Rude Recession Awakening: Fundamental Breakage Between Democratic Party and Labor

Only the yachts of the nation’s biggest corporations and richest 1% are rising, with profits hitting $1.65 trillion in the third quarter, the highest figure since such record-keeping began 60 years ago. At the same time, much of the rest of America feels like it is trapped under water, as I have recounted here, here, and here.

GLOBALIZATION KEY TO RICH GETTING RICHER

US corporations’ un-regulated ability to shift jobs overseas — and
impose huge social costs on workers and communities without taking any responsibility — gives them ever-increasing leverage over workers to push down wages. As a scholar at the American Enterprise Institute, a conservative policy center, explains with remarkable frankness:

Corporations are taking huge advantage of the slack in the labor market — they are in a very strong position and workers are in a very weak position,…They are using that bargaining power to cut benefits and wages, and to shorten hours… That strategy… serves corporate and shareholder imperatives, but very much jeopardizes our chances of experiencing a real recovery.

As the New York Times outlines it, a sizable part of the present
divergence between record profitability and the jobs crisis — 15
million officially jobless, wages sinking, and almost all workers in
a state of permanent insecurity — is related directly to corporate
globalization:

More so than in the past, many American-based corporations earn a great portion of their profits overseas. And thanks to porous tax laws, these companies return fewer of those profits to American shores [an estimated $1 trillion is stashed away in offshore tax havens] than in the past.

“The big American companies are really global,” said Robert Reich, former labor secretary for President Clinton. ​“They can show big profits from foreign sales. G.M. is making more Buicks overseas than in the United States. There’s no special pop for the United States worker.”

FUNDAMENTAL DISCONNECT BETWEEN DEMOCRATS AND PARTY OF FDR, TRUMAN AND LBJ

As noted last week, major US corporations created 1.4 million jobs
in their overseas operations last year, far more than they generated
in the U.S. last year, reported the Economic Policy Institute.

The late British billionaire Sir James Goldsmith observed how radically
global capitalism has shifted, from its Fordist strategy of paying
high wages to build the domestic market to seeking the lowest wages
available anywhere on the globe. The earlier model of capitalism also partially accepted the notion that the economy was an instrument of meeting society’s needs, rather than acting as the master of society:

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, and not the reverse. The ultimate purpose of the economy is to create prosperity with stability.

When a society provides prosperity and security only to those at the
top, the subordinate classes are forced to threaten instability in
the streets.

But these days, leading Democrats seem to feel no threat to the party’s internal stability, which gave the insurgent labor and civil rights movements leverage with their disruptive strategies during the 1930s and 1960s, as Richard Cloward and Frances Fox Piven argued in their brilliant work of history and analysis, Poor People’s Movements.

The Nation’s William Greider, one of the America’s most insightful political observers, recently enumerated all the ways in which the Obama administration has totally accommodated itself to the demands of corporate power at public expense when enacting ​“reforms” of healthcare and Wall Street and caving in on Bush’s tax cuts for the rich. Obama’s
much-touted ​“pragmatism” in practice, translates into nothing less than than ​“surrender,” maintains Greider, who rarely uses hyperbole:

When the choice comes down to society or capitalism, society regularly loses. First attention is devoted to the economic priorities of the largest, most powerful institutions of business and finance.

The bias comes naturally to Republicans, the party of money and private enterprise, but on the big structural questions business-first also defines Democrats, formerly the party of working people.

All of this, says Greider, signals the end of ​“New Deal liberalism” under the current administration crew in the White House, Congress, and the party apparatus:

When the party of activist government, faced with an epic crisis, will not use government’s extensive powers to reverse the economic disorders and heal deepening social deterioration, then it must be the end of the line for the governing ideology inherited from Roosevelt, Truman and Johnson.

Labor must be willing to recognize that we have indeed reached the end of the line in our current relationship with the Democrats. We are being confronted with a replay of pro-corporate Clintonism at a moment when working people are the worst off they have been in 80 years.

While the union movement still retains significant power, it is time for us to threaten the Democratic establishment with the withdrawal of our resources until we see initiatives truly aimed at aiding working people. 

Yes, labor will need Obama to fend off the new round of ferocious attacks from Republicans. But Obama also needs labor if he is to avoid becoming a one-term president. Staying passive will merely guarantee labor being sold out again and again.