I sense that our thirty-some-year slide to the right is coming to an end. In this diary I look at the public's disenchantment with conservative ideology and hints from Obama about where public opinion is headed. I see faint signs that the public's worship of the heroic entrepreneur is fading, making room for a possible movement to challenge the abuses of power by business elites. My central question is can we create a new New Deal to pull us out of economic malaise, and if the central role of labor law in the first new deal will have a corollary in the next.
Mike Konczal’s editorial in Bloomberg News highlights this ideological shift by focusing on the differences in the 2013 Inaugural Address of President Obama and the 2005 Inaugural Address of President Bush. In 2005 George W. Bush used the term “ownership society” to describe his vision of America where everyone will own their own home and take responsibility for their own health care expenses and retirement savings (with the elimination of Social Security and Medicaid). In his State of the Union message a few weeks later he elaborated that federal taxes will be dramatically lower and businesses will be free from “needless regulation” and “junk lawsuits”. As a result, each atomistic individual will be “an agent of his or her own destiny” free and beholden to none.
To give every American a stake in the promise and future of our country, we will … build an ownership society. We will widen the ownership of homes and businesses, retirement savings and health insurance preparing our people for the challenges of life in a free society. By making every citizen an agent of his or her own destiny, we will give our fellow Americans greater freedom from want and fear, and make our society more prosperous and just and equal.
Konczal, a fellow at the Roosevelt Institute, points out that in an “ownership society,” risks are shifted to individuals and families. And while conservatives, he contends, are still firm believers, the events of recent years have made the idea of an ownership society laughable to most Americans. Has the expansion of home ownership made our society more “prosperous, just and equal”? No, it has subjected millions of families to both the rollercoaster of the free market and to widespread fraud (“they didn’t tell me that the rate was only a short term “teaser rate” that would go up by 3 to 4 percentage points!”). Has the move away from defined benefit pensions and into 401K retirement plans “given every American a stake in the promise and future of our country?” No, big investment banks have pulled vast amounts of wealth out of the rest of the economy in such a way that their profits and executive compensation skyrockets while the value of the assets backing the 401Ks plummeted during the financial crisis and are only now catching up.
Konczal reveals the darker side of the ownership society philosophy.
While … “compassionate conservatism” seem[s] to contrast with the “47 percent” meme of the Tea Party versus the looters, these are just two sides of the same coin. Or, perhaps, the good cop and bad cop of the ownership society. The good cop offers you a range of tax-free personal accounts … the bad cop tries to stigmatize and dismantle what remains of government assistance.
In the 2012 presidential election, most voters rejected the candidate who claimed that he would not represent the 47% of voters who believe they are victims and are dependent on government. So what is the ideology being touted by the winner of that election?
In President Obama’s 2012 Inaugural Speech he clearly rejects the ideal of the atomistic ownership society. He strongly affirms the federal government’s role in protecting citizens from risks that they have no control over. In so doing he upholds the ideal of “collective action,” and he hints at the importance of a living wage.
But we have always understood … that preserving our individual freedoms ultimately requires collective action
For we, the people, understand that our country cannot succeed when a shrinking few do very well and a growing many barely make it. … We know that America thrives when … the wages of honest labor liberate families from the brink of hardship.
We, the people, still believe that every citizen deserves a basic measure of security and dignity….. We do not believe that in this country, freedom is reserved for the lucky, or happiness for the few. We recognize that no matter how responsibly we live our lives, any one of us, at any time, may face a job loss, or a sudden illness, or a home swept away in a terrible storm. The commitments we make to each other – through Medicare, and Medicaid, and Social Security – these things do not sap our initiative; they strengthen us. They do not make us a nation of takers; they free us to take the risks that make this country great.
The president also honored the memory of Martin Luther King, Jr. and his followers.
We, the people, declare today that the most evident of truths – that all of us are created equal – is the star that guides us still … just as it guided all those men and women, sung and unsung, who left footprints along this great Mall, to hear a preacher say that we cannot walk alone; to hear a King proclaim that our individual freedom is inextricably bound to the freedom of every soul on Earth.
So, does this presage a new New Deal? President Obama has scrupulously avoided any mention of unions and labor law. Does this speech indicate an opening to reconsider unions or a closed door?
Ellen Dannin, a law professor at Wayne State, has made a strong case for the need to educate the public about the values that underlie the National Labor Relations Act as written in 1935. As a lawyer, she hopes that invigorated public support for the NLRA values together with courtroom strategies emphasizing the act’s original intent will reverse years of harmful legal precedent. I want to explore the educational, consciousness raising side of her argument.
Balance of Power and Freedom from Tyranny
As every student knows, our democracy encompasses many devices to protect against tyranny: The separation of the three branches of government: legislature, executive and judiciary and the division of authority between the federal and state governments, to name the most obvious. What about the tyranny of great wealth? Polls show that most Americans are disgusted by the corrupting influence of money in our electoral process. The hubris of the Sheldon Adelsons and Koch brothers bombarding us with their super pacs pushing their idiosyncratic views has got to stop. We’ve had enough.
Even the image of the American businessman is changing. Our popular culture has long embraced the ideal of the noble businessman. This entrepreneur has used his courage, vision and hard work and his broad knowledge of economics and markets to build a business. He is a leader of men, providing jobs and new products that we can all enjoy. But with Occupy Wall Street, a new character has entered the national imagination: the greedy bankster, arrogant, brazen and fiendishly cleaver, he has never known hardship or productive labor and makes a game out of taking all he can.
If all business leaders were like the ideal entrepreneur, then perhaps we would have no need to curb their power. But reality falls short in two respects: first, the people with power to make the big decisions like plant closings and outsourcing are usually not the same people as the ones who built the business. Anyone familiar with the hostile takeovers and leveraged buyouts knows that the private equity companies can drain a company of its retained earnings along with its reputation among workers, suppliers and buyers and leave it saddled with debt and mortally weakened. If this villainy were better known, Mr. Romney never would have gotten as far in politics as he did. Many in the business press such as Bloomberg and the Economist knew his game and endorsed Obama instead.
The second problem with the myth of the great entrepreneur has to do with externalities. Children are still serenaded with stories of Paul Bunyan clearing forests and Buffalo Bill slaughtering bison, but we now know that unbridled exploitation has consequences. The myth of the entrepreneur is a holdover from those frontier days. He resents any suggestion that he conserve resources, or consider the health and welfare of his workforce. The result is devastation of the land, the devastation in the families of those sickened or injured on the job, and the devastation of communities. Sam Walton may appear a great hero at first glance, but why should Walmart workers have to go without medical care or finally turn to hospital emergency rooms for care (then forcing the hospital takes the loss when they fail to pay) and all the while members of the Walton family rank among the world’s wealthiest individuals?
The good news is we can challenge the abuse of power by the business elite. Our legal philosophy rests on a theory of checks and balances. Corporations as instruments of investors are created and protected by law, and in the 1930s legislators demanded that workers needed to be able to create similar alliances and have similar legal protections. A prominent goal of the NLRA, as stated in the act, is to achieve equality of bargaining power between owners and employees. While the act only applies to bargaining over wages and working conditions in a single firm, the revival of the spirit of the law can present a more far-reaching goal. Business enterprises do not operate in a vacuum and stakeholders include workers and the community. When the profit created by workers, managers and community support structures is used to fight environmental regulation, corrupt the political process, deceive consumers and finance massive lawsuits against competitors, the stakeholders, including workers, need to have a say.
Consider the case of the Ravenswood strike. The seventeen hundred workers were not pitted against those who built the business. The new, union-busting CEO was put in power by a fugitive financier living in Switzerland. When the steelworkers did the hard work to trace the connection, they were also able to expose the contracts that had the U.S. Mint buying metal from this same individual, wanted by the Justice Department. And by winning the strike, the workers ensured that the other nearby businesses in rural West Virginia could still count on strong business from a well-paid workforce. Here is the case of a union acting not as a special interest, not as an impediment to progress, but as a voice of reason standing up to the needless destruction of American manufacturing.
It has been shown that business owners will not take workers concerns into consideration unless compelled to do so, especially in this climate of high unemployment. In order to compel business decision makers to listen, workers and their representatives must work hard at crafting demands that their peers will unite around and that research has shown the company can afford. In this time of shifting allegiances, unions can go further in educating their workers and the public as to the real character of business elites today, and the importance of holding owners responsible for the consequences of their decisions on families, communities and the planet.
Economics, Aggregate Demand, and the Role of Unions
I’ve heard that some cultures reject the idea that illness can be caused by tiny organisms too small to see. Our society really struggles with the idea that recessions can be caused by insufficient aggregate demand. When I hear conservative commentators say that we shouldn’t “spend our way out of this recession” it’s as though they have just declared that a surgeon washing his hands before surgery is performing a ritual based on superstition.
Recent recoveries have been “jobless recoveries” because the declining real wages and the increasing productivity of workers means workers can’t afford to buy the stuff they are producing, and billionaires can’t take up the slack. Real economic recovery requires that either the government make investments in common goods like infrastructure and green energy, thus creating jobs that allow workers to increase their spending, or wages must rise for those already employed so that those workers’ increased spending will get things going again. The postwar economic boom in the United States lasted as long as it did because wages for a large portion of the working class kept pace with increases in productivity, and wages kept up because of the pressure exerted on employers by unions.
So here again, the public needs to be educated about the vital role that unions play in keeping wages in line with productivity gains, and hence insuring resilience against recession. This connection was well understood by FDR and the framers of the NLRA. Roosevelt was frustrated that his attempts to set wages and prices by government decree had failed miserably, and the Supreme Court had repeatedly struck down minimum wage legislation. He supported the NLRA as his last greatest hope that wages could rise so that consumer demand could get the economy operating at full speed.
Democracy
In a democracy conflicts and rivalries are mediated by an inclusive process of dialogue, representation and negotiation. I can openly express my views through speech and prose, I can speak to my elected representatives or work to replace them, and representatives can negotiate with one another in the halls of government. A favorite theme of President Obama has been the evolution of a more perfect union usually applied to matters of race. Workplace democracy could similarly be constructed as a move to a more perfect union.
In 1910 there was a tragedy that served as a catalyst for extensive investigation and dialogue about democracy’s failings: During a labor dispute, union men blew up the Los Angeles Times building and in the explosion and resulting fire 21 newspaper employees were killed and 100 were injured. This brutal act symbolized to many the impotent rage of the disenfranchised. Intellectuals of the period banned together and petitioned the president to set up a commission to investigate industrial violence. The task ultimately fell to President Wilson who was eager to court the labor vote as his best hope for a second term. The commission was headed by the flamboyant lawyer and brilliant campaigner Frank Walsh. The commission toured the country, investigating a number of violent labor disputes (including the Ludlow massacre and a public humiliation of John D Rockefeller). Between the work of the progressive intellectuals and the commission’s work, the concept of “industrial democracy” was widely debated throughout the country. It is this same concept that underlies the NLRA: that free speech, dialogue, and negotiation through representation must extend to the workplace.
But where are we today? Most workplaces are dictatorships. Workers have no free speech rights but can be required to attend anti-union presentations or political diatribes by the boss. How can Americans become skilled in citizenship when they spend most of their lives in tyranny? Workers under tyranny can’t call out abuse and mismanagement, and they can’t keep their wages in line with their productivity. On the other hand, workers who regularly discuss and debate the realities of their jobs and workplaces and their visions for change, who have the motivation to learn to read financial statements and interpret and discuss political policies, these workers are ennobled and enabled to keep our economy on track and our people free from tyranny.