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  August 19, 2012

Is Full Employment Possible in the Era of Globalization?

Bob Pollin Pt4: The global "army of the unemployed" weakened American labor, but tariffs are not a solution - a mass mobilization is needed
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Robert Pollin is Distinguished Professor of Economics and Co-Director of the Political Economy Research Institute (PERI) at the University of Massachusetts-Amherst. He is also the founder and President of PEAR (Pollin Energy and Retrofits), an Amherst, MA-based green energy company operating throughout the United States. His books include The Living Wage: Building a Fair Economy (co-authored 1998); Contours of Descent: U.S. Economic Fractures and the Landscape of Global Austerity (2003); An Employment-Targeted Economic Program for South Africa (co-authored 2007); A Measure of Fairness: The Economics of Living Wages and Minimum Wages in the United States (co-authored 2008), Back to Full Employment (2012), Green Growth (2014), Global Green Growth (2015) and Greening the Global Economy (2015).


PAUL JAY, SENIOR EDITOR, TRNN: Welcome to The Real News Network. I'm Paul Jay in Baltimore.

We're continuing our series about Bob Pollin's new book, Back to Full Employment. Now joining us to continue this discussion is Bob Pollin. He is the founder, codirector of the PERI institute in Amherst, Massachusetts. Thanks for joining us again, Bob.


JAY: So just to pick up our last conversation, if you haven't watched the first few parts of this series, I suggest you watch it in order, 'cause all this conversation will make more sense that way. We were talking about your chapter in your book "Is Full Employment Possible under Capitalism". And part of the idea or concept of the book is that there used to be a full-employment objective in public policy in the United States. And I think probably one of the main markers for that is 1946 with the Full Employment Act.

But some people would argue 1946 is a very specific kind of year. First of all, you have more workers on strike in 1946 in entire American history, if I understand correctly. Before '46 and after '46 there were, I have, 4,985 strikes, 4.6 million workers on strike, for a total of 116 million strike days. So in the context of that—and there was—many, many of the soldiers coming back were unemployed. Plus you had the Soviet Union, which at least for many workers held out the promise of a socialist system that was going to work. And one of the most important things about this socialist system, people thought (and we know this promise was not fulfilled, but still, in '46 a lot of people thought it would be), was full employment.

So within the context of the beginnings of the Cold War and all these strike struggles, you get the Full Employment Act. But some people would argue, you know, now the socialist models of Russia and China have failed, and then, particularly with globalization, the ability—as we've talked about a little bit in the earlier segment of the interviews, the ability for capital to use this global reserve force of unemployed or very cheap labor as leverage against the American workers, that they no longer need to make these kind of compromises like they did in '46, or even the New Deal in the '30s, that they can be far more—what's the word?—intense in how they go after American workers, and that full employment simply isn't their objective, so that the set of policies you're talking about or the toolkit you're talking about might well work, but these guys won't do it—. What do you make of that?

POLLIN: Well, the objective of the book was to lay out what I tried to show was a feasible path to full employment, to show how it can be done within the confines of a broadly capitalist system today, so that we can energize political forces today—today—to fight for decent jobs for anybody that wants a job today.

Now, the political forces, that is another issue. In fact, the whole point of the book is to help mobilize political forces. Of course I know full well that the political forces are very different today than they were in 1946, and for that matter in the 1970s. But we also have a crisis on our hands. We had a crisis that started due to the collapse on Wall Street in 2008 and 2009. Employment conditions remain worse than at any time since the Great Depression. So it seems like an appropriate time to start thinking about ways through which we can fight for decent livelihoods and full employment for people in this country.

Of course it's going to take a political mobilization to get there. I mean, we did have—for example, last fall we had the Occupy Wall Street movement, which created a lot of tremendous energy around social justice and workers' rights and inequality in the country. Now, the Occupy Wall Street movement did not attach itself to any specific set of policies—on purpose. They deliberately chose not to. But I would say when we have a second round of this kind of movement, that it should indeed focus on some specific policies, and top on the list, in my view, should be full employment. And it's because full employment is not just about jobs. Of course it is about jobs, but it's about decent jobs, it's about inequality, it's about reducing poverty. And in order to have any chance of getting to full employment, you also have to to have a highly regulated, stable financial market.

JAY: Okay. Well, when we get to the final segment, we'll kind of explore some of the big ideas again. But let's kind of dig into one piece of this, and that is the whole issue of globalization, because certainly, you know, in the postwar years, one—the fall of the Soviet Union is one major factor on the political, you could say, ideological side of this question. But on the sort of objective economic balance of power between business and workers, the biggest development, I would guess, is this globalization of labor, where now you can produce at a very sophisticated level in markets that have high—in countries that have enormous unemployment, very low wages, and bring the products back to the U.S. So talk about the effect of globalization and then what this means in terms of full employment.

POLLIN: Well, globalization, the impact of that on the U.S. labor market—and we can talk about it in other countries as well, but the impact on the U.S. labor market has been going on since the 1970s increasingly. And the single clearest indicator of the impact of this formation of a global reserve army of labor, that is, that businesses can threaten workers in the U.S. by saying, well, we're just going to go produce in China and workers are going to get one-twentieth of what you get—so that seems to me the biggest single factor with globalization, the credible threat that U.S. businesses can use against workers in this country.

The impact has been two generations of wage stagnation. The average worker in the United States today is earning about 7 or 8 percent below what the average worker earned in 1973.

JAY: Yeah, you give the numbers in your book. You have $19.47 an hour in 2011 dollars for the average nonsupervisory worker today, and in 1972 the same worker would actually be making, as you said, 7 to 8 percent more, $20.99.

POLLIN: Right. And the other part of that figure that I show is that that stagnation or decline in the average wages occurred while average productivity in the U.S. economy, that is, the amount that the average worker produces over the course of a day or over the course of a year, has doubled. So the average worker coming to work is producing twice as much as they did, roughly, in 1970, in the early '70s, whereas they're getting paid about 8 or 9 percent less than they did. There's really never been this kind of pattern before that I know of in U.S. history or in the history of any advanced capitalist country. So the workers have been really getting clobbered by globalization.

Now, that is one of the main themes of the book: how do you fight against that? That is one of the questions that I try to raise in the book, counteracting those pressures from globalization.

JAY: Let's go there. I know if we'd follow directly chronologically in the book, this isn't the next thing you take up, but you have in previous interviews. For example, you deal with is immigration or illegal immigration really a problem. We've done interviews about that. You can watch it below us. We've done interviews on—. But let's pick up on what one solution to globalization is, and maybe then go to what you think it should be, and that's the issue of trade tariffs, that some people are saying there should simply be a return to tariffs on imported goods, protect the American market, and in that way protect jobs for American workers, and you hear that both from the right and sections of the left.

POLLIN: Right. Right. Now, the issue that I raise in the book—it was really two sets of issues. One, is this the kind of policy that really has a big chance of success? My view is that the chances of success are not very good.

JAY: "This policy" meaning protectionism.

POLLIN: The policy of trade protectionism as a counterforce to globalization. And the basic reason why I don't think it's going to succeed is, if we think about the policy tools that we have, they're basically ways to set up barriers so that, say, Chinese goods are more expensive. And the most basic way to do that is to force the Chinese to raise the value of its currency, the yuan, relative to the dollar, or, correspondingly, for the U.S. to push down the value of the dollar relative to the yuan.

Whether we can even do that if we try is itself questionable. I mean, the U.S. right now—the Fed is trying to decide what to do to try to move the growth in the U.S. economy forward. And the measures that we've taken have had only limited success. There's no reason to assume that the U.S. would be capable of moving the dollar to where it wanted to be relative to China even if it wanted to. In addition, why wouldn't China or any other developing country that depends on the U.S. market retaliate? They will retaliate.

JAY: In other words, you start getting currency wars and everybody tries to keep dropping below the U.S. dollar wherever it goes.

POLLIN: That's right. And then the other thing is, even if at the level of national governments Third World countries didn't retaliate, the producers in the Third World, they will retaliate. They don't want to lose the U.S. market. So what they will do is push down the wages of the workers in the Third World. So that'll force super exploitation on the workers that are already getting paid too little. So I don't really see this as a viable solution even technically, certainly not in terms of solidarity.

And the other issue in terms of solidarity is I don't think that the U.S. should be focused—certainly progressives in the U.S.—should be focused on creating jobs for U.S. workers by taking away jobs from Third World workers.

JAY: You could add another piece to that too, which, if the history of the 20th century's to be understood, and before that, you know, trade wars, which essentially a currency war would be, and especially if you add protectionism to that, tend to lead to real wars.

POLLIN: Right. So I don't think, for all of these reasons, that is a viable policy. Around the edges, of course, you know, we can negotiate with China and talk tough and all that, and I do favor industrial policies to promote manufacturing and the green economy in the U.S., but I don't see that as, necessarily, an aggressive trade policy against Third World producers.

JAY: Okay. So let's go. In the next segment, we're going to go to—then let's look at what would be viable policies. And we'll start looking at—both in terms of—and we're going to start with an assessment of did the Obama stimulus work, and if it didn't, why didn't it. And then we'll go from there.

So thanks very much for joining us on The Real News Network, and join us for the next part of our series with Bob Pollin.


DISCLAIMER: Please note that transcripts for The Real News Network are typed from a recording of the program. TRNN cannot guarantee their complete accuracy.


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