It's scary when a columnist who practices an anti-working class form of
economics writes a column for the most prestigious capitalist newspaper in
the US (if not the world) preaching to workers that the only organizations
they have -- the trade-unions -- are working against the workers' own
interest, whereas the economist is working (or at least talking) in their
favor. It seems reminiscent of the common management tactic in a strike of
saying that the rank-and-file workers aren't really endorsing the strike --
instead, it's the unresponsive and undemocratic union bureaucracy.
But it shouldn't be forgotten that such tactics aren't totally separated of
reality, since the vast majority of US unions (especially the large ones)
are indeed run by unresponsive bureaucracies. The problem is that it's only
the rank-and-file workers themselves who can make this judgement, while any
strike that does not have rank-and-file support goes nowhere fast, likely
undermining the union organization severely. Trade-union bureaucracy
undermines the union's long-term ability to grow and to resist management,
which is of course why business prefers such unionism, as exemplified by
Hoffa Junior quoted below (while giving them the opportunity to denounce
it). (It's also strange, to say the least, that the leaders of a
bureaucratic organization would denounce bureaucracy as a matter
of principle.)
Despite the antagonistic tone of the first paragraph, the second paragraph
this analogy says that PK's column need not be totally wrong -- so that
something useful can be gleaned from it. Further, few "working stiffs" read
the New York TIMES op-ed page, so in fact, PK is addressing its
upper-income and upper-middle-income constituency rather than preaching to
the workers. So let's see what he says. It's interesting that in the end,
he isn't blaming labor for its protectionism as much as pitying it.
May 21, 2000 / New York TIMES
RECKONINGS / By PAUL KRUGMAN
Workers vs. Workers
> ... The U.S. labor movement is not as brutally direct in its slogans [as
the old South African labor slogan "Workers of the world unite for a white
South Africa!"]. Probably its leaders don't even admit to themselves that
their increasingly vociferous opposition to imports is, in effect, an
effort to improve the condition of American workers by denying opportunity
to workers in the rest of the world.<
It's important to note that PK takes this last proposition (that opposition
to "free trade" denies opportunities to workers in other countries) as an
_axiom_. It's not proven in this column (nor anywhere else that I've seen).
Note also that he assumes that the "vociferous opposition" is only to
_imports_. This ignores the whole issue of capital mobility (as usual),
along with the kinds of side-agreements that go along with many "free
trade" agreements (as with the recent African "free trade" agreement) which
leverage the poor countries' debt peonage, often incurred by
unrepresentative regimes long out of power, into forcing the recipients of
the "benefits of free trade" into restructuring their economies to fit the
neoliberal model. (By the way, the refusal to address the way in which
international capital mobility and international trade are dynamically
intertwined is standard among orthodox economists, including PK. Instead,
capital mobility is treated as a form of free trade.)
PK also assumes that the general rise in efficiency that eventually comes
from freer trade (following the standard models that he implicitly assumes
as Gospel) actually accrues to the _workers_ in Africa or China. But this
does not follow. The increasing mobility of capital between countries (also
encouraged as part of the on-going neoliberal revolution) means that any
countries that allow their workers to participate in the benefits of direct
foreign investment will not attract that investment. Instead, the mobility
encourages these countries to compete to keep wages down to attract
capital. The vast majority of poor-country governments are perfectly
willing to engage in the repressive tactics needed to participate in this
competition, busting unions, heads, and worse. Further, the
commercialization of agriculture, with its rapid labor-saving technological
change and its redefinition of property rights to favor the large
landholders, encourages a flow of workers to the industrial areas, as do
other rural disruptions (such as Colombia's civil war). It's likely,
therefore, that to the extent that efficiency gains from trade appear in
the poor countries, they will be captured by the multinational corporations
that invest their and their governmental allies.
It should be noted that the increase in efficiency presumed to arise with
freer trade need not happen. A shift of industrial production to countries
with lower environmental standards (and competing to offer low
environmental standards to attract capital) would raise the environmental
costs, which might easily overwhelm the direct benefits in terms of
marketed products of increased trade. Of course, these environmental costs
hit the poorest folks most (especially since they have the least political
power), and those working or living closest to the factories and the
commercial farms. So the workers in poor countries may _lose_ from freer
trade. Of course, this has little meaning to the multinational
corporations' management or their allies in government, the main
beneficiaries of globalization, since they can live most of their lives in
rich countries with less pollution.
Following from his self-evident axiom, PK continues: >But when the
Teamsters' president, James P. Hoffa, declares, as he did on this page not
long ago, that "American workers should not be asked to compete with
foreigners who are not paid a living wage," the implications are clear.
Given the low productivity of workers in third-world countries, their
nations' lack of infrastructure and general lag in development, to insist
that such workers be paid what Americans would regard as a living wage is
to insist that they price themselves out of their jobs. And that is no
accident: any policy that didn't price those workers out of the market
would offer no relief to workers here.<
Rather than taxing poor Mr. Hoffa at length, however, PK sees this
phenomenon as an example of a classic tragedy, not the result of bad people
but of a conflict between goods: >There is a sort of tragic inevitability
about the way labor has reached this moral impasse. The U.S. labor movement
has every right to feel that American workers have gotten a raw deal. By
standard measures, the real take-home pay of blue-collar workers is lower
now than it was a quarter-century ago. You can quibble with the statistics,
but without question blue-collar workers have been largely left behind by
the nation's economic growth. And far from fighting this inequality in
rewards, policy has in general reinforced it: taxes have become less rather
than more progressive, public schools for those who can't afford to live in
the right places have gotten worse, and so on. <
It is great that this is being acknowledged in such an elite venue. I
wonder if Thomas Friedman, the NY TIMES' Gilded Guru of Globalization, is
conscious of the facts that the era of neoliberalism has not helped US
workers? How could the workers be getting such a "raw deal" despite the End
of History and the Triumph of the Neoliberal Will? Could it be that if
There Is No Alternative (in Margaret Thatcher's words), workers are screwed?
But PK doesn't examine the causes of the "raw deal" that US workers have
been getting for 25 years. Could it be the "one-sided class war" that
United Auto Workers leader Doug Frasier pointed to during the early stages
of the process? It sure seems that way. During the late 1960s, the rate of
profit on capitalist investment fell, encouraging a slowdown, along with a
decade of stagflation (reinforced by surging oil prices). This in turn
unleashed an employers' offensive, both on the micro- and macro-economic
levels, aiming to undermine the power of unions and of individual workers.
Even when this was not the _intention_ of the neoliberal offensive, as with
the break-up of AT&T (which used to monopolize the US phone system) or the
ending of the government-sponsored cartels in trucking and airlines, it had
the effect of undermining workers' power. (If I am wrong about the
intention of these changes, it hardly undermines my argument.) This in turn
almost completely erased the phenomenon of blue collar workers earning
"middle class" life-styles from the economic landscape, while encouraging
inequality between the remaining insiders and the vast mass of outsiders.
Reagan's and Volcker's economics, along with Clinton's welfare reform
reinforced this result. (Volcker's economics, of course, helped turn the
old industrial heartland, once the center of US industrial unionism, into
the rust belt.)
A key question not faced by PK is whether or not "freer trade" (as actually
implemented, as with NAFTA, not as it appears in the economics textbook)
was one part of this general trend. It sure fits. Back in the so-called
Golden Age of US capitalism, the US economy was largely self-centered: the
relatively high wages of many blue-collar workers formed a market for the
products of US industry. (This was allowed by existing trade restrictions,
limited capital mobility, and the US manufacturing superiority relative to
its competitors, especially immediately after World War II.) The US has now
shifted into a mode where high wages are only a cost (not a desired source
of demand), undermining international "competitiveness." In this vein,
freer trade doesn't simply allow global increases in efficiency (which
might be wiped out by environmental problems). It also undermines the
ability of workers to gain a share of any gains in efficiency. In fact, it
typically moves them into jobs that pay less and are less secure.
(By the way, the change from the Golden Age to the current Gilded Age makes
sense as a metaphor. It used to be that the US economy was gold all the way
through, since the majority of the population shared in the benefits of
growth. Now the gold is only painted on the surface of the top.)
>A well-meaning economist can give you a list of things that might help
America's working class: some form of national health insurance, bigger and
better wage supplements along the lines of the earned-income tax credit,
etc., etc. But if I were a labor leader, I would sneer at my professorial
na�vet�. You know and I know that such proposals are pipe dreams, that in
America today the left, such as it is, has its hands full holding back
efforts to tilt the tax-and-benefit system even more toward the interests
of the affluent. And the labor movement -- whose influence is far less
today than it was even 20 years ago -- is in no position to reverse the
political tide.<
The undermining of labor's political clout is of course just one part of
the still-ongoing one-sided class war, reinforcing (while being reinforced
by) its economic weakness. I hope that PK's explication of this fact
doesn't encourage his elite readers to intensify their efforts.
It is notable that the two possible pro-working class reforms that PK
mentions are technocratic-legislative ones, representing the limited scope
of political reforms. The health care example seems totally off the agenda
at present, while the earned income credit (unlike classic income-support
measures) make workers more dependent on their employers' good wishes,
i.e., hardly helps their bargaining power. Notably absent from PK's list
(though that list is short) is direct aid to those workers who are directly
impacted by "freer-trade" measures. In theory at least, if freer trade
raises efficiency, it should easily allow the payment of such aid. (If
efficiency indeed rises, no-one should have to lose.) If orthodox
economists _really_ cared about free trade's benefit to workers, they would
link all "free-trade" legislation to this kind of aid to those who bear the
brunt of its costs. Heck, they might even explicitly favor the gradual
phasing-out of protection to allow people to adjust. But that would
interfere with the economists' preaching. (Gradual implementation is
already part of most trade agreements, I think, since they are results of
compromises between competing lobbyists. But orthodox economists have to
advocate the free-trade utopia with no compromises if they are to attain
their goals.)
>So what's a labor leader to do? Choose a fight that he might be able to
win: a fight to limit imports that compete with the workers he represents.
Voters might not see protection as a direct threat to their pocketbooks
(though it is). The payoff may be limited -- the arithmetic suggests that
even a total ban on manufactured imports from third-world countries would
raise blue-collar wages no more than 3 or 4 percent -- but who's counting?
And if the target is unattractive enough -- if it is, say, a nasty regime
in China -- labor's limited but not negligible lobbying power just might
pull off a victory. <
The "arithmetic" is a reference to PK's axiom. Even if we accept it, as far
as I can tell from his research, the 3 or 4 percent gain in blue collar
workers' wages is for the _aggregate_ of blue-collar workers. The aggregate
benefit might easily be overwhelmed by the costs to those workers directly
impacted by freer trade (low-wage, low skilled manufacturing, etc.) This
arithmetic also follows from only a static, abstract, and silly economic
model.
>In other words, it's understandable that labor has decided that it must
try to help American workers by denying opportunity to even needier workers
abroad -- while, of course, denying that it is doing any such thing. If I
were a labor leader I would probably be a protectionist too. But to
understand this political strategy, even to accept its inevitability, is
not to approve. <
Okay, at this point, PK should call for the building of a mass grass-roots
movement to increase the power of organized labor and the working class as
a whole, so that the workers can get beyond playing such a "mug's game" (a
Brit phrase for a game that can't be won).
But no. Now that the neoliberal revolution is largely victorious, all PK
can do is to see the working class as victims of tragic inevitability. For
workers, it's time to give up, while for the readers of the NY TIMES, it's
time to enjoy the ride.
Jim Devine [EMAIL PROTECTED] & http://liberalarts.lmu.edu/~JDevine
