizens as well as government. Once individuals, or states or federal agencies, cannot pay their bills—and for many Americans this often means medical bills—assets are sold to corporations or seized. Public land, property and infrastructure, along with pension plans, are privatized. Individuals are pushed out of their homes and into financial and personal distress.

  2. And by the way, Rep Kavanagh…I actually like having these discussions with you. Glad you peek in here. I hardly ever agree with you, but I really do enjoy the debate. Thanks.

  3. Let’s not conveniently “forget” that that debt wasn’t run up by this President! You know that, or you ought to know that, and every time you spew that lie, you are willfully lying to your constituents. Stop it. Just stop it. For the party that harps on responsibility, it sure is something to see the tap dancing that goes on when your selective memory kicks in.It’s laughable.

    http://zfacts.com/p/1195.html Republican National Debt: $12 Trillion and Counting This has been going on for decades now, as you can see.

    Let me refer to Forbes (not a liberal bastion by any stretch!) for this truth: http://www.forbes.com/sites/rickungar/2012/05/24/who-is-the-smallest-government-spender-since-eisenhower-would-you-believe-its-barack-obama/

    Rather than have a serious discussion about responsible ways to rein the debt,you engage in this ridiculous blame game, and I, for one, have had enough.I can see that you have fallen into that same mindset because of your response to this story. We don’t have a spending problem, we have a revenue problem.You can’t get something for nothing..and that’s exactly what most Republicans seem to be advocating for these days. When I hear that Republican members of Congress are threatening to shut down the govt over the debt ceiling (a misnomer, by the way)it makes me want to scream.Once again, the so called “party of fiscal responsibility” (another misnomer)advocates not paying the bills IT’S ALREADY INCURRED and voted to spend!! Congress appropriates money, not the President! So just stop with the “Obama administration” is spending tons of money crap…Congress has to approve that spending. You know it and I know it…try being honest for a change. It would go a long way in the honest dialog we need to have.

  4. Let’s not forget the $16.5 trillion in national debt that the Obama administration is placing on our children.