Yves here. As reader John Z pointed out, the policy program described in this post is very much in synch with the recommendations Lambert has been making. One small point of divergence is that Leopold reinforces the idea that taxes fund Federal spending. Taxes serve to create incentives, and since income inequality is highly correlated with many bad social outcomes, including more violence and shorter lifespans even for the rich, progressive taxation is key to having a society function well. However, he does get right (as very few do) that the purpose of a transaction tax is to discourage the activity being taxed, rather than raise money (aside from the MMT issue, the tax would shrink the level of transactions in question, making it not very productive in apparent revenue terms).
By Les Leopold, the director of the Labor Institute, who is currently working with unions and community organizations to build the educational infrastructure for a new anti-Wall Street movement. His new book Runaway Inequality: An Activist’s Guide to Economic Justice serves as a text for this campaign. All proceeds go to support these educational efforts. Originally published at Alternet
During the Bernie Sanders campaign I heard a high-level official give a powerful speech blasting the Trans-Pacific Partnership Act for the harm it would bring to workers, environmentalists and to all who cared about protecting democracy.
Donald Trump now has signed an executive order pulling out of the TPP negotiations.
Is this a victory or a defeat for the tens of thousands of progressives who campaigned to kill the TPP?
On the same day Trump killed the TPP, he met with corporate executives saying he would cut taxes and regulations to spur business development. But he also warned that “a company that wants to fire all of the people in the United States and build some factories someplace else and think the product is going to flow across the border, that is not going to happen.” He said he would use “a substantial border tax” to stop those practices.
Is this a victory or a defeat for workers and unions who for three decades have been begging politicians to stop the outsourcing of decent middle-class jobs?
Breaking the Spell of Neoliberalism
Our answers may be clouded by four decades of the neoliberal catechism—tax cuts on the wealthy, Wall Street deregulation, privatization of public services and “free” trade. Politicians, pundits and overpaid economists long ago concluded that such policies will encourage a “better business climate,” which in turn will lead to all boats rising. Instead those very same policies led to a massive financial crash, runaway inequality and a revolt against neoliberalism which fueled both the Sanders and Trump insurgencies. (See enough facts to make you nauseous.)
This ideology is so pervasive that today no one is shocked or surprised to see Democratic governors on TV ads trying to lure business to their states by promising decades of tax holidays. No one gags when politicians lavish enormous tax gifts on corporations—even hedge funds—in order to keep jobs from leaving their states.
Similarly, we have grown accustomed to the neoliberal notion that we should go deeply into debt in order to gain access to higher education. Free higher education, which was the norm in New York and California until the 1970s, was “unrealistic” until Sanders rekindled the idea.
More troubling still, elites propagated the idea that public goods should not be free and available to all via progressive taxation. Rather public goods were denigrated and then offered up for privatization. Even civil rights icon Representative John Lewis used the neoliberal framework to attack Bernie Sanders’ call for free higher education and universal health care: “I think it’s the wrong message to send to any group. There’s not anything free in America. We all have to pay for something. Education is not free. Health care is not free. Food is not free. Water is not free. I think it’s very misleading to say to the American people, we’re going to give you something free.”
Obama/Clinton Didn’t, Trump did
Ironically, while Lewis is defending neoliberalism, Trump actually is attacking two of its foundational elements—free trade and unlimited capital mobility. Not only is Trump violating neoliberal theory, he also is clashing with the most basic way Wall Street cannibalizes us. Without the free movement of capital, assisted by trade deals, financial elites and their corporate partners would not be able to slash labor costs, destroy unions and siphon off wealth into their own pockets.
In particular, we should be extremely worried about how Trump is approaching the loss of manufacturing jobs. The neoliberal fog should not cause us to miss the obvious: presidents Obama and Clinton did absolutely nothing to stop the hemorrhaging of middle-class manufacturing jobs to low-wage countries. (U.S. manufacturing fell from 20.1 percent of all jobs in 1980 to only 8.8 percent by 2013.) Not only did Obama and Clinton fail to stop even one factory from moving away, but they truly believed that capital mobility and free trade were good for America and the world. In other words they had sipped plenty of the neoliberal Kool-Aid.
Meanwhile, Trump is all in. He is saying that jobs in the U.S. are more important than the long-run benefits of capital mobility and TPP/NAFTA agreements. If he keeps bashing corporations for moving jobs abroad and if he manages to ignite even a mini U.S. manufacturing jobs boom, Trump could be with us for eight long years.
But What About the Poor in Other Countries?
To many progressives, saving American jobs sounds jingoistic and “protectionism” is a bad word. Isn’t global trade helping the poor become less so around the world? Isn’t it selfish only to protect American jobs? Isn’t it more moral to share scarce manufacturing jobs with the poor in Mexico and Asia? After all, even if a plant closes in the Rust Belt, service sector jobs can be found at wages that still are far higher than what the poor can hope for in low-wage countries.
You can be sure corporations will be playing this tune if Trump tightens the screws on capital mobility.
These arguments however have little to do with how the world actually functions.
First, the big winners in the outsourcing game are the corporations and their top Wall Street investors. (In fact Wall Street is driving the process by endless pressure for stock buybacks.) It’s hard to make the case that the poor in Mexico have been the beneficiaries of NAFTA.
Second, it is morally suspect to argue that someone else should give up his or her standard of living so that the product made here can be produced abroad by the same company and imported back into the U.S. No worker can afford to donate his or her job to developing nations.
Third, outsourcing to low wage areas always involves increasing health, safety and environmental hazards. In almost every case production moves from more stringent standards to weaker standards. Plus, the increased distances the products must travel mean there will be more carbon emissions than if production remained here.
No, it’s not possible to make a credible progressive case for outsourcing your neighbor’s job
What Do We Do?
The progressive instinct, and rightfully so, is to trash Trump. If he’s for it, we must be against it. When it comes to immigration, civil rights, abortion, freedom of the press and many, many other issues, that’s a sound strategy.
But trashing Trump for saving jobs in the U.S. is suicidal.
In opposing Trump, we must not slip into defending neoliberalism. It’s not okay for corporations to pack up and leave. We should have some control over our economic lives and not leave all the crucial decisions to Wall Street and their corporate puppets. Trade deals are bad deals unless they enforce the highest health, safety, environmental and labor standards. And those measures must be enforceable by all the parties. The race to the bottom is real and must stop.
In the U.S. We Should Be Mobilizing the Following Areas:
1. Organize the outsourced: We should identify and organize all those at risk from off-shoring. We need to make sure Trump and Congress hear from these actual and potential victims. Trump needs to be reminded each and every day that there are millions of jobs he must protect. At the same time we should be rounding up support for the Sanders bill to stop off-shoring.
2. Resist:Trump has made it clear to corporate America that in exchange for job creation in the U.S. he will cut their taxes and regulations. We should demand that all tax “reforms” include a new financial speculation tax (Robin Hood Tax) on Wall Street to slow down their insatiable greed. Also, we need to fight tooth and nail against any weakening of workplace health, safety and environmental regulations. We have to destroy the Faustian bargain where jobs are protected but the workers and the communities are poisoned.
3. Connect: More than 3 million people protested against Trump. But it is doubtful that dislocated workers and those facing outsourcing were involved in these marches. That’s because the progressive movement has gotten too comfortable with issue silos that often exclude these kinds of working-class issues. That has to change in a hurry. We need to reach out to all workers in danger of off-shoring—blue and white collar alike.
4. Expand: Many key issues—from having the largest prison population in the world to having one the lowest life-spans—are connected through runaway inequality. Outsourcing is deeply connected to the driving force behind runaway inequality—a rapacious Wall Street and its constant pressure for higher returns. We need to broaden the outsourcing issue to include stock buybacks and the other techniques used by Wall Street to strip-mine our jobs and our communities. It’s time for a broad-based common agenda that includes a Robin Hood Tax on Wall Street, free higher education, Medicare for All, an end to outsourcing, fair trade and a guaranteed job at a living wage for all those willing and able.
5. Educate: In order to build a sustained progressive movement we will need to develop a systematic educational campaign to counter neoliberal ideology. We need reading groups, study groups, formal classes, conferences, articles and more to undermine this pernicious ideology. Some of us are fortunate to be part of new train-the-trainer programs all over the country. We need to expand them so that we can field thousands of educators to carry this message.
Yes, all of this is very difficult, especially when it seems like a madman is running the country. It is far easier to resist than to tear apart neoliberalism. But we have to try. We need to recapture the job outsourcing issue and rekindle the flames that ignited Occupy Wall Street and the Sanders campaign.