The Jobs Crisis and the Wall Street Occupation

President Obama’s September 8 call for passage of the American Jobs Act, whatever its transparent political motivations and programmatic limitations (and even counter-productive features), may serve to reinforce fast-spreading popular movements like “Occupy Wall Street.” Originating in lower Manhattan’s financial district by a diverse collection of the young and economically stressed, Occupy Wall Street has inspired imitators in numerous cities across the U.S. and has rapidly connected with a labor movement seeking leverage in a globalized capitalist system. While the protesters have been savaged in corporate media like the New York Times for not producing easily-digestible demands, for the protesters, the most immediate concern is job creation. Given the depth of the jobs crisis, it is remarkable that Obama waited until September of his third year in office to propose the Jobs Act. Obama and his team of economists and advisors—drawn almost exclusively from the ranks of Wall Street—had been unwilling to recognize that combating the jobs crisis—with about 25 million either out of work or desperately seeking full-time work—is the nation’s central priority. The jobs crisis has contributed to the growing disparity in income in America where the richest 1 percent earns 23.5 percent of all income and the wealthiest 20 percent holds 84 percent of all wealth. This new “Gilded Age” is perpetuated by the ever-expanding ability of the wealthiest Americans to “invest” in campaign contributions to candidates in a system of legal “payoffs” and policy “paybacks” in the form of subsidies, tax breaks, government contracts, and takeovers of newly-privatized public institutions.


Accountability For Wall Street


While none of the major figures implicated in the Wall Street meltdown of fall 2008 have been indicted on any charges by the Obama Justice Department headed by former corporate attorney Eric Holder, some 700 protesters have been arrested in a single day.


According to Ron Suskind, author of the new book Confidence Men, Wall Street banks remain too big to fail and largely disinterested in investing in the productive economy. The much-heralded “Wall Street reform” contained in the Dodd-Frank bill accepted the financial industry’s basic operational model, which privatizes immense gains while exposing the vast majority of American taxpayers to vast ongoing risks. The limited number of effective regulations contained in the Dodd-Frank bill were largely inserted by progressive Congresspeople over the objections of Treasury Secretary Tim Geithner and the Federal Reserve, according to economist and Washington observer Robert Kuttner. Even at this stage of the game, with Wall Street enjoying spectacular profits and bonuses, Obama continues to oppose the notion of a small tax on each Wall Street transaction as proposed by Nobel Prize economist James Tobin as a means of both raising revenue and creating a dis-incentive for short-term, parasitic investments that do not contribute to real job-creating economic activity.


As protesters sense their growing strength across the nation, it is unlikely that they will passively wait for Obama’s package of tax breaks and subsidies to produce trickle-down job creation in “the private sector,” as Obama reverently refers to Corporate America. With the jobless, under-employed, and their hard-pressed allies in labor now sensing the potential disruptive power wielded by thousands of determined demonstrators in the streets, it seems highly probable that they will press hard for direct public-service job creation like the insurgent and disruptive unemployed workers and industrial union movements did in the 1930’s Great Depression.


The Occupy Wall Street protesters and their advocates have also been hammering at the stunning new levels of inequality pervasive in America. While 25 hedge-funds managers on Wall Street collectively raked in $25 billion last year, worker wages in inflation adjusted terms have receded to 1973 levels, as economist William K. Tabb notes. Recent figures show that the share of income claimed by the richest 1 percent is the highest share since 1928, just before the U.S. economy exploded into the Great Depression marked by the drop in effective consumer demand by the majority of citizens. Even the CIA’s annual World Factbook, which ranks nations on a “Gini” formula for inequality, places the U.S. in the company of the Philippines, Ecuador, and Rwanda.


The progressive coalition Strengthen Social Security points out that Obama’s payroll tax holiday for large businesses will swell the coffers of corporations already awash in cash. “Corporations are already sitting on substantial cash reserves; an employer payroll tax cut will increase these cash holdings without any guarantee of additional hiring,” the group notes. “Corporations were sitting on $1.9 trillion in liquid assets during the first quarter of 2011 (the most current data), the largest such sum ever recorded. Moreover, they made a record $3.8 trillion in profits in the second quarter of 2011. Most companies are not using their cash to hire new employees now. A tax cut will just fatten their bottom line.”


An estimated 5.6 million U.S. jobs have been wiped out and 43,000 U.S. factories closed since the North American Free Trade Agreement with Mexico in 1994 and subsequent trade deals with nations like China. The U.S. economy cannot sustain the impact of additional trade deals that grant corporations special rights over sovereign governments and feed a race to the global bottom on wages, argues Todd Tucker, research director of Public Citizen’s Global Trade Watch. Yet, in the name of domestic job creation, Obama’s jobs program promotes three “free trade” agreements that will: 

  • increase U.S. job losses to South Korea
  • reward Colombian elites for their reign of terror against unionists
    which has resulted in some 2,500 deaths
  • intensify the exploitation of workers there already toiling in misery

  • permanently consolidate Panama’s status as a tax haven for U.S. corporations, millionaires, and billionaires


Moreover, the International Associations of Machinists contend, persuasively, that the South Korea deal will not only cost an estimated 159,000 U.S. jobs—as projected by the Economic Policy Institute’s Robert Scott—but also allow South Korean to serve as a “funnel” for components produced by near-slave labor in North Korea and China.


While Republicans generally love “free trade” agreements because of the extraordinary degree of power granted to global corporations—especially those like the Colombia FTA stripped, with Democratic agreement, of its labor protections—they have been scuffling with the Democrats over the extension of Trade Adjustment Assistance to workers who will be displaced by the FTAs. Then there are partisan differences among conservatives: Republicans want no safety net for workers whose jobs are relocated, while conservative Democrats are content to see largely worthless consolation prizes, such as re-training for non-existent jobs, included. If the FTAs are to pass, Obama will have to rely on the votes of a majority of stridently anti-worker Republicans and a relative handful of conservative Democrats.


The fight over the “free trade” agreements threatens to become an explosive battle in the coming months now that legislation is being introduced. While top labor officials may attempt to contain the ferocity of the battle over these job-exporting deals with the notion of avoiding divisiveness that might, in their eyes, undermine Obama and produce a far-Right Republican president, rank-and-file unionists are likely to view Obama’s trade proposals as a Clinton-style betrayal of their votes and activism on Obama’s behalf in 2008.


Surrendering To the Right On Post Office


In yet another capitulation to the right wing, which has long despised the U.S. Postal Service as a model of public enterprise whose work could be privatized, “President Obama has agreed to a plan to cut Saturday delivery,” David Morris reported on “The Post Service’s management wants to close 2,500 post offices immediately and up to 16,000 by 2020.” Further, Representative Darrell Issa (R-CA) has introduced a bill that could end free door-to-door delivery.


These cuts would be especially devastating in terms of service to low-income people and senior citizens lacking computer access, small towns, and rural communities. It would also short- circuit the flow of ideas and information via magazines and newspapers.


At the same time, slashing tens of thousands of jobs in the post office—one of the public-sector institutions where over 20 percent of African-Americans are employed—will serve as a  counter-stimulus to economic recovery.


For its part, cheerleaders for unfettered “free enterprise”—actually state-supported “crony capitalism” in practice—have no alternative proposals for job creation and investment except to heap more “incentives” (i.e., tax breaks) among those who already have all the resources for which they could possibly dream. For advocates of free-market fundamentalism, which include all of the Republican presidential candidates, “Job Creators”—their term for CEOs—must be:


  • relieved of the supposedly massive burden of “uncertainty” caused by Obama’s proposals for a return to Clinton-era tax rates on millionaires and billionaires
  •  the danger of enforcing regulations designed to prevent more environmental and worker-safety disasters like the BP Gulf of Mexico catastrophe and the Massey mine explosion that killed 29 miners last year
  •  the supposedly job-destroying impact of federal deficits


The Republican claim, as explained by one of their dimmest bulbs, Jeb Hensarling (R-TX) stated September 8: “Deficit reduction is part of job creation.” Rather than use federal jobs programs, expanded unemployment benefits, and other federal spending to stimulate an economy obviously starved for consumer spending, Hensarling advocates a tax holiday for the $1 to $1.5 trillion in foreign profits stashed offshore by U.S. corporations, a proposal that proved counter-productive when employed in 2004 and that would accelerae the pace of U.S. firms offshoring jobs.


Taking Things Away


The pro-corporate intellectual elite, exemplified by the New York Times’ Thomas Friedman and his co-author of That Used to Be Us, Michael Mandelbaum, remain impervious to the damage done by corporate globalization. They diagnose America’s economic problems in terms startlingly similar to those one would expect from the likes of Governor Rick Perry of Texas or Governor Scott Walker of Wisconsin. According to Mandelbaum, the leading task of America’s government is not a relentless focus on job creation and protecting job and retirement security, but “the great task of government and of leadership is going to be about taking things away from people.” Presumably, he is not referring to the CEOs who guide the global economy. Further, “to lead now is to trim, to fire or to downsize services, programs or personnel.” Referring not to those who looted Wall Street or plundered America’s productive base, he likens working Americans to locusts that have eaten “the prosperity that was bequeathed us.”


In contrast to the stream of social Darwinism flowing so loudly from leading Republicans and Democratic elites—Obama’s jobs speech offered a substantially more human vision of America.


Obama outlined a set of economic principles with which most progressives would agree: “What we can’t do—what I won’t do—is let this economic crisis be used as an excuse to wipe out the basic protections that Americans have counted on for decades…. I reject the idea that we need to ask people to choose between their jobs and their safety…. I reject the argument that says for the economy to grow, we have to roll back protections that ban hidden fees by credit card companies, or rules that keep our kids from being exposed to mercury, or laws that prevent the health insurance industry from shortchanging patients…. I reject the idea that we have to strip away collective bargaining rights to compete in a global economy. We shouldn’t be in a race to the bottom where we try to offer the cheapest labor and the worst pollution standards.”


What’s Our Strategy?


But as emphasized above, there is a vast gulf between Obama’s statement of principles and his actual political strategy of offering under-funded and politically circumscribed job-creation programs, capitulating to the right wing on the deficit and public employment, appeasing his donor base on Wall Street with weak regulations, and introducing “free trade” legislation which contradicts some of his most central electoral appeals.


Given the increasingly weak attachment and declining enthusiasm of key elements of Obama’s electoral base—labor union members, Latinos, and African-Americans—for his 2012 campaign, Obama remains vulnerable to challenges like the Occupy Wall Street movement. Strategic disruption and collective defiance conducted independently from the Democratic Party, but designed to extract significant policy concessions from it, is likely to offer our best hope of transforming the direction of the Obama administration toward jobs, greater economic equality, effective regulation of Wall Street, and halting rather than promoting the export of U.S. jobs.


Reflecting on their examination of the unemployed workers’ movement of the 1930s, the industrial union movement, the civil rights movement, and the welfare-rights movement, Piven and Cloward argue that insurgent movements exert the most power when two conditions ripen and coincide: “Marginalized groups can find levers of power for disrupting the routines of daily social order, as exemplified by sit-down strikes by industrial workers at auto plants that cut off the flow of auto production and subsequent profits to the owners. But even disrupting the order normally found in a financial district generates tensions within ruling groups.


“Second, when political parties are confronted with electoral instability (i.e., the possible defection of crucial allies and sources of votes), they are vulnerable to fracture and therefore more likely to grant policy concessions to insurgents rather than risk the potential costs of ongoing disruption.


“Reviewing the lessons from each of the movements that they examined, Piven and Cloward concluded: ‘Reform required a break with an established pattern of government accommodation to private elites.’ Concessions were won by the protestors only when political leaders were finally forced, out of a concern for their own survival, to act in ways which arouse the fierce opposition of economic elites.… Under conditions of severe electoral instability, the alliance of public and private power is sometimes weakened, if only briefly, and at these moments a defiant poor may make gains.”


The present moment may be presenting progressives with just such an opportunity. If labor, progressives, and the jobless play their cards right, they could potentially reap both substantial policy changes and move toward consolidating a genuine, long-term mass movement fighting for economic and social democracy.  


Roger Bybee is a Milwaukee-based writer, publicity consultant, and former editor of the Racine Labor Weekly.