May 22, 2017
With Responses From
May 22, 2017
9 Min read time
The reorganization of the global economy is to blame for labor's decline.
With Trump’s election and the global growth of far-right nationalist movements, unions that have the power to challenge corporate dominance, politically and in the workplace, have never been more needed or more threatened. I agree with most of Pope, Bruno, and Kellman’s analysis: the current legal regime and various aspects of how unions are defined do stand in the way of rebuilding organized labor. Unions should be part of a broader rights movement with demands that go beyond just higher wages. And this movement needs to connect to, support, and grow with other emerging movements that are challenging white supremacy and attacks on women, immigrants, and the environment.
The reorganization of the global economy has far more to do with labor’s decline than does exclusive representation.
However, I am not convinced that exclusive representation is as central to the decline of unions as Pope, Bruno, and Kellman argue. Union membership is in dramatic decline throughout much of the industrial world, including in Europe where labor law already facilitates sector-wide bargaining and the option of picking which union to join. Despite starting with historically higher union membership and greater economic equality than the United States, overall decline there is similar to here. The reorganization of the global economy and rise of neoliberalism, financialization, privatization, and outsourcing have far more to do with labor’s decline, I would argue, than does exclusive representation.
Not only does existing labor law not address the crisis arising from late stage capitalism, it actually insulates and protects the entities that are driving and profiting from this new order. It is only through breaking unjust laws that we will ultimately change the laws. Symbolic choreographed civil disobedience is a weak substitute for the strikes, occupations, and other bold actions that we need to disrupt the operations of the billionaires who increasingly rule the United States.
Capitalism is more rapacious now than at any other time in recent history. It is also hugely fragile, the boom and busts of recent financial crises being one illustration. Understanding and demystifying what is going on in the economy is essential if we are to seize this moment of frailty as an opportunity to challenge the power of the elites that dominate our politics and economy.
Our strategy, targets, and tactics need to be driven by an understanding of who is really in charge. In practical terms this means we have to address two seemingly contradictory developments: there is an unprecedented concentration of wealth and ownership of corporations at the summit of the financial system, while at the same time employment is increasingly disaggregated at the bottom. This means that the person, entity, or company that pays workers is far down the economic ladder, where there is little authority to offer improved wages and benefits. The principle failure of unions, in short, is that for the most part we are now fighting the wrong people at the wrong level. This is true in both the public and private sector.
In the public sector, when elected officials demand concession or move to cut and privatize public services, it is often because Wall Street and corporations are making public entities “broke on purpose.” First, they move to increase profits by cutting taxes. Then they make more money loaning money to make up for the revenue shortfall resulting from lowered taxes. Then when the city, school board, or state is significantly in debt to them, they demand cuts in public spending and privatization (from which they profit) as the price for continuing loans. Ultimately, they argue, as they have in Detroit and Puerto Rico, that emergency financial control boards should be put in charge. This eliminates democratic rule and allows them to enforce even greater austerity.
Not only does labor law not address the crisis of late capitalism, it actually insulates and protects those profiting from it.
The economic crisis in Puerto Rico is an extraordinary example of this. Santander Bank, Wells Fargo, and Goldman Sachs, along with hedge funds that bought debt at a discount, engineered a series of financial deals that enriched themselves while essentially selling the equivalent of pay-day loans to the government. In one case, Puerto Rico borrowed $3 billion in a “capital appreciation bond” that with interest will require close to $30 billion in repayment. At the same time taxes for millionaires have been cut and taxes for everyone else dramatically increased. Now that Puerto Rico is drowning in debt, a fiscal control board has been installed (La Junta) that is proposing mass privatization, cuts of $500 million to the University of Puerto Rico, closing of hundreds of school, and massive cuts to health care.
In the private sector, the situation is similar: increasingly it is Wall Street, hedge funds, and private equity that run the show. They insist on high returns for shareholders, and often engage in schemes of buying up profitable companies, draining them of money, and then demanding cuts from workers to make up for the money they have sucked out. Wall Street’s unending search for greater profits drives the behavior of companies at every level of the economy.
A quick look at Blackstone, one of the world’s largest private equity companies—it manages $368 billion in investments—helps to illustrate this. Through its subsidiary portfolio companies, Blackstone has more than 500,000 employees, at companies as diverse as Hilton Hotels, Michaels, and, until recently, Sea World. By buying up distressed mortgage assets from the Department of Housing and Urban Development, they are also now the largest landlord of single-family homes in the country. Their subsidiaries in turn subcontract their cleaning, security, and many other services out to various contractors. On top of this Blackstone and its CEO Steve Schwarzman, who is worth more than $11 billion, benefit from the carried interest tax loophole that lets them pay tax at a lower rate than school teachers and firefighters. The carried interest loophole costs New York State alone over $3.7 billion in revenue a year.
And Blackstone is not unique. Unions, community groups, and others often find themselves battling hedge fund subsidiaries (sometimes not even knowing who really owns the companies they are fighting) instead of the real power, namely, the hedge funds that are structured to insulate themselves from the liability of the companies they own and invest in. CWA recently had a three-month-long strike in upstate New York against Momentive Performance Materials, which is owned in part by Blackstone and majority-owned by a similar hedge fund, Apollo Global Management. It was not until a couple of months into the strike that CWA shifted its strategy after they came to understand how the hedge funds owning Momentive had drained money from the company while demanding concessions from its workers. By shifting the site of its strike from upstate New York to New York City, where it picketed Apollo, CWA was able to win a new contract.
The principle failure of unions is that we are now fighting the wrong people at the wrong level.
In short, if we hope to start winning fights, we must shift our focus upward. Hedge Clippers and Bargaining for the Common Good are examples of exciting campaigns that are on the offense. They name names, publicly unmasking how banks, hedge funds, private equity companies, and billionaires use tax avoidance, financial engineering, and political contributions to increase their power and enrich themselves while destroying jobs and privatizing the public sector.
Bargaining for the Common Good is a campaign that seeks to incorporate community demands into the public-sector bargaining of unions. Hedge Clippers is supported by the American Federation of Teachers and a plethora of community groups including New York Communities for Change. It combines reports that expose the power and influence of hedge funds with direct action and civil disobedience. It helped introduced legislation in eight state to increase taxes on hedge funds by closing the carried interest loophole; it has also won divestment from hedge funds of over $15 billion dollars from public employee pension funds and college endowments.
When unions bargain and organize for the common good, they move beyond the narrow scope of traditional wage bargaining, while building powerful partnerships with community allies. In Chicago, St. Paul, and other cities across the country, unions in partnership with community allies have fought for demands that are not “mandatory subjects of bargaining,” including school class sizes and restorative justice. The Chicago Teachers Union along with the Grass Roots Collaborative and the Refund American project have brought increased public scrutiny to the interest rate swaps. These so-called toxic swaps have cost local governments billions of dollars because they bet against banks that interest rates would rise, when in fact they have plummeted to record lows. Chicago’s school district, for example, entered into interest rate swaps with a number of banks, including Bank of America; these deals have cost the school district hundreds of millions while enriching the banks. Chicago teachers have also threatened to go on an “illegal” strike to demand that tax dollars segregated for business redevelopment subsidies (tax increment financing, or TIFs) instead go to fund quality schools. Similarly, St. Paul teachers recently bargained to have the school district no longer do business with banks that foreclose during the school year. The demands of these teachers’ unions go way beyond the scope of teachers wages and benefits and in other instances have included ending racist probations policies, restorative justice, expansion of recess and the arts for students.
The Committee for Better Banks (CBB), a project of community groups, global bank worker unions, and the Communications Workers of America, is leading a campaign to organize bank workers. It is built around demands not just for better pay and the right to have a union, but also the elimination of sales goals that force workers to sell predatory products to keep their jobs. It was bank workers, who are members of the CBB, who blew the whistle on how Wells Fargo illegally opened millions of consumer accounts. By linking worker and consumer demands, the campaign has helped build a movement in which workers can play a role in curtailing the power of big banks.
There are two valuable resources that people can use to start understanding who in our economy has power and how this power is routinely abused to game the system. LittleSis is a research wiki that democratizes and demystifies research and allows people to map corporate power. The Action Center on Race and the Economy focuses on the intersection of racial justice and Wall Street accountability. The organization does groundbreaking work on how various forms of predatory loans are used to drain the wealth of people of color and the communities in which they live.
By having unions take new approaches and partner with community allies such as Bargaining for the Common Good, Hedge Clippers, ACRE, and LittleSis, we can figure out how to go up the economic ladder. So doing, we can start to directly engage with corporations and billionaires whose bad practices affect not just workers but also consumers, students, community groups, and the environment. Together we can help rebuild unions as part of a broad transformational movement to redistribute wealth and power, which is central to the fight for social, racial economic and environmental justice.
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