The State of Labor Today

Today seems like an apt day to discuss the state of labor. We are currently mired in an economy with zero job growth, a real unemployment rate of 16.2%, shrinking hours and wages and an increased onus on workers to pay for their own healthcare and retirement savings. And what are political pundits discussing? The deficit, more tax cuts and which Republican buffoon has the best chance of winning the nomination. What happened? I think one key thing to consider is the declining power of unions since the 70s as we moved from a Fordist to post-Fordist economy and neoliberalism replaced Keynesianism as the dominant ideology (arguing unions were actually one of the greatest impediments to economic prosperity).  Another is the fundamental changes that occurred in the 70s and 90s, and how they manifest the economic reality today.

As I have discussed previously, the 70s saw several fundamental changes to the economy. The first was two oil crises, which among other things cut profitability, increased inflation dramatically and led to stagflation for one of the first times in American history. The importance of these two oil crises was the change in orientation it created, away from unemployment to inflation. We still see this orientation today, even as unemployment rates move toward the late 70s levels. The second was the collapse of Bretton Woods brought on by Nixon, that then allowed currencies to freely float. This of course played a huge role in the explosion of globalization (together with major cuts in tariffs and the development and expansion of organizations that regulated global trade). The third, which is related to the second, is the move from a Fordist manufacturing based economy to a post-Fordist service economy. At the time, most economists and politicians agreed that America could survive without making much themselves, as long as they dominated in the worlds of finance, advertising, banking, computing and telecommunications. This has proven to be wrong, as one can compare the German economy to ours and see the fundamental problem.


Rather than focus on the Reagan years, where the real push for deregulation and the shrinking of government started, I'm now going to turn to Clinton and the many negative results of his two terms in office. Clinton was a better Reaganite than Reagan himself, actually cutting the federal budget, balancing it and leading the way to major deregulation that can be blamed as a proximate cause for the current financial crisis. I want to briefly mention four reform bills that have played a big part in the world we live in today. The first was the 1996 Welfare Reform Act, which has essentially led to a lot of single mothers living in abject poverty today. The second was the 1997 Telecommunications Act, which helps explain why five corporations control over 90% of what we see, hear and read (and why they are so derelict in their duties as the fourth estate). The third is the 1998 banking reform act, which essentially ended Glass-Steigel (and led to the irrational exuberance of the big investment firms and banks that created absurd CDOs and other instruments that overvalued a series of investments including secondary market mortgages), allowed banks to charge exorbinant fees and interest rates (remember when credit cards had 10 to 20% rates, 20 day grace periods and $10 late fees -- blame Clinton for the $39 late fees, no grace periods and 39.9% interest rates when you max out your card) and other deregulations that allowed preditory lending. Finally was the failure to enact new regulation on the exploding derivatives market (recommended by a number of top economists), which played a direct role in the collapse.


Where does that leave us today? Instead of discussing the sorry state of the labor market , we are constantly discussing debt? Instead of debating cuts to military spending, we are talking about increased tax cuts for the wealthy and corporations? Instead of working to expand the healthcare reform act, we pretend we know what socialism means and stand on the precipice of a serious healthcare disaster. And instead of a much needed stimulus to the economy, we continue to pretend that markets left to their own wiles can actually solve this profound problem. When Obama entered office over 2 1/2 years ago, I had great hope that he would work to restore faith in government and its ability to regulate, reform and redistribute when necessary. After some early promise, the obstructionist Republican minority (and then House majority) have stifled him at every turn and he has seemed to give up on his project. The only answer today appears to be to return to unions as the last bastion of sanity in a system that cares more for the sordid lives of reality TV stars then the 10s of millions of Americans on the verge of starvation and homelessness, together with a shrinking middle class that sees their quality of life decrease from year to year. Workers unite!