avatar
Bailouts & Economic Rights








Bank bailout opens door to raising
economic rights for working families

by Roger Bybee

The bailout of Wall Street is lightening the already-skimpy bank accounts of most American taxpayers of some $700 billion. But it also shows signs of enlightening the public about government’s role and a revived concept of economic rights, creating sweeping new opportunities for a progressive restructuring of the economy. 

First, the myth of a free market operating without government support has been decisively shattered, crashing faster than the value of so many retirement accounts. The "invisible hand" of the government intervening to support favored players in the market has suddenly become glaringly obvious. Millions of ordinary Americans–faced with jobs going overseas, soaring health costs and shrinking benefits, plummeting home values and the prospect of foreclosure–are now asking, "Where’s our bail-out?" 

Second, the current collapse in spending power and the too-glaring inequity in addressing only Wall Street’s problems open the door for re-asserting the concept of economic rights for working Americans. This notion was briefly but memorably sketched out by Franklin Delano Roosevelt In his 1944 Inauguration speech where he discussed an "Economic Bill of Rights." Undergirding this conception is the premise that the purpose of the economy is to serve human needs, rather than to sacrifice human aspirations to the gears of vast, relentless economic machine.

The past four decades of intensified corporate-directed globalization have, until this moment, all but erased the notion that working Americans have any room to assert economic rights of any sort.  Even the clearly-established legal right to organize unions now exists only on paper. Employers feel free to routinely fire workers for exercising their rights to organize, sending a message of fear with 32,000 such firings last year alone. This is coupled with threats of relocation to Mexico used by 68% of manufacturers faced with organizing drives.

More generally, average Americans are repeatedly warned–by their employers, by most politicians of both parties, and almost unanimously by the major media–that they have to give back family-supporting wages and benefits achieved over decades, pay higher taxes so corporations pay less, and swallow a diminished voice in democracy in order to avoid impairing the competitiveness of US manufacturers and thereby keep them in the US. The safety net–unemployment compensation, welfare, and job training (of course, of limited use when the labor market is shrinking)–has been thoroughly shredded. The dominant message about surrendering hard-won economic and social rights: "Get used to it," as the Milwaukee Journal Sentinel put it.

But it’s become increasingly obvious that the sacrifices have been both one-sided and futile. While workers toiled longer hours (highest in the world) for less pay, the outflow of US jobs to low-wage, high-repression nations like China and Mexico became a torrent. Currently, for example, 60% of exports into the US from China were produced in US-owned subsidiaries in China.

 

But pro-corporate globalizers of both parties and leading media voices have been exhorting working people to passively  accept "reality" and to accept the burden of individually re-molding their entire lives via "retraining," and re-shaping society as a whole to make American institutions more corporate-friendly.

The notion of economic rights for workers as well as corporations? Forgetttaboutit, as the wise guys say. In calling for Americans to give up any notion that corporations owe workers a reciprocal loyalty for years of sacrifice and hard work, former Clinton Commerce Dept. official David Rothkopf declared: "The real entitlement we need to get rid of is our sense of entitlement." In the same vein, Newsweek’s Fareed Zakaria praises globalization’s "celestial mechanism for discipline."

 

However, we have now entered a profoundly different era where the economic outcomes of the "no entitlements" strategy are looking far less than "celestial" to the majority of Americans who, at the very same moment, are now seeing that they are financing the recovery of the US economy. The richest 1% currently earns some 22% of all annual income in the US, more than the bottom 50%. One out of five manufacturing jobs has been lost since 2000, reflecting a hollowed-out productive capacity coinciding with a financial-services sector accounting for 40% of domestic corporate profits. Meanwhile, the "retraining" and education prescribed for displaced workers by Friedman and others appears utterly futile in light of Princeton economist Alan Blinder’s estimate that up to 42 million professional jobs now in the US are "highly off-shorable" to China, India, and other low-salary locales.

 

Further stoking the awareness of glaring inequality are the non-stop indulgences of the financial elite who are cavorting about with remarkable obliviousness to public’s rising outrage. For example, as former Goldman Sachs managing director and author Nomi Prins notes, Goldman Sachs set aside $11.4 billion during the first nine months of this year–slightly more than the firm’s $10 billion US government gift–to cover bonus payments  for its 443 senior partners, who are set to make about $5 million each, and other employees." (Alternet, 11/7/08) [Goldman Sachs has since announced that the top seven will be excluded, but otherwise, it appears that the largesse will continue to flow.]

Over at the insurance giant AIG, recipient of some $75 billion thus far with more to come, executives could not contain themselves from following up a disastrously-publicized gathering at a luxury spa in California with a hunting trip to an ancient hunting lodge in England. NY Times columnist Maureen Dowd described the excellent adventure for AIG’s latter-day nobility: "In an astonishing let-them-eat-cake moment, the A.I.G. big shot Sebastian Preil held court at the bar and told an undercover reporter, "The recession will go on until about 2011, but the shooting was great today and we are relaxing fine." (NYT 11/2/08). 

In a more typical display of corporate arrogance, GM recently moved to close down its Janesville, Wis. plant after running it into the ground with its fixation on low-mileage, high-profit SUVs. While shutting down US plants like Janesville and ending 1,800 jobs, GM has been tripling its capacity in China in recent years.  Starting pay for the demanding, draining and dangerous life of an autoworker has been dropped to $14 an hour. Yet now GM, Ford, and Chrysler are joining the parade of financiers and insurance executives seeking public aid.

 

In this context, progressives inside and outside the Obama administration will have an opportunity to introduce a very different logic to the working of our economy. The guiding rationale: the public funds should work to make the economy the servant of human needs, rather than working people being virtual slaves of the global economy. As long as American citizens are footing the bill for rejuvenating the American economy, they have a right to demand that corporate recipients of taxpayer lifelines accept a set of conditions.  

The bailout of the auto industry, in particular, along with the major financial institutions, represents an opportunity to set a model for re-shaping the economy to serve humanity rather than merely corporate survival alone:  

Democratizing the bailout planning process so that it is no longer dominated by "Government Sachs"–that is, Goldman Sachs execs on loan to the government who have clear conflicts of interest. 

 Green production: To receive assistance, corporations like the Big 3 must dedicate themselves to non-polluting practices and to the production of high-mileage, fuel-efficient cars, trucks, and mass transit.

Bring the jobs homeIf public money is being used to stabilize our economy by propping up the Big 3, banks and insurers, a crucial ingredient in stabilizing the economy for all–not just the top executives–is putting US taxpayers back to work at family-supporting wages. The Big 3 must be required to shut down off-shore plants dedicated to producing for the US market and bring the jobs home. Why bother saving GM, Ford, and Chrysler as institutions unless they revitalize the lives of the workers they have cast off? 

 Universal, quality healthcare as a right. If the US manufacturing sector is to restore its competitiveness, lowering health costs is imperative. But that will mean removing private insurance firms from their commanding role in the healthcare system, where their presence imposes a bureaucratic burden of $350 billion to $400 billion annually.

A moratorium on home foreclosures: Allowing a wave of foreclosures to ripple through American neighborhoods will de-stabilize American families and communities and further drive down the value of surrounding housing. A more sensible approach: court-overseen re-negotiation of mortgage payments for victims of the sub-prime loan vultures. 

Additional principles would cover regulation of executive compensation and the financial practices of banks and insurers.

If some CEOs don’t want to play by these rules in return for a publicly-funded transfusion for their corporations, let them face a guillotine built by their own shareholders.

 

 

Leave a comment