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  September 7, 2017

Low Rate of Unionization in US Consequence of Deregulation

Bill Black points out that former Treasury Secretary Lawrence Summers' recent plea for greater unionization contradicts his actions as a member of the Clinton and Obama administrations, when he promoted financial deregulation, increasing the power of capital
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William K. Black, author of THE BEST WAY TO ROB A BANK IS TO OWN ONE, teaches economics and law at the University of Missouri Kansas City (UMKC). He was the Executive Director of the Institute for Fraud Prevention from 2005-2007. Black was a central figure in exposing Congressional corruption during the Savings and Loan Crisis.


SHARMINI PERIES: It's the Real News Network. I'm Sharmini Peries coming to you from Baltimore. People in the U.S. just celebrated Labor Day, and some used the occasion to take stock of the situation of organized labor in the U.S. One unexpected analysis came from Lawrence Summers, Treasury Secretary under President Bill Clinton and Director of the National Economic Council under President Barack Obama. In his column in the Financial Times, he wrote, "Americans need unions more than ever." At the heart of his argument is that inequality has been increasing because workers and employees in the U.S. have been losing bargaining power relative to their employers.

Joining us now to analyze the state of American labor is Bill Black. Bill is a white collar criminologist, Associate Professor of Economics and Law at the University of Missouri Kansas City. He is the author of "The Best Way to Rob a Bank Is To Own One." Thanks for joining us, Bill.

BILL BLACK: Thank you.

SHARMINI PERIES: So Bill, let's start off with your reaction to Lawrence Summers' FT article.

BILL BLACK: Certainly Summers is correct that there has been a catastrophic loss of labor union power and that this is occurring at the same time that we've seen this astonishing stagnation of wages. And so the middle class and big chunks of the working class have not been getting significant wage increases for over 30 years now, and that has had enormous consequences for not just the economy, but family structure, and of course for politics. So Summers' piece is mostly a make nice-nice with the left wing of the Democratic Party on Labor Day. It doesn't cost him very much. He certainly wasn't a major proponent for unions at any stage in his career over the last 25 years. Bill Clinton was pretty famously hostile, as were the New Democrats as a whole.

Among the leading funders of the New Democrats' key organizations was the Bradley Foundation, and any of our viewers from Wisconsin are likely to know the Bradley Foundation is the leading force, even more than the Koch brothers, attempting to destroy unions throughout the United States. And of course the other leading entity that had a member of their board who boasted that his goal in life was to destroy unions, well, his fellow board member of course was one Hillary Clinton.

SHARMINI PERIES: Interesting. Speaking of the Clintons and then following up with the Obama Administration, where Summers served on both as I indicated, does he not make the link between the kind of deregulation in terms of workers' rights that he's been a part of through the Clinton Administration then the Obama Administration, and what's going on in terms of inequality that he writes about?

BILL BLACK: No, and again it's more than inequality, it's not simply that the rich are getting richer at a faster rate than the poor and the middle class and the lower middle classes, working classes. It's that there have been virtually no gains in huge slugs of the American population, all the way from working class through much of the middle class, over 30 years. So that's far worse than simple inequality, and it's combined with in many cases a severe loss of wealth out of the financial crisis as well. Again, for these groups, not for the wealthy. Of course, you've seen that the wealthy disproportionately put their money in stocks and similar investment vehicles that have done astonishingly well. So they have not only made up all of their losses, they have made huge gains, where you don't see similar recoveries for most of the middle and working class.

This has also caused a crisis in economic theory, which Summers' article does mention, that economists really can't explain with conventional economics how this is occurring. First, wages are supposed to be driven by productivity gains, and there are two big things about that. One, wages haven't remotely kept up with productivity gains. Instead that money has gone to a combination of shareholders, and in particular the absolute top managers, the CEOs, the CFOs, the people in the C-suites through these massive bonuses. So that's where the increased wealth has gone.

But second, productivity gains, which the right, and that includes the New Democrats, the Clintons and the Gores and the Larry Summers of the world, promised us that their deregulation, that their hostility to unions, was going to lead to dramatic increases in productivity, which they said would produce rapid increases in wages. Well, I've already said we're not getting those wage increases, but productivity, instead of surging, has also ... the growth of productivity has fallen substantially over the last 25 years. And so what they're doing that was supposed ... they promised us was going to be the greatest thing ever and was going to reduce inequality and be really, really good for the working class and the middle classes has had exactly the opposite effect, and that's of course because their economic theories are falsehoods.

They're basically cover stories for laissez-faire, and Summers never admits the link to his own policies, but he now says things like ... in this op-ed about labor, he said things about trade and saying well, you know, international trade can really suppress wages in a place like the United States. He certainly never said that when he was Treasury Secretary or head of the National Economic Council under Clinton and Obama, respectively, where he was pushing very strongly for precisely those kind of trade packages.

SHARMINI PERIES: Summers also points out that private sector unionization currently stands at 6.4%, two-thirds lower than in the 1970s and lower than almost any time in the past 70 years. Could it be that the same reasons for which inequality has been increasing are also the reasons why unionization has decreased?

BILL BLACK: There's been a war on unions. I was born in Detroit and grew up largely in Dearborn, Michigan, very close to where Walter Reuther was thrown off the overpass by the Ford goons and such. Today's my 66th birthday.

SHARMINI PERIES: Happy birthday.

BILL BLACK: Thank you. But when I was young, it was absolutely normal that people were in unions, and now in the private sector it's vanishing, so it's basically one in about 16 workers is in a union, and that's falling all the time. And on top of that, I mentioned the Bradley Foundation already, there's an active effort to destroy public sector unions or to emasculate them in terms of having any power. And that of course is the story politically in Wisconsin of attempting to ruin the public sector unions as well.

That attack is working. You can see that the unions have tried pushing back in some of the border states, where as you know, virtually all the new auto plants are opened in states that are very hostile under state law to unions. The UAW has attempted to organize, but in general they lose those elections, with the companies typically following policies that were championed by Bradley Foundation and by that Wal-Mart lawyer/director that I was talking about, that are unlawful under the labor laws, but we have not enforced the labor laws. And of course one of the Trump administration's most recent actions was to gut the efforts by the Obama Labor Department to ensure that workers would actually get overtime when they work overtime. So wage theft is now openly a practice at places like Wal-Mart and such. It is a key business strategy.

The hostility to workers is quite extraordinary. I mean, even Ronald Reagan used to praise labor unions, even if he wasn't much of a friend in practice, at least when he spoke, he spoke well of them. Now they absolutely demonize teachers' unions and try to make them the worst folks in the world. They even went after the nurses at one point in California and such, and nurses are among the most popular people in the world. After all, they're the ones helping you and your loved ones in the hospitals. That's how you typically see nurses in these circumstances. So we have gone a very long way in the pendulum. As you say, it's about as bad as it has been in modern history, where modern history goes back 80 years.

SHARMINI PERIES: Right. Now, on the conservative side, we actually did a story recently, it's titled "Conservative Policy Network Aims To ‘Defund and Defang’ Public Sector Unions," and the interview we did was with the current chair of Our Revolution, the organization that Bernie Sanders started. And in that story we focus on the kinds of efforts that are underway across the 50 states to deregulate any forms of labor protection that there is, and I imagine the Bradley Foundation that you mention is a part of that process. What is on the side of the unions? Who's fighting for trying to maintain and increase unionization in the country? To me, it seems really the obvious answer would be the large labor unions, but they were ineffective at even getting EFCA passed under the Obama Administration. That leaves us very little hope, Bill. Your comments on that?

BILL BLACK: There is a whole lot less hope, frankly, and so first the golden era for unions was also only possible because it was the golden era for U.S. business dominance. This is after World War II, we had, in essence, oligopolies that dominated the world economy in industry after industry. Europe was in fact devastated, and in standard economics those kind of oligopolies make a whole lot of extra profit. And so those were circumstances where it didn't make sense to fight with the union, have strikes that would really reduce your profits. You had big enough profits you could give a chunk to labor as well and do just fine. That era is gone, and it isn't coming back.

So that's part of what's going on, but beyond that has been the Democratic Party's, under the New Democrats, open hostility to labor and sometimes hostility from the left part of the Democratic Party as well, based on social stands of some unions. For example, police unions had recently, I think in Pennsylvania, described Black Lives Matter as "rabid animals" and such. It's not like there is uniformity in any portion of the Democratic Party or much less the left as a whole about unions.

SHARMINI PERIES: All right, Bill. I was hoping you would deliver better news for us and give us a sense of what can be done about increasing the levels of unionization in the country.

BILL BLACK: Well, I can talk about that, but the answer is, that is a very long term struggle, and the first thing we need to do is reject the advice of entities like Third Way. Politico has just this amazing article in which they refer to Third Way as center left and talk about, in favorable terms, this report that urges the Democratic Party to turn further against unions and pro business. So the first thing we need to do is realize that Third Way is not a center left institution. It is, as I describe it, Wall Street on the Potomac. It is completely controlled by Wall Street and operates for Wall Street. Until the Democrats free themselves from that kind of mindset of actively attacking labor, they're never going to be a force that in conjunction with labor can begin what's going to have to be a 50-year process of rebuilding labor union strength.

SHARMINI PERIES: All right. Bill, I thank you so much for joining us. We'll take what you're saying to note, and I hope the labor unions, the larger ones, are listening to the kind of organizing that they need to do. I thank you so much for joining us.

BILL BLACK: Thank you.

SHARMINI PERIES: And thank you for joining us here on the Real News Network.


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