Up With Downward Mobility

Every once in a while, an idea gels in my head and I dismiss it, thinking to myself "Nah. I gotta be missing something. It can't be that. And then I hear someone who probably knows a lot more than I do about the subject at hand say pretty much what I'd been thinking all along.

That was the case with my long-standing suspicion that one of the main goals of conservative politics and policy is to drive as many people as possible into downward mobility [1].

Anti-unionization, deregulation, and increased outsourcing are all hallmarks of contemporary conservatism. So, at least we know who to thank for our current situation. But that's the unspoken message of conservative economic philosophy in a globalized economy: the only way Americans can "compete in a global economy" as envisioned and delivered by conservatism is to accept a lower standard of living. As low as the market demands. How low? Read up on working and living standards in just about any country you can find on any label on just about anything in your own house.

I'd been working on making the connection for a while, but it was a familiar theme in Harold Meyerson's Washington Post column [2] that helped me make the final leap towards a broader view of conservative's resistance to the auto industry bailout.

[B]y the early 1950s, the UAW had secured a number of contractual innovations -- annual cost-of-living adjustments, for instance -- that set a pattern for the rest of American industry and created the broadly shared prosperity enjoyed by the nation in the 30 years after World War II.

The architects did not stop there. During the Reuther years, the UAW also used its resources to incubate every up-and-coming liberal movement in America. It was the UAW that funded the great 1963 March on Washington and provided the first serious financial backing for César Chávez's fledgling farm workers union. The union took a lively interest in the birth of a student movement in the early '60s, providing its conference center in Port Huron, Mich., to a group called Students for a Democratic Society when the group wanted to draft and debate its manifesto. Later that decade, the union provided resources to help the National Organization for Women get off the ground and helped fund the first Earth Day. And for decades after Reuther's death in a 1970 plane crash, the UAW was among the foremost advocates of national health care -- a policy that, had it been enacted, would have saved the Big Three tens of billions of dollars in health insurance expenses, but which the Big Three themselves were until recently too ideologically hidebound to support.

Narrow? Parochial? The UAW not only built the American middle class but helped engender every movement at the center of American liberalism today -- which is one reason that conservatives have always held the union in particular disdain.

...In a narrow sense, what the Republicans are proposing would gut the benefits of roughly a million retirees. In a broad sense, they want to destroy the institution that did more than any other to raise American living standards, and they want to do it by using the power of government to lower American living standards -- in the middle of the most severe recession since the 1930s. The auto workers deserve better, and so does the nation they did so much to build.

Dan Carpenter [3] takes it a bit further with a column that caught my eye because of the title

The idea that collective bargaining has achieved a standard of living that is unfair and unsustainable, rather than one that society as a whole should pursue, is one of our most powerful national myths. Like the glory of war and the frivolousness of environmental protection, union bashing is a bill of goods sold by the most myopic of special interests and bought by ordinary folks against their own interests.

..."If you ask me, American workers have been silently bailing out their companies for 35 years," says Nancy Holle, a leader in the advocacy group Central Indiana Jobs With Justice.

"Want an increase in profits? Take it out of the workers' pay. Have them work longer with no increase, or let them go, and the CEOs get a bonus. Time after time, time after time. The U.S. worker works harder and longer than workers in any other industrialized country. It has been a silent bailout."

It is no coincidence that fewer and fewer of those workers are organized. Republican presidents, governors and legislators have not been inclined to make life easy for Democratically-inclined labor; and sadly, laborers themselves have become so conditioned to going unprotected that they resent those who have some insulation. Not to mention ignoring history. Consider those "featherbedding" retirees.

Of course. What else explains letting the Wall Street CEOs keep their salaries [4], while demanding auto workers take a pay cut [5] (though emptywheel points out that Bush's "bridge loan" basically demands that workers at American-owned companies earn less than workers at foreign owned companies [6]), except as a reward for getting us into a mess that creates a tremendous opportunity for conservatives to complete — or go a long way towards completing — the Wal-Mart-ization of the U.S. economy [7]?

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.

...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.

Yet, the best solutions conservatives can come up with is that Americans need (a) lower wages [8], and (b) an $800 billion consumer lending stimulus [9].

Create jobs? Better wages? At a time when increasing numbers of Americans are out of work? Nah. People just need to spend more [10], as Kevin Drum says. They can do that without earning more, right?

I think the big thing I'd add to that is growth in median incomes. One way or another, there's really no way for the economy to grow strongly and consistently unless middle-class consumers spend more, and they can't spend more unless they make more. This was masked for a few years by the dotcom bubble, followed by the housing bubble, all propped on top of a continuing increase in consumer debt. None of those things are sustainable, though. The only sustainable source of consistent growth is rising median wages. The rich just don't spend enough all by themselves.

The flip side of this, of course, is that rich people are going to have to accept the fact that they don't get all the money anymore. Their incomes will still grow, but no faster than anyone else's.

How do we make this happen, though? I'm not sure. Stronger unions are a part of it. Maybe a higher minimum wage. Stronger immigration controls. More progressive taxation. National healthcare. Education reforms. Maybe it's just a gigantic cultural adjustment. Add your own favorite policy prescription here.

This isn't just a matter of social justice. It's a matter of facing reality. If we want a strong economy, we can only get it over the long term if we figure out a way for the benefits of economic growth to flow to everyone, not just the rich. This is, by far, Barack Obama's biggest economic challenge. Until median wages start rising steadily and consistently, we haven't gotten ourselves back on track.

That's assuming, of course, that we want a strong economy, and that we want it on those terms. I could throw in a few policy prescriptions with those Kevin mentioned above. But conservatives seem stuck on one prescription: Down with upward mobility! Or is that "Up with downward mobility!"?