Saturday, December 7, 2013

Progressive thought, the Pope, and rising Producer Class unrest

To watch the academics, preachers, and pundits who make it to broadcast TV or read the "think pieces" they write for the big papers, a reasonable person could conclude the country had been bombed with some powder that makes everyone stupid.

Actually, the reason why establishment thought has become so relentlessly goofy is that it is an example of an end-of-empire disintegration.  The neoliberals and neocons are losing their intellectual grip because their core thinking was discredited at least 150 years ago and their triumphs these last 40 have just been a sad reprise.  In the case of the neoliberals, their discredited beliefs revolve around the idea that moneychangers should run the economy and the more they can extract from the real economy, the more successful their management.  In the case of the neocons, their discredited core belief is that because USA has most of the globe's explosives and delivery systems, we get to run things without even acknowledging the rest of humanity exists.  If you believe either of those impossibly insane lies, it is extremely likely you will get everything else wrong.  But if you do not believe these things, it is almost impossible to be heard or seen in the big established press or get tenure at the expensive colleges.

But if you look very carefully, you just may see the debate shifting ever so slightly.  In my mind, the first breakthrough came when the Occupy people got folks talking about the 1% vs. the 99% maldistribution of wealth.  The next step came when Ken Rogoff, one of the high priests of neoliberalism at Harvard, got caught engaging in academic fraud in one of his books Growth in the Time of Debt.  But nothing beats seeing the POPE condemn trickle-down economics by name.  Hard to beat the establishment credentials of someone who has 1.2 billion followers.  Here is Jon Stewart making great fun of the financial press's objections to a raise in the minimum wage (first clip) and Pope Francis' sermon against neoliberalism (second clip).

Of course, the real work will have to be done in the trenches. Here is a short discussion from DW on how some Germans plan to expand on their version of the Occupy ethos.

New Momentum for Anti-Capitalism Protests?

Decentralized protests instead of large rallies - this is Blockupy's modus operandi. At a meeting in Frankfurt, the critics of capitalism are planning new demonstrations against the EU's strict austerity measures

Deutsche Welle (Germany) November 23, 2013

Measuring just under 200 meters (about 656 feet), the twin towers of the European Central Bank's (ECB) new headquarters in Frankfurt can be seen from the city limits. From these lofty heights, Europe's financial experts will watch over the EU's common currency when the building is completed a year from now.

Together with the European Union and the International Monetary Fund (IMF), they will oversee the efforts of Southern Europe's crisis-battered states to stick with their austerity schemes.

And for that reason, the towers in the city's east end are also expected to become the new center of a storm of protest. The first demonstration is already scheduled for the day of the official opening, and on Sunday (24.11.2013), representatives of the Blockupy movement will plan for that event.

The alliance has influence among capitalism critics and globalization opponents who want to disrupt the work of the ECB. Earlier this year, protests in the spring saw about 10,000 demonstrators march through Frankfurt, many of them previous participants in the protest camps that sprung up around the ECB's headquarters in recent years.

Fear of the future adds momentum

In recent months, though, the movement has grown quiet. With their meeting in Frankfurt on Sunday, the 300 participants from Germany, Greece, Italy and Spain want to give the movement new energy, to protest against Europe's fiscal policy in the wake of the debt crisis.

"We're planning decentralized days of protest across Europe," said Roland Süss of Germany's anti-globalization pressure group, Attac, in addition to the main demonstration at the ECB. As a preventative measure, the Frankfurt police have proposed to meet with the organizers and their associated groups and start a dialogue. They want to avoid scenes like those in the spring, when there were violent clashes between police and demonstrators.

In addition to Attac, various leftist groups and unemployment groups from several European countries are also part of the Blockupy movement. The more people fear for the future, the more they join the protests in Spain, Greece, Portugal or France - to Blockupy's benefit.

But the core of the protest alliance is still found in economically strong Germany, partly because the ECB is based in Frankfurt, according to Oliver Nachtwey, of the economic sociology department at the University of Trier. In addition, he said, economically strong Germany has backed strict austerity policies and made the struggling Southern European countries into victims, a move also criticized by many Germans. Southern Europe's own protest movements, such as the Indignados (the "Indignant") in Spain, have risen in response.

Pan-European protests

Blockupy's weekend conference is an attempt to bring all these individual protest movements together and forge a common front. Nachtwey, however, does not expect an immediate success, partly due to the language barrier which has made common decisions difficult. A lack of funds is also a factor. Transporting thousands of protest participants from several European countries to a common demonstration in Frankfurt is unrealistic, he said.

"I think that the future lies in simultaneous, decentralized protests," said Nachtwey, adding that Blockupy has successfully used this strategy in the past year, organizing synchronized protests in about 70 European cities.

This increase in pan-European protests is new and remarkable, said Nachtwey. "They have reached an intimacy and synchronicity that hasn't been seen since World War II." Even more astonishing is the fact that Blockupy has achieved this without a central leadership. The principles of one or a few leaders cannot be enforced on a higher level, said Nachtwey, adding that these groups have reservations when someone tries to be the star.

Search for a common path

Oliver Nachtwey Nachtwey: Movements like Blockupy are slow but perhaps sustainable

A decentralized management makes it difficult, however, to form a sharp consensus on specific topics, and in a society heavily oriented around the media, a group like Blockupy needs someone to publically articulate its views. However, this procedure can also have its advantages, as Nachtwey brings up the leftist movements of the 1970s, where a departure from the doctrine was seen as a betrayal. Many of these groups had a falling out and ultimately disintegrated due to inner conflict.

Attac's Süss, on the other hand, sees no problem in working with radical groups such as the Interventionistischen Linken (the "interventionist left") - as long as people can agree on a lowest common denominator. And that commonality is the criticism of the capitalist system. "We will find ways to deal with each other and accept each other, in spite of our different ideas," he said.

Nachtwey sees many advantages with Blockupy's unusual method. Although Blockupy may disappear from time to time from the public consciousness, it's never gone for long. "These movements are slower, but they may also be more sustainable," he said. more
There is no occupation so skilled or valuable that the neoliberals won't trash it in order to enrich themselves.  This is about Boeing and the aerospace workers.

Bold Boeing workers refuse to screw over next generation

By rejecting a contract that amounted to corporate extortion, employees have taken a stand for the middle class

This originally appeared on Next New Deal.

In a remarkable act of courage and solidarity with the next generation, last week Boeing workers in Seattle soundly rejected corporate extortion, by voting down a contract which traded job guarantees for concessions that would severely erode the pay and benefits of younger workers. In doing so, the members of the Machinists are risking their jobs to save an America built on the middle class.

The dramatic fight of fast food workers for a minimal living wage, risking their jobs every time they take a day off to demonstrate, is one end of a corporate economy based on low wages, no benefits and no unions. That corporate strategy, aimed at maximizing profits, is destroying America’s middle class, wrecking the engine that powered the U.S. economy.

On the other end of the middle class are workers like Boeing’s, who have fought together through their union for the good pay, pensions, health benefits and job security that characterized the increased prosperity and lowered income inequality of America in much of the second half of the 20th Century. But despite being a hugely profitable corporation, with dominance in the world aerospace market, Boeing is eager to follow the Wal-Mart/fast-food model of the 21st Century economy.

Boeing is the aerospace and defense industry’s largest company, with its highest profits. In 2012 just the increase in Boeing revenues alone, $13 billion, would be equivalent to the 15th largest company in the industry. With a $319 billion backlog of orders – about 3,700 planes – the company is set for years and is outpacing its only competition, Airbus. Last year, Boeing made $6.3 billion in profits and rewarded its CEO $27.5 million in compensation, a 20% hike from the previous year.

But none of that matters – the high profits, the educated workers, the civic history – to a modern corporation that is driven only to maximize profits for its shareholders and pay for its top executives. Boeing moved its headquarters to Chicago in 2001 and decided to build its new 787 Dreamliner in South Carolina, with the first planes rolling out in 2012, assembled by 6,000 workers who earn $15 per hour, almost 50% less than what Washington assembly line workers earn.

Historically, Boeing’s Seattle workforce has shared in that wealth. With a 100-year history in the Puget Sound region, Boeing is still the area’s largest employer, its 70,000 employees dwarfing the 40,000 who work for Microsoft. Boeing workers are anchors of Seattle communities, both economically and civically. And with good schools and colleges, transportation, and stable communities, the Seattle area has provided key public structures that have enabled Boeing to prosper.

Early this month, Boeing tried to blackmail both its union members and Washington state. Declaring that it would consider moving assembly of a new line of 777X planes out of state, the corporation asked for mammoth tax incentives and huge concessions on wages and benefits. The Governor and State Legislature caved immediately, passing the largest development tax break for a company in American history, $8.7 billion over 16 years, in a special weekend session. The leadership of Machinists Local 751 also wavered, agreeing to put the contract up for a membership vote, over the objections of most of the union’s management council.

But then a remarkable thing happened, in an age in which Americans, scared that they will lose what they have left, seem resigned to shrinking pay and disappearing benefits. A grassroots swell of membership opposition to the contract rose up, leading to 67% of the member rejecting the contract. The members did so with their eyes wide open, understanding that Boeing might not be bluffing and despite the fact that Boeing combined bribery with their extortion; the contract would have provided a $10,000 signing bonus to each worker. So why did they show such resolve?

In making their case, the members who organized against the contract focused on the fact that they would be giving up “hard fought contract negotiations and strikes by generations of Fighting Machinists that came before us. ” They warned, “Boeing is hoping you will deny the next generation many of the benefits we have today.”

While the proposed contract came with skimpy pay increases and benefit cut-backs for all workers, younger Boeing workers and new hires would have been hit the hardest. Instead of a steady progression to higher wage rates as workers stayed with the company and acquired new skills – which is what Boeing contracts have guaranteed for years – under the proposed contract, recent hires and new hires would be locked into low pay, with glacial increases. The contract would have frozen current pensions and replaced future pensions with a 401K, the defined-contribution accounts that have no guaranteed pay-out and are subject to market risk. Boeing would have been allowed to transfer money from the over-funded workers’ pension fund to the under-funded executive retirement fund.

Angered at the company’s “corporate threats and intimidation,” the members declared, “The one thing Boeing can’t take away is our solidarity.”

Unlike Boeing, which has no allegiance to anything but the bottom line, the workers care about their community. As the website stated, “We must be prepared for a decision they [Boeing] may make and understand that if they take the work elsewhere, they are responsible for that decision. We just could not destroy ourselves in order to keep the company from making a decision that destroys union and non-union workers alike, our communities and the investors.”

That statement reminds me of a memorable insight I received in the first lecture of a finance class at the University of Chicago School of Business, delivered by Robert Hamada, a future dean of the School. Hamada pointed out that in the class we would be learning how a firm calculates return on investment (ROI), but that there was no reason that the calculations needed to be applied to ROI for shareholders. The same methods could be used to maximize ROI for workers, the community or society at large.

As a society, we do not have to accept that the mammoth entities that control so much of our economy should operate just to benefit their shareholders. We can require that corporate decision making take into account its impact on its workers, our communities and the broader economy.

That is what unions have done historically and still do at companies like Boeing, which pay high union wages, and in countries that support high rates of unionization. To give workers a say in decision making, German corporations are required to have works councils, which have union members sharing in decisions – which the UAW is now trying to win in a Volkswagon plant in Tennessee – and union representatives have the right to sit on corporate boards of directors.

Two years ago there was a huge uproar from conservatives when the National Labor Relations Board accused Boeing of moving to South Carolina in 2009 because of anti-union bias, which is prohibited under the National Labor Relations Act. The Board was roundly attacked for second guessing a corporate decision on where to locate jobs. But the Board’s action was based on a Boeing memo, which admitted“the only consistent advantage attributed to Charleston was the ability to ‘leverage’ the site placement decision toward ‘rebalancing an unbalanced and uncompetitive labor relationship.’” The Board dropped the case after the union and company agreed to a new labor contract, the very one that Boeing now wants to replace with the concessions that the union’s members just rejected.

Part of the controversy around the Board’s decision was its novelty; cases are rare because it is difficult to prove that a company made relocation decisions based on anti-union bias. If we are going to reign in corporate destruction of wages and communities, we should instead imagine a labor law in which corporations are not able to expand into non-unionized facilities and make long-term investment decisions at the expense of jobs at already unionized facilities. These and other changes aimed at giving workers a powerful role in corporate governance are needed to balance the grip that corporate America now has on our economy and democracy.

We will find out in the next year whether Boeing is bluffing or serious. Production problems at the South Carolina plant give the union some hope that Boeing might return to the bargaining table, although only after looking to see what they can extort in concessions for anti-union states.

But regardless of where Boeing builds the 777X, the fight for an America in which hugely profitable corporations – whether it be Wal-Mart, McDonald’s or Boeing – share their wealth with their workers and their communities is just heating up. The bold vote by Boeing workers, like the wave of fast food strikes, are encouraging signs of a new movement of workers, supported by our communities, to build an America that again promises broadly based prosperity. more


  1. The videos in this post automatically turn on whenever I open the "real economics" page. Since have slow internet (rural satellite) loading the video -- that I didn't want to watch in the first place -- slows the page load to a crawl. I'd appreciate it if you could adjust the settings on the embedded video so that it doesn't turn on until you click it.

    1. I did not know this was happening. I will try to turn it off but as of this moment, I am not sure how to do it. And my only tech guru went to Mexico for Christmas.