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Unions Aren’t the Problem December 9, 2008

Posted by rogerhollander in Economic Crisis, Labor.
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Posted on Dec 9, 2008

www.truthdig.com

By Marie Cocco

As Congress and the White House lurch toward possible approval of a loan package for the crippled auto industry, we are undoubtedly in store for more union-bashing. Note well that we did not hear any such tirades when vastly larger sums of taxpayer money—with fewer strings attached—were lavished upon the banks and financial industry wizards who created the credit crisis. 

Put aside for a moment the misinformation and outright untruths that characterize conservative attacks on the autoworkers’ unions. No one should be allowed to cast blame on workers who want nothing more than to maintain a middle-class life.

Unions aren’t the problem. They are the solution.

Creating a viable middle class has been the goal of organized labor since labor first became organized. And it is this goal that was abandoned outright by American political and business leaders as they did all they could over the past three decades to encourage a relentless race to the bottom in wages and benefits.

Strip away the financial mumbo jumbo and the credit crisis comes down to this: For decades, as wages and benefits for working and middle-class people stagnated or fell, the only way for them to purchase the goods that make the economy hum was through credit. This was true whether the item purchased was a home, a car—or all the unnecessary gizmos that retailers have been more than happy to tell consumers were the must-haves of the day. Until we understand that we are in the midst of two crises—one the short-term credit crisis and one the longer-term crisis in the failure to pay workers what they need to sustain themselves—we are doomed to repeat this horror.

“If you are a man with only a high school education … your chances of making a wage or salary as good as what your father was making in the late 1970s are not good,” says Gary Gerstle, a Vanderbilt University historian. “We are looking at a deterioration in their life opportunities and living standards, at the same time that an enormous amount of wealth has accumulated at the top of the income ladder.”

It is true that some individuals were reckless in taking on debt. But it is equally valid that American workers simply haven’t been paid what it takes for them to spend enough to keep the American economy growing. “The economy needed levels of expenditure and consumption that most Americans literally could not afford,” Gerstle says.

What do unions have to do with this? To start with, unionized workers make about $200 more per week than do nonunion workers, according to the Bureau of Labor Statistics. The great expansion of the American middle class and an unprecedented rise in living standards occurred between the end of World War II and the 1970s—when unions were far more common and powerful than they are today. Beginning in the 1980s, an ideology of deregulation and anti-unionism took hold, with free-market capitalists arguing that no intervention in the markets—including labor’s intervention—was ever beneficial.

“The promise of deregulation was that this would create so much energy and dynamism at the top that it would all trickle down,” Gerstle says. “Not only would people on Wall Street make all kinds of money, but people on Main Street would find that there would be more dynamism in their lives, more opportunity, more wages.”

Well, people on Wall Street did make all kinds of money. People on Main Street got depressed wages, the demise of guaranteed pensions and 401(k)s that crashed with the stock market. They got health insurance that is barely affordable, if they’ve got insurance at all.

We are engulfed by an economic morass that holds the prospect of being the deepest and broadest downturn of the post-World War II era. It is no coincidence that the percentage of private-sector workers in unions—about 7 percent—is roughly the same as what it was before the Great Depression. Historically, Gerstle says, social movements have needed direct and often unsettling action to capture the public’s imagination and take hold.

This is why we can only hope that events such as the unfolding peaceful occupation of a Chicago window factory by its newly laid-off workers is the start of something much, much bigger. 

Marie Cocco’s e-mail address is mariecocco(at)washpost.com.

Starving for a change November 25, 2008

Posted by rogerhollander in Barack Obama, Economic Crisis.
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Posted on Nov 24, 2008

www.truthdig.com

AP photo / Kiichiro Sato, file

Leah Poare visits a food pantry in Columbus, Ohio. Even with the help of free groceries, Poare and her husband limit themselves to one full meal a day, usually in the evening, so that their three children, ages 6, 7 and 17, can eat breakfast, lunch and dinner.

By Chris Hedges

Elba Figueroa worked as a nurse’s aide until she got Parkinson’s disease. She lost her job. She lost her health care. She receives $703 a month in government assistance. Her rent alone costs $750. And so she borrows money from friends and neighbors every month to stay in her apartment. She laboriously negotiates her wheelchair up and down steps and along the frigid sidewalks of Trenton, N.J., to get to soup kitchens and food pantries to eat.

“Food prices have gone up,” the 47-year-old Figueroa said, waiting to get inside the food pantry run by the Crisis Ministry of Princeton and Trenton. “I don’t have any money. I run out of things to eat. I worked until I physically could not work anymore. Now I live like this.”

The pantry, which occupies a dilapidated three-story art deco building in Old Trenton, one of the poorest sections of the city, is one of about two dozen charities that struggle to provide shelter and food to the poor. Those who quality for assistance are permitted to come once a month and push a shopping cart in a U shape around the first floor where, clutching a piece of paper with allotted points, they can stock up on items using the pantry’s point system according to the number of people in a household. The shelves of the pantry hold bags of rice, jars of peanut butter, macaroni and cheese and cans of beets, corn and peas. Two refrigerated cases hold eggs, chickens, fresh carrots and beef hot dogs. “All Fresh Produce 2 pounds = 1 point,” a sign on the glass door of the refrigerated unit reads. Another reads: “1 Dozen EGGS equal 3 protein points. Limit of 1 dozen per household.”

The swelling numbers waiting outside homeless shelters and food pantries around the country, many of them elderly or single women with children, have grown by at least 30 percent since the summer. General welfare recipients receive $140 a month in cash and another $140 in food stamps. This is all many in Trenton and other impoverished areas have to live on.

Trenton, a former manufacturing center that has a 20 percent unemployment rate and a median income of $33,000, is a window into our current unraveling. The financial meltdown is plunging the working class and the poor into levels of destitution unseen since the Depression. And as the government squanders taxpayer money in fruitless schemes to prop up insolvent banks and investment houses, citizens are callously thrown onto the street without work, a place to live or enough food. 

The statistics are already grim. Our banking and investment system, holding perhaps $2 trillion in worthless assets, cannot be saved, even with the $700 billion of taxpayer money recklessly thrown into its financial black hole. Our decline is irrevocable.  The number of private sector jobs has dropped for the past 10 months and at least a quarter of all businesses say they plan to cut more jobs over the next year. The nation’s largest banks, including Citigroup, face collapse. Retail sales fell in October by the largest monthly drop on record. Auto companies are on the edge of bankruptcy. The official unemployment figures, which duplicitously mask real unemployment that is probably now at least 10 percent nationwide, are up to 6.1 percent and headed higher. We have lost 1.2 million jobs since January. Young men of color have 50 percent unemployment rates in cities such as Trenton. Twelve million houses are worth less than their mortgages and a million people will lose their homes this year in foreclosures. The current trends, if not swiftly reversed, mean that one in 33 home owners will face foreclosure.

There are now 36.2 million Americans who cope daily with hunger, up by more than 3 million since 2000, according to the Food Research and Action Center in Washington, D.C.  The number of people in the worst-off category—the hungriest—rose by 40 percent since 2000, to nearly 12 million people.

“We are seeing people we have not seen for a long time,” said the Rev. Jarret Kerbel, director of the Crisis Ministry’s food pantry, which supplies food to 1,400 households in Trenton each month. “We are seeing people who haven’t crossed that threshold for five, six or seven years coming back. We are seeing people whose unemployment has run out and they are struggling in that gap while they reapply and, of course, we are seeing the usual unemployed. This will be the first real test of [Bill] Clinton’s so-called welfare reform.”

The Crisis Ministry, like many hard-pressed charities, is over budget and food stocks are precariously low. Donations are on the decline. There are days when soup kitchens in Trenton are shut down because they have no food.

“We collected 170 bags of groceries from a church in Princeton and it was gone in two days,” Kerbel said. “We collected 288 bags from a Jewish center in Princeton and it was gone in three days. What you see on the shelves is pretty much what we have.”

The largess of Congress to Wall Street bankers and investors does not extend to the growing ranks of the poor. The U.S. Department of Agriculture’s Emergency Food Assistance Program donated $240 million in surplus food in 2003 to food banks and other programs. Those donations fell last year to $59 million.

States, facing dramatic budget shortfalls, are slashing social assistance programs, including Medicaid, social services and education. New Jersey’s shortfall has tripled to $1.2 billion and could soar to $5 billion for the next fiscal year. Tax revenue has fallen to $211 million less than projected. States are imposing hiring freezes, canceling raises and cutting back on services big and small, from salting and plowing streets in winter to heating assistance programs. Unemployment insurance funds, especially with the proposed extension of benefits, are running out of money. Governors such as Arnold Schwarzenegger in California and David A. Paterson in New York have called special legislative sessions to deal with the crisis.

If Barack Obama continues to turn to the elites who created the mess, if he does not radically redirect the nation’s resources to assist the working class and the poor, we will become a third-world country. We will waste gargantuan amounts of money we cannot afford on our military, our national security state and bloated corporations while we damn the middle and working class to the whims, idiocy and greed of an entrenched, corporate oligarchy. Obama’s appointments of Timothy Geithner as treasury secretary and Lawrence Summers as director of the National Economic Council are ominous signals that these elites remain entrenched.

Dolores Williams, 57, sat in the cramped waiting room at the Crisis Ministry clutching a numbered card, waiting for it to be called. She has lived in a low-income apartment block known as The Kingsbury for a year. Two residents, she said, recently jumped to their deaths from the 19th floor. She had a job at Sam’s Club but lost it. No one, she says, is hiring. She is desperate.

She handed me a copy of The Trentonian, a local paper. The headline on the front page read: “Gangster Slammed for Bicycle Drive-By.” It was the story of the conviction of a man for a fatal drive-by shooting from a bicycle. The paper, as I flipped through it, was filled with stories like these, the result of social, economic and moral collapse. Poverty breeds more than hunger. It destroys communities. There was a report about a 56-year-old woman who was robbed and pistol-whipped in the middle of the afternoon. There was an article about the plight of four children whose two parents had been shot and seriously wounded. “Libraries OK Now, but Future Is Murky” a headline read. Another announced: “Still No Arrests in Hooker Slayings.”

“It is like this every day,” Williams said. 

So while our nation crumbles, physically and morally, while our empire implodes, while our economy tanks, the bankrupt elites who got us here play the merry-go-round game of power in Washington. They will continue to oversee our demise, including the obscene drain of our military and security budget, which now accounts for half of all discretionary spending. Pentagon officials have reportedly asked the Obama transition team for $581 billion, an increase of $67 billion. This increase does not, of course, include the $3 trillion for the wars in Afghanistan and Iraq.  We will pay these loans later.

Banks, automotive companies and investment firms, all sinking under the weight of their own incompetence and greed, head to Washington, usually in private jets, to engage in the largest looting of the treasury in American history. And Congress doles out our money without oversight in the greatest transference of wealth upwards in modern times.

As this pitiful march of folly rolls forward, children in Trenton and across America go to bed hungry. 

The Belly Button Theory of Economics August 26, 2008

Posted by rogerhollander in Belly Button Theory of Economics, Political Essays (Roger).
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The Belly Button Theory of Economics

 

(This was submitted to and rejected by the “Los Angeles Times.”  Arguing that they could not compete with the low wages and health benefits given to its employees by Wal-Mart, three major supermarket chains in Southern California locked out their workers, who refused to accept the cutbacks.  I have to admit that I thought my metaphor was pretty clever and catchy, but it obviously failed to convince the “Times” oped editor.)

 

Call it the belly button theory of economics, if you will.  Every one knows there are two types of umbilicals: innies and outies.  Well, when all is said and done, all complexities aside, doesn’t one’s economy simply break down into what comes IN and what goes OUT?

 

Let’s talk about the ordinary working person.  She earns from her job (IN), and she meets her needs and pleasures by making purchases (OUT).  The well-being of her “economy” depends upon there being at least enough IN to take care of all the OUT.

 

One might be tempted to say that both are equally important, that is income (IN) and the cost of things (OUT).  Here is where I would argue that many economists miss the boat.  I believe that what one does through her work to acquire the means to live (IN) is fundamental, whereas the cost of things (OUT), while important, is secondary.  Think of is this way.  If you are unemployed you sure appreciate a good bargain, but what you really need is a good job.

 

There can also be a “dialectic” relationship between IN and OUT.  Take health care.  It is something we purchase (an OUT).  However, for millions of Americans, their health care comes as a benefit attached to their work (an IN).  In other words, health insurance as a benefit is an IN that offsets the cost of health care, an OUT.

 

That is why I believe it is so important for all working people that in the current labor dispute that grocery giants — Safeway, Vons, Ralph’s and Albertsons — do not succeed in their efforts to cut drastically the wages (IN) and health benefits (IN) of their workers.  They argue that this is necessary in order to compete with the Wal-Mart super stores, who pay their workers substantially less in wages and benefits (cf. Nickel and Dimed, Barbara Ehreneich’s classic study where she tried over a large period of time and failed to be able to live on Wal-Mart wages).  Wal-Mart does this by keeping its prices (OUT) lower than anyone else.  Interestingly, and here is that dialectic at work again, Wal-Mart is able to offer such low prices (OUT) by pressuring its suppliers to cut labor costs (their workers’ IN) in order to provide Wal-Mart with its goods at cut rate prices.

 

In the end, you see, it always boils down to IN(come).  Of course, the worker is also a consumer and naturally loves low prices.  We all appreciate a bargain, and who can blame us?  But if the price of bargains is that, in the long run, we don’t have a living wage (IN) that meets our needs to provide for our expenses (OUT), then the bargain is, in effect, no bargain.  It is a cruel trick disguised as a bonus.

 

Human beings are by nature, first and foremost, producing animals.  We produce the means by which we survive and thrive.  Only then are we able to “consume.”  I am no great fan of capitalism because it treats human labor as a commodity, just one more expense for the capitalist along with things such as materials, rents and other overhead costs.  But as long as capitalism exists, working people have no choice but to demand wages and benefits that meet their fundamental needs.  Health care, along with food and shelter, is one of the most basic of human needs.  Because the United States government, the only one in the world of industrial nations (with the possible exception of South Africa), has not seen fit to provide universal health coverage for its people, then this need for most of its working people gets fulfilled through employer health care plans.  It is not an “extra.”

 

I have spoken with shoppers crossing the picket lines at the supermarkets, fellow working people, who justify their non-support of the grocery workers on the basis that they too must pay part of their health care costs (“If I can’t have it, you can’t have it either”).  This sad lack of worker solidarity is a product of the divide and conquer strategy of the supermarket chains, and it is in contrast to the solidarity the chains themselves have shown by sharing their profits amongst themselves, possibly in violation of anti-trust legislation.  How ironic that the supermarket industry is turning around that famous dictum to read: “chains of the world unite, you have nothing to lose but your workers!”

 

Think of this the next time you are tempted to support them by shopping in one of the on-strike or locked out supermarket chains.

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