Corporate GOP Intransigence
And Democrats' Craven Passivity
One of Dr. Martin Luther King’s most memorable and inspiring statements—“The arc of the moral universe is long, but it bends toward justice”—increasingly seems like a desperate hope for tens of millions of Americans in 2013.
During King’s life, the audacious, defiant industrial-union movement of the 1930s and the African American civil rights movement launched in the 1950s and 1960s forced America’s major institutions to extend opportunities and expand democracy to bring in previously shut-out and impoverished groups. But at the present moment, we are confronting 19th century-style intransigence by much of America’s ruling elite and their mostaudible allies within the Republican Party, with a complacent and divided Democratic Party standing by.
In this political climate, America’s ruling class appears to feel free to jettison all values and obligations, except for the maximization of profit. As Colin Leys observed in Market-Driven Politics, “Society is being shaped in ways that served the needs of capital accumulation rather than the other way around.” Similarly, the late Sir James Goldsmith, although a billionaire, was aghast at the way that the lives of human beings are being distorted to serve an economicorder that demands more and delivers less for the majority: “In the great days of the USA, Henry Ford stated that he wanted to pay high wages to his employees so that they could become his customers and buy his cars. Today we are proud of the fact that we pay low wages.
“We have forgotten that the economy is a tool to serve the needs of society. The ultimate purpose of the economy is to create prosperity…and not the reverse. The ultimate purpose of the economy is to create prosperity with stability.”
Unlike Goldsmith, the leading sectors of American capital see the economy as a tool to enrich them, while America returns the dog-eat-dog world of 19th-century capitalism, where wealth and economic rights was the exclusive province of the super-rich and their allies and where workers’ isolated voices could easily be ignored. To the extent that this restoration of near-absolute power cannot be achieved within the borders of the U.S., America’s CEOs are eager to search out locations outside the U.S. where labor rights, environmental protections, and other achievements of U.S. democracy do not stand in the way of maximizing profit.
We see an economy built increasingly around part-time jobs, the off-shoring of millions of U.S. jobs to repressive low-wage nations, a major push to drive down wages and benefits, and a renewed effort to completely crush a union movement that has already been reduced to a mere one-fifth of the 35 percent of the workforce it represented in the 1950s. At the same time that the richest 1 percent siphons away 24 percent of all annual income in the U.S., there is growing momentum among corporate leaders and their political allies to further reduce the increasingly-light tax burden borne by U.S. corporations and their largest stockholders.
Rather than the American Dream becoming accessible to more of our society, we are being hit by a severe shrinkage of family-supporting jobs. America’s vast income and wealth is so concentrated among the top 1 percent, that the CIA Yearbook ranks it with some of the most unequal societies. Slate’s Timothy Noah, in “The United States of Inequality,” wrote, “Income distribution in the United States [has become] more unequal than in Guyana, Nicaragua, and Venezuela, and roughly on par with Uruguay, Argentina, and Ecuador.” The richest 1 percent captured 93 percent of income gains in 2010 and an even more extraordinary 122 percent (meaning that they wrested away income which previously went to the bottom 99 percent). But for the vast majority, “median annual household income for the population at large has shrunk to $51,584 in January 2013 from $54,000 in 2008,” Thomas Byrne Edsall reported (NYT, 3/6/13). U.S. wages dropped by 1.1 percent nationally in the 12 months ending in September 2012, with some states—like Wisconsin, where private-sector wages fell by 2.2 percent—being hit even harder.
This already-tilted political system now confers even greater power to CEOs and the rest of the “donor class” on critical issues, effectively reducing the majority of citizens to virtual non-existence. Princeton political scientist Martin Gilens, in his recent book, Affluence and Influence: Economic Inequality and Political Power, based upon studying hundreds of federal issues, was led to this conclusion about the erosion of American democracy: “The American government does respond to the public’s preferences, but that responsiveness is strongly tilted toward the most affluent citizens. Indeed, under most circumstances, the preferences of the vast majority of Americans appear to have essentially no impact on which policies the government does or doesn’t adopt.”
This finding was exemplified by recent bi-partisan efforts to gut key portions of the Dodd-Frank bill enacted to regulate the kind of the Wall Street transactions in derivatives and other obscure financial instruments which led to the Wall Street meltdown of 2008, triggering a bailout of banks portrayed as “too big to fail.” While seen by many observers as too timid, a remarkably bold campaign is underway to severely weaken the bill, as described in the NY Times(5/23/13):“Bank lobbyists are not leaving it to lawmakers to draft legislation that softens financial regulations. Instead, the lobbyists are helping to write it themselves. In a sign of Wall Street’s resurgent influence in Washington, Citigroup’s recommendations were reflected in more than 70 lines of the House committee’s 85-line bill.” Two crucial paragraphs, prepared by Citigroup in conjunction with other Wall Street banks, were copied nearly word for word. (Lawmakers changed two words to make them plural.)
The current aggressive stance of the corporate class in resisting virtually any reform and frontally assaulting labor rights are particularly striking given the relatively tranquil period of roughly 1940 to the mid-1970s when corporations in the Northeast, Midwest, and the West Coast accepted unionism and unions trimmed their demands to narrow issues of wages, benefits, and working conditions, forsaking fundamental issues involving control over investment and the location of plants. Previously, the labor uprisings of the 1930s presented a nightmarish image for capitalists, with workers taking over factories during “sit-down” strikes, showing the potential for a society in which owners of major corporations were permanently replaced by the workers themselves. The eventual outcome under Franklin Delano Roosevelt’s New Deal administration was corporations’ reluctant acceptance of unions, in which business received in return was higher paychecks—which ultimately resulted in a stronger domestic market and bigger profits—and labor maintaining discipline over its members, preventing “wildcat” strikes and other disruptions of production.
This “social contract”—an informal truce—also entailed corporations paying the taxes needed for an educated and healthy workforce, and assuming a major (and self-interested) role in planning needed social reforms and infrastructure projects. Whether a Democrat or Republican held the presidency, primary attention was devoted to the demands of corporate leaders, but the broad social welfare was also recognized as vital to democracy and social stability.
But in the mid-1970s—rocked by the sudden emergence of international competition and drastic oil price increases, and a strike wave among U.S. workers rebelling against inflation-devalued wages and authoritarian workplaces corporate leaders began a counterattack. No longer are corporations bound by any sense of obligation to workers and communities, nor is there any doubt that the sole mission of leading corporations is to maximize profit. Taken together, the changes embraced by major corporations are breathtaking.
The phenomenon known as “Caterpillar Capitalism”—demanding major worker concessions despite massive profits—is becoming widespread among major corporations. Despite huge profits, Caterpillar is systematically and ruthlessly driving down wages and other labor costs. In 2012, the Caterpillar Corporation forced a lengthy strike in Joliet, Illinois. Despite earning record profits in 2011 and in 2012, the company demanded a 6-year wage freeze, even though it had profits of $39,000 per employee last year. Caterpillar CEO Douglas Oberhelmer, the driving force behind the demands for wage and benefit cuts, personally gained 60 percent in his compensation, lifting it to $16.9 million. Similarly, GE—which earned $14.2 billion in 2010 while paying no federal taxes—has repeatedly informed labor that it views $13 per hour as a competitive wage in manufacturing.
Unions are now just 7.9 percent of private-sector workers and overall union membership is at its lowest point in 76 years, representing just 11.3 percent of the U.S. workforce. These dismal figures reflect an ongoing war against union organizing, one made possible because, as Robert Bruno, director of the University of Illinois at Urbana-Champaign’s Labor Education Program, explains, “We have the weakest labor law and enforcement of labor law in the entire Western industrialized world.” This downslide threatens to grow even worse with states like Wisconsin and others imposing immense barriers to maintaining public-sector unions and Michigan and Indiana adopting right to work laws that prohibit unions from charging workers dues or equivalent fees for the cost of protecting their jobs and representing them in negotiations.
According to Christopher Martin, author of Framed! In a typical year like 2005, no less than 31,358 union sympathizers were illegally fired. When manufacturing workers seek to organize a union, 70 percent of these union drives encounter threats of relocation to Mexico or elsewhere, according to Cornell Professor Kate Bronfenbrenner, author of No Holds Barred.
As Business Week (5/23/94) accurately reported, “US industry has conducted one of the most successful antiunion wars ever, illegally firing thousands of workers for exercising their right to organize.” This “war” has also included the virtual destruction of the right to strike, as U.S. employers are permitted to bring in “scab” replacement workers. The deployment of such replacements during strikes at Greyhound, International Paper, Phelps- Dodge, Hormel, Eastern Airlines, the Detroit News, and Caterpillar, among others, has resulted in unions abandoning strikes as a method of leveling the playing field with management. In 1950, 470 strikes involving 1,000 or more workers took place; in 2009, just 5.
Shift From Policy-Making To Plunder
Both GE and General Motors both avoided taking a stance on the Affordable Care Act (“Obamcare”) passed in 2010, according to the United Electrical Radio and Machine Workers political director Chris Townsend. Their self-interest in the issue would appear to be overwhelming: GE has a mammoth health equipment division and about 130,00 domestic workers, while GM has long been paying $4 an hour more for cars produced in the U.S. instead of Canada. The abstention of these two major players represented a basic shift in the perspective of leading firms toward the federal government.
In the past, GM and GE were long involved in shaping long-term government policies in a number of arenas outside labor relations, from social welfare to defense, health care and education.
While playing a paternalistic, out-sized, and undemocratically influential role, they nonetheless looked out for strengthening the domestic consumer market, absorbing labor in the discipline of the rank and file and rejection of non-market economic alternatives, providing themselves and other firms with a reliable source of well-educated and healthy workers, and ensuring social stability through a variety of measures, from the maintenance and expansion of public space for workers’ leisure activities, to the co-optation of African-American leaders.
Fully one-quarter of the largest corporations manage to avoid paying any federal taxes. Despite these flagrant abuses of the tax system, momentum is actually building for even lower corporate taxes, especially on profits earned overseas. At the state level, major corporations receive $80 billion in subsidies across the U.S., according to a series by Louise Story in the New York Times.
In the past, more enlightened sections of the corporate elite recognized the need for social reform and government programs to ensure long-term social stability and pump up U.S. domestic spending power.
Economist Jeffrey Faux writes in The Global Class War: “The CEOs and principal owners of corporations who have disconnected, or are in the process of disconnecting, their fate from America’s have no interest in paying more taxes to make the society they are abandoning more competitive.”
This has several implications beyond the withdrawal from playing a leadership role in handling long-term social problems. It also means a loss of self-interest in boosting domestic buying power. The emerging practice is to cut wages in the U.S. and instead rely on the most affluent 10 percent of emerging nations like Mexico, China, India and Brazil to buy the products of these multinationals.
The most tangible form of the corporate secession is the large-scale transfer of family-sustaining—often unionized—jobs to low-wage nations where labor rights are repressed, like Mexico and China. “Some 50 percent of all U.S.-owned manufacturing production is now located in foreign countries, and 25 percent of the profits of U.S. multinational corporations are generated overseas—and the shares are rapidly growing,” according to economist Jeff Faux.
American workers and communities have suffered the loss of 4.9 million jobs and the closing of nearly 50,000 factories since the North American Free Trade agreement went into effect in 1994, stated Global Trade Watch director Lori Wallach. The impact of these shutdowns ripples across factory towns, resulting in predictable increases in family and street violence, deteriorating physical and mental health, and other major social problems.
But corporate leaders seem fully committed to shifting even more jobs offshore. Princeton economist Alan Blinder has calculated that up to 42 million highly-technical U.S. jobs—from computer programming to medical transcription to accounting—are “highly offshorable” to low-wage sites like China, India, and the nations of Eastern Europe (Wall Street Journal, 3/28/07).
In the new environment, corporate leaders have been notably silent about Republican threats to democracy via limiting voting rights at the state level, with a number of Republican-dominated states adopting new “voter identification” schemes and restrictions on early voting, measures clearly adopted to discourage voting by Democratic-leaning constituencies including African-Americans, Latinos, the poor elderly, and college students. Advocates of these proposals were remarkably brazen in proclaiming their intent, as when a Pennsylvania Republican proudly announced that new voter restrictions would help elect Mitt Romney in 2012. The strenuous efforts to restrict voting failed to produce the desired result, with African-Americans actually showing up at the polls at a higher rate than whites for the first time in U.S. history.
The voter-restriction measures thus failed to stem the tide of voters and thereby block public will in the presidential election, with Obama winning handily. However, an elaborate multi-state redistricting plan called REDSTATE, coordinated by the Republican Legislative State Council, produced a grotesque re-shaping of Congressional and state legislative districts so that Republican influence was immensely exaggerated. At the Congressional level, Democratic House candidates gathered 1.75 million more votes than Republican candidates. Yet with the Democratic votes strategically sliced up into new districts designed by Republican legislative leaders to minimize their impact, the Republicans converted their deficit in votes into a lopsided 33-seat majority in the U.S. House.
Despite their zealotry, the Republicans have succeeded in dominating the nation’s agenda because of the unwavering, lock-step discipline within its congressional ranks and their tenacity in blocking as much of Obama’s agenda and as many of his appointees as possible. Along with blocking the most modest reforms aimed at assisting working families in the House through its undemocratically-created majority, the Republicans have utilized the filibuster process in the Senate to require 60 votes on the most routine issues.” Democrats have had to end Republican filibusters more than 360 times, a historic record,” as CNN’s Julian Zelizer noted (5/21/12).
The Republican Party has thus become unrecognizable to former party stalwarts like 1996 presidential candidate and long-time Kansas senator Bob Dole. Although long regarded as a staunch conservative, Dole supported the Clean Water Act, the Endangered Species Act, the Violence against Women Act, the Voting Rights Act, food stamps and the Americans with Disabilities Act—all of which are now targets of contempt for the new Republicans. In an interview with right-wing Fox News, Dole stated, “We’re here to articulate our positions on the issues and do what we can for the good of the country and let the process move forward.”
In the present Republican Party, even the sainted Ronald Reagan might have a hard time fitting in. While Reagan’s firing of 11,000 federal air controllers in 1981 was a decisive signal to corporate leaders across America about a new standard of behavior toward unions, Reagan nonetheless continued to uphold the right to union representation and trumpeted the legitimacy of Poland’s Solidarity union. In contrast, South Carolina Governor Nikki Haley declared, “We can and we will do more to protect South Carolina businesses by shining that light on every action the unions take…. And we’ll make the unions understand full well that they are not needed, not wanted, and not welcome in the State of South Carolina.”
The attitude of Haley and fellow contemporary Republicans like Wisconsin Governor Scott Walker represent remarkable contrast to the national consensus that viewed unions as a central part of American democracy. Their chief legislative objective appears to be simply blocking any positive action by Obama’s to cope with persistent high unemployment and sinking wages.
However, the agenda and strategy of Obama and the Democrats on these critical economic issues are hardly compelling. Obama has neglected public sentiment and cozied up to the CEOs of Caterpillar and general electric and the titans of Wall Sreet. Obama has been careful to avoid offending the “donor class” of corporate executives and thus failed to address the persistent problems of falling incomes and ongoing unemployment. Obama’s strategy on key issues essentially emboldened his opponents while disillusioning his supporters.
Even the New York Times (2/4/13)—hardly a tribune of labor—editorially called for Obama to devote attention to the widespread problem of declining wages, chastised him in harsh terms, stating that “the administration’s support for unions has been more rhetorical than real. The Times added pointedly, “In his first term—a time of persistent high unemployment, weak job growth, stagnating wages and rising income inequality—Mr. Obama neglected a basic labor agenda.” This was perhaps most shamefully displayed when Obama and his spokesmen failed to speak out in support of public employee rights under attack by Wisconsin Governor Scott Walker.
While Obama and the Democrats are stymied on the legislative front by the Republicans’ ability to exercise undemocratic minority rule in Congress, they have been unwilling to forcefully speak out against the wage-cutting wave and to stand up for the rights and living standards of working people. Obama and leading Democrats have done nothing bolder than outlining a plan for rebuilding America’s infrastructure and raising the minimum wage.
Measures to halt the offshoring of jobs are not seriously considered, and Obama undermines momentum for even weak anti-offshoring legislation by spreading the myth that America is experiencing a manufacturing revival via “insourcing.” All but a handful of the most progressive Democrats have failed to hammer away at the destruction of union rights or to mobilize the vast majority of the public opposed to the offshoring of jobs.
Left Must Provide Pressure
The Democrats’ failures to offer a coherent alternative to the lingering effects of the great recession for working people have placed an urgent responsibility on the u.s. left, and apart from the labor upsurge in wisconsin and the occupy movement, the left has not been able to exert any significant impact on U.S. politics in recent years. “The left has not acted like a real force on Obama’s left,” stated economist William K. Tabb, author of The Amoral Elephant:Globalization And The Struggle For Justice In The 21st Century and other works on how the global economy affects working people. “The Republicans have been playing a smart strategy on Obama’s right, screwing up every bit of legislation and government operation up so that the economic problems will be GOP’s blamed on Obama.”For both parties, to varying degrees, “The only class that counts is the upper class.”
Without the Left organizing effectively around issues like falling wages for workers, unaffordable tuition for students, the offshoring of jobs, and unfair taxation, “We will continue to see lower living standards for the lower 80 percent or 90 percent of the population,” said Tabb. “There is no reason for the deterioration to stop. There is no bottom to the decline”—unless the Left can successfully articulate widespread grievances and mobilize. Under the dire present conditions, “If we educate the people, they will understand and move,” Tabb predicted.
Roger Bybee is a Milwaukee-based writer on labor issues and a labor studies instructor at Rutgers and the University of Illinois.