Giant corporations, loyal to coin and faithless to country, staged a public display of blubbering in the run up to this week’s fourth round of negotiations to revise the North American Free Trade Agreement (NAFTA).
Whaa, whaaa, whaaaa, groups like the U.S. Chamber of Commerce sniveled into the swamp from which they crawled to conduct their press conferences. President Trump isn’t doing what corporations want, they wailed.
The President’s trade priorities, which he repeatedly stated on the campaign trail, do not include groveling to the whims and whining of corporations or their toady, the U.S. Chamber of Commerce. President Trump said he would create good, American jobs. To do that, he wants more stuff made in America and less stuff made in factories off-shored by greed-motivated American corporations.
One of the mysteries attending the eclipse of the political center and the rise of left and right, both in the United States and in Europe, is why it has taken so many by surprise. When economies fundamentally alter their course, to the detriment of most, a radical shift in nations’ politics — for both better and worse — shouldn’t be so astounding, particularly when an economy’s dysfunctions have been clear for many years.
The United States’ economic dysfunctions have been apparent for decades: The decline of manufacturing, which provided middle-income jobs to millions, and the burgeoning of the low-wage service sector were visibly underway by the 1980s. So, too, was the shrinking of unions, and with it, the ability of workers to bargain with their employers. By now, it’s clear that long-held beliefs about how an economy works — for instance, that declining unemployment should be accompanied by higher wages — need to be altered, or at least qualified. Since the depth of the Great Recession, in 2009, the unemployment rate has been cut nearly in half, but despite its decline over the past year to roughly 5 percent, wages haven’t budged, while median income and the rate of poverty, according to Tuesday’s Census Bureau report, have remained unchanged. A different litany of economic woes vexes most European nations, but on both sides of the Atlantic the belief that the economy generally produces broadly shared prosperity has been shaken, if not shattered.
Under these conditions, voters respond, and should respond, to political leaders who offer compelling explanations and solutions for the harsher economic realities. They respond to those who identify the culprits behind their troubles and say how they’ll diminish their sway. That’s why Donald Trump and Sen. Bernie Sanders (I-Vt.) have connected with millions of voters, and why politicians who haven’t gauged the depth of voters’ anger over the economy’s betrayal of their prospects and expectations have failed to connect.
Sen. Bernie Sanders’s presidential campaign is the first such effort by a democratic socialist since Norman Thomas waged the last of his six such campaigns on the Socialist Party ticket in 1948.
It’s about time.
Historically, the role of the two great American socialist standard-bearers Eugene Debs and Thomas, and such socialist members of Congress as Meyer London and Ronald Dellums, was to advance ideas that their progressive compatriots were sometimes able to enact — partially — years or decades later, or that later were transformed into common sense. Running for president in 1904, Debs campaigned for the eight-hour workday, social insurance and women’s suffrage. Representing New York’s Lower East Side in Congress during the 1910s, London introduced legislation to create paid maternity leave, something Congress still has yet to get around to. In 1942, Thomas was virtually the only prominent American to publicly oppose the internment of Japanese Americans.
So what gives with the American people? Don’t they realize, as my colleague Charles Krauthammer argued last week, “that free trade is advantageous to both sides”?
The sides to which Krauthammer referred, of course, are nations. But perhaps those who’ve experienced such free-trade consequences as factory closings and lower-paying jobs are thinking about two entirely different sides — capital and labor. Trade promoters cite David Ricardo’s 200-year-old assessments of trade’s benefits to nations, but skeptics can mine a rich vein of mainstream economics that demonstrates how trade deals can, and frequently do, benefit major investors at workers’ expense.
As a letter to The Post noted this week, future Nobel laureate Paul Samuelson wrote in 1955 that, under free trade, “national product would go up, but the relative and absolute share of labor might go down.” More pointedly still, another Nobel laureate, Bertil Ohlin, showed that as a result of trade, a nation’s workers could see their wages decline even if none of them lost their jobs.
“Policy,” says David Rolf, the Seattle union official chiefly responsible for the first successful campaigns for a $15 minimum wage, “is just frozen power.” By which measure, the problem with U.S. trade policy for the past quarter-century is that it reflects the growing imbalance of power between investors, able to profit from global markets, and workers, who have lost the institutions that once enabled them to improve or at least maintain their jobs and incomes.
Beyond question, the entry of China, India and the former Soviet bloc into the world labor market has exerted downward pressure on jobs and wages throughout the advanced industrial world. In the United States, that pressure has been particularly intense and widespread. As one paper published last year in the Review of Economics and Statistics concluded, U.S. workers forced out of their jobs by globalization between 1984 and 2002 saw their wages decline by between 12 percent and 17 percent. And that was before the full weight of Chinese competition descended on American manufacturing and an additional 55,000-plus U.S. factories shuttered their gates.
But globalization has not had so grim an aspect in every advanced economy. Like the United States, Germany is home to a large number of iconic manufacturers — Volkswagen, Daimler, Siemens, to name a few — that have factories all over the world. Yet Germany frequently has the world’s largest trade surplus while the United States perennially runs the world’s largest trade deficit. More remarkably, German manufacturing workers make a good deal more than their American peers: Their hourly compensation averaged $46 in 2012, $10 more than the U.S. average, according to a Labor Department survey.
“Raising wages is the single standard by which leadership will be judged,” AFL-CIO President Richard Trumka announced Wednesday at the federation’s conference unveiling labor’s political agenda. To that end, he said, the AFL-CIO would launch projects this year in the four states that hold the first four presidential primaries and caucuses of 2016 — Iowa, New Hampshire, Nevada and South Carolina — as a way to make presidential candidates spell out exactly what they would do to boost Americans’ increasingly anemic wages.
The focus on wages is hardly new to U.S. labor, of course. In 1996, Trumka’s predecessor as federation president, John Sweeney, co-authored a book with David Kusnet titled “America Needs a Raise.” Since Sweeney’s book appeared, however, the raise has all but disappeared from the lives of U.S. workers. As Sen. Elizabeth Warren (D-Mass.) noted in addressing the conference, the bottom 90 percent of Americans, who received 70 percent of the income growth between 1935 and 1980, have gotten precisely zero percent of the income growth since 1997.
Haltingly, with understandable ambivalence, the American labor movement is morphing into something new. Its most prominent organizing campaigns of recent years — of fast-food workers, domestics, taxi drivers and Wal-Mart employees — have prompted states and cities to raise their minimum wage and create more worker-friendly regulations. But what these campaigns haven't done is create more than a small number of new dues-paying union members. Nor, for the foreseeable future, do unions anticipate that they will.
Blocked from unionizing workplaces by ferocious management opposition and laws that fail to keep union activists from being fired, unions have begun to focus on raising wages and benefits for many more workers than they can ever expect to claim as their own. In one sense, this is nothing new: Unions historically have supported minimum wage and occupational safety laws that benefited all workers, not just their members. But they also have recently begun investing major resources in organizing drives more likely to yield new laws than new members. Some of these campaigns seek to organize workers who, rightly or wrongly, aren't even designated as employees or lack a common employer, such as domestic workers and cab drivers.
“The question is, ‘How do we help people at the bottom rather than thwart people at the top?’” Harvard economics professor Gregory Mankiw, who served as a leading adviser to President George W. Bush and Republican presidential candidate Mitt Romney, recently asked. The set of beliefs behind this question — that economic inequality isn’t the problem we should address; that we should focus instead on better educating the poor so they can earn more — has increasingly become the fallback position of conservatives in the debate over rising economic inequality.
Han Dongfang believes that China’s workers may one day compel the country’s Communist Party to actually become social-democratic. I’m not sure if that makes Han the most credulous of China’s democracy activists or the canniest strategist now working to democratize that nation. I am sure, however, that he’s had more successes than anyone else in empowering Chinese workers.
Speaking last week to a Washington conclave sponsored by the Albert Shanker Institute, Han recounted the victories that striking Chinese workers have won over the past four years. In 2010, workers at a huge Honda plant shut off the power and walked off the job to win a living wage. They made clear their intent to stay out—and not to damage the factory. Surprisingly, the local government didn’t send in the police. Eventually, a mediator came in to meet separately with both workers and management, and persuaded Honda to give its employees a 32 percent wage increase. “This was the first collective bargaining in China,” Han said.
The conservative majority on the Supreme Court today took up the case of some of America’s most disadvantaged workers, and ruled that they should be disadvantaged some more. The five-to-four ruling in Harris v. Quinn goes a long way to crippling the efforts that unions have made to help these workers get out of poverty.
The standard argument — really, the only argument — against raising the minimum wage is that it will lead to job loss. The argument is beloved by die-hard opponents of raising the wage because it provides them with a veneer, however flimsy, of concern about the welfare of the working poor.
Economic studies have repeatedly shown that argument to be spurious. Now the latest survey of 350,000 small businesses from Paychex, a payroll provider company, and IHS, a business analysis firm, provides strong indications that the exact opposite may be true.
What’s happening in cities can be described as Obama’s agenda trickling down to the jurisdictions where it has enough political support to be enacted—but it’s also the incubation of policies and practices that will trickle up. With considerable creativity and limited power, the new urban regimes are seeking to diminish the inequality so apparent in cities and so pervasive nationwide. They are mapping the future of liberalism until the day when the national government can bring it to scale.
The word on Americans—one bit of conventional wisdom that is nonetheless true—is that they are ideologically conservative and operationally liberal. They are opposed to big government but support actual universal government programs like Social Security and Medicare.
Confronted with Obamacare, conservative Americans have taken this paradox to new heights. They intensely dislike the program, but they like what it actually does.
When President Obama delivers his State of the Union address this month, he will surely highlight the issue of growing economic fast-track legislation that would limit congressional input in the accord to facilitate its ratification.
If he does both — bemoan rising inequality and promote yet another free-trade agreement — his speech will rate a chapter in the annals of self-negation.
By now, even the most ossified right-wing economists concede that globalization has played a major role in the loss of American manufacturing jobs and, more broadly, the stagnation of U.S. wages and incomes. Former Federal Reserve vice chairman Alan Blinder has calculated that 22 percent to 29 percent of all U.S. jobs could potentially be offshored. That’s a lot of jobs: 25 percent would translate to 36 million workers whose wages are in competition with those in largely lower-income nations. Of the 11 nations with which the United States is negotiating the TPP, nine have wage levels significantly lower than ours.
It was a damned-if-you-do/damned-if-you-don’t contract that Boeing offered its workers last week, and its workers responded accordingly. Confronted with a contract that transformed their pensions into 401k’s, and with the company’s threat to relocate production of its new 777x to some other, lower-wage state unless its workers took the deal, the members of the International Association of Machinists Puget Sound/Boeing district approved the company’s offer by a suitably ambivalent 51-percent-to-49-percent margin.
Two months earlier, the same members had rejected management’s offer by a two-to-one margin—whereupon Boeing invited other states to offer it relocation deals. Shortly before the second vote, the company announced that 22 states had responded with proposals—promising tax abatements, free land, anti-union public policies, and Lord only knows what else. If the company took one of those states up on its offer, as many as 10,000 of the 80,000 Boeing jobs in the Greater Seattle area would move. If it didn’t move, Boeing would still make out like a bandit: the state of Washington had pledged to give it a mind-boggling $8.7 billion in tax breaks if it stayed. The union’s national leadership reluctantly recommended that the workers vote yes; the local leadership strongly recommended that they vote no. In the end, the workers’ 51-49 vote mirrored the split among their leaders.
American liberalism and the Democratic Party — two partially overlapping but by no means identical institutions — have set themselves an unusually clear agenda for 2014: reducing economic inequality and boosting workers’ incomes. These are causes they can fight for on multiple fronts.
Raising the minimum wage should offer the course of least resistance. Although congressional Republicans may persist in blocking an increase in the federal minimum wage, they do so at their own peril. Raising the wage is one of the few issues in U.S. politics that commands across-the-board public support. A CBS News poll in November found that even 57 percent of Republicans support such an increase.
Democrats have concluded that they can turn Republican legislators’ opposition to raising the wage into an electoral issue by using state ballot measures. As states are free to set their own minimum-wage standards — though the rates take effect only when they exceed the federal minimum — Democrats are working to put wage-increase initiatives before voters in states that will have contested House and Senate races in 2014, including Arkansas, Alaska, South Dakota and New Mexico. Such ballot measures have proved an effective way to increase turnout of low-income and minority voters, which can translate into more ballots cast for Democratic candidates.
