Today is World Day for Decent Work, and union members in more than 100 countries are mobilizing to address the global economic and employment crisis and demand fundamental reform of the world economy.

The deepest global recession since the 1930s has led to a jobs crisis with millions of people out of work. The International Labor Organization (ILO) predicts that as many as 50 million more workers could be kicked out of jobs worldwide in the next year and could lead to a dramatic increase in the number of working poor.

Live online coverage of the activities around the world, including videos, photographs and messages from events in every continent, will be broadcast on a special website, www.wddw.org, which will be updated via a 24-hour live feed.

At its recent convention, the AFL-CIO strongly underscored its support for decent work for workers in the United States and around the world by unanimously passing a major resolution, “A Labor Movement Agenda for a Stronger, Cleaner and More Just Global Economy.” The resolution stressed the need for the global labor movement to promote the ILO’s Global Jobs Pact to help coordinate government efforts to respond to the employment crisis.

Following the convention, the newly elected AFL-CIO leadership traveled to meet with working families around the country, leading up to the G-20 meeting in Pittsburgh. At the G-20, AFL-CIO President Richard Trumka and International Trade Union Confederation (ITUC) General Secretary Guy Ryder, along with other international trade union leaders, met with President Obama. They stressed the elements of the June 2009 ILO “Jobs Pact” and the importance of enacting coordinated policies to create decent and environmentally sustainable work to combat growing unemployment, enact comprehensive and effective regulation of financial markets and promote the inclusion of key international labor standards in all assistance programs of the International Monetary Fund and World Bank.

The economic crisis is far from over and the global stimulus packages will not be enough to keep joblessness from growing at a steady pace, according to a new report by the ITUC. The report, “Jobs—The Path to Recovery,” was released to mark World Day for Decent Work. It shows that only 1.8 percent of financial rescue efforts have been dedicated directly to employment.

The report highlights trade union actions to fight the crisis around the world and explains the steps needed to achieve a decent work-led recovery and build a fairer and more sustainable world economy for future generations.

The G-20 summit, which ended recently in Pittsburgh, made progress in some areas but failed to completely address the overwhelming need to create new jobs now. “The current situation needs mending,” says Ryder:

Trade unions are raising their voices across the continents, to keep up the pressure for fundamental change, for justice and equity.

They face tremendous resistance from those who have profited from the exploitation of others in the past. Trade unions are determined to confront and defeat that resistance, and to ensure that governments everywhere get the message that they must deliver the results that working people demand.

Click here to read the full report, “The Path to Recovery: How Employment is Central to Ending the Global Crisis.”

Nowhere is the need for decent work more obvious than in the sweatshops of Asia, where workers toil long hours for little pay and few, if any, benefits to make apparel and other items for export that they could never afford to buy themselves.

Today, in New Delhi, India, and in cities in the United States, United Kingdom and throughout Europe, workers will launch a campaign for a living wage called the Asia Floor Wage.

In rallies, workshops, meetings with government and business leaders, public lectures by prominent human rights supporters and press conferences, they will promote a new strategy for global economic growth based on protecting workers’ rights and guaranteeing a living wage.

With so many of the world’s garments and other products being manufactured in Asia, corporations have exploited the workers there, forcing them to work long hours with little pay and few benefits. The campaign challenges this race-to-the-bottom by calling for raising the minimum wage in all major garment producing countries.

In the United States, Jobs with Justice is teaming up with the International Labor Rights Forum (ILRF), United Students Against Sweatshops (USAS), Worker Rights Consortium (WRC), the Asia Pacific American Labor Alliance (APALA) and the AFL-CIO for an educational campaign with our members and allies.

To learn more about the Asia Floor Wage campaign, click here.

About the Author James Parks had his first encounter with unions at Gannett’s newspaper in Cincinnati when his colleagues in the newsroom tried to organize a unit of The Newspaper Guild. He saw firsthand how companies pull out all the stops to prevent workers from forming a union. He is a journalist by trade, and worked for newspapers in five different states before joining the AFL-CIO staff in 1990. He has also been a seminary student, drug counselor, community organizer, event planner, adjunct college professor and county bureaucrat. His proudest career moment, though, was when he served, along with other union members and staff, as an official observer for South Africa’s first multiracial elections.

This article originally appeared in the AFL-CIO blog on October 7, 2009. Re-printed with permission by the author.

Unions and progressive coalitions are seeking to add grass-roots organizing power to President Obama’s calls for financial reform, with stepped up activism from the AFL-CIO, Jobs for Justice and the progressive Americans for Financial Reform coalition all starting this week.

Following last week’s AFL-CIO convention that aimed to jump-start reform drives and the union movement, new president Richard Trumka and other leaders will be taking their case for economic reform to Wall Street and the  public. As the AFL-CIO Now blog reported:

The team’s tour continues Sunday and Monday in Atlanta, including a rally outside Wachovia, where Trumka will condemn its predatory financial practices, such as foreclosures. On Monday night and Tuesday, the team travels to New York City where Trumka will issue a strong warning to Wall Street at a press conference outside the New York Stock Exchange.

The goal: create a fairer economy that works for everyone, not just the wealthy.

On Thursday, the Jobs for Justice Coalition plans an action—one of many protests scheduled for over 20 cities over the next week—outside a meeting of the pro-banking Financial Services Roundtable in Washington, D.C., a key lobbying coalition opposed to the Administration’s proposed consumer financial protection agency, as well as other reforms.

As a Jobs for Justice press release proclaimed:

Thousands expected to participate in over a dozen cities to mark the one-year anniversary of the bank bailouts.

Nearly a year after Congress authorized hundreds of billions of dollars to bail out the financial industry, major banks continue to pay outrageous salaries and bonuses, drive layoffs and foreclosures, and spend millions lobbying against the interests working people.

Rallies across the country will condemn the “bailout bandits” and “corporate criminals” at Bank of America, JP Morgan Chase, Citigroup and Wells Fargo.

Actions will take place in at least 21 cities, and new cities are being added every week. See below for local contacts and find an up to day list of actions at www.jwj.org/recovery.

There are good reasons for all the anger. But it has has yet to lead to a massive public outpouring for progressive reform, as opposed to the corporate-abetted “Tea Party” events that also decry bailouts along with healthcare reform, while leaving the current toothless oversight of the financial industry in place.

Even though federal officials allowed a free-spending set of bailouts with no requirements and little oversight, virtually nothing has been done to make sure the money isn’t wasted and is spent in ways that benefit the economy. Indeed, nobody really knows how the $700 billion in bailout funds was actually spent.

So while inside-the-beltway analysts claim that Obama has an uphill fight in Congress, out-of-control banks and  Wall Street firms are now squandering taxpayers’ funds while returning to trading in risky investments. And credit is still largely frozen, worsening the “jobless recovery.”

As the Media Consortium summed up in its year-later review of the Wall Street collapse:

While workers experienced increasing pressure on their pocketbooks, Wall Street gambled away their retirement investments. Lehman Brothers filed for bankruptcy one year ago today, a move which created chaos in the financial sector and heavy damage in the rest of the economy. Things were looking bad for the economy before Wall Street imploded, but the financial crisis made those problems a lot worse.

“In a modern society, a credit freeze means instant death to the real economy, since virtually every enterprise, big and small, runs on credit,” Les Leopold explains for In These Times. “When the financial sector froze, it pushed the real economy off a cliff.”

But incredibly, after a year marked by massive financial bailouts, not one new law has been signed to protect our economy–and taxpayers–from Wall Street. Not one.

Even the modest plans to rein in executive pay for taxpayer-supported companies have proved toothless. Leopold notes that President Barack Obama’s refusal to crack down on the banks has left both the financial regulatory process and other important progressive plans–like overhauling the broken health care system–in a precarious political state. The largesse we have shown for bailed-out bankers gives conservatives ammunition against other, more productive activities.

Read more at: http://www.huffingtonpost.com/the-media-consortium/weekly-audit-one-year-aft_b_287290.html

Perhaps the biggest promoter of refom, outside of the president himself, is the potentially influential coalition of 200 labor, consumer and  progressive groups, Americans for Financial Reform. It is planning grassroots actions while working with federal and state government officials to promote greater oversight of the financial system.

Indeed, to shore up support for administration proposals to rein in risky  investments, limit pay and offer a new consumer protection agency — all facing stiff industry opposition — the Treasury Department is reaching out to likely consumer allies, including the AFR organization.

So while some progressives and experts, including former Labor Secretary Robert Reich, remain skeptical about how committed this administration is to truly reforming a broken financial system, Bloomberg News reports that

Treasury Department officials are meeting with consumer allies to build support for a regulations overhaul for Wall Street as President Barack Obama ramps up a campaign to win legislation by year’s end.

The Treasury roundtables have been largely unpublicized, by invitation only and billed by some Democratic lawmakers as consumer-protection forums. The audiences are drawn in part from the rolls of a consumer-advocacy coalition that is pushing the legislation. They are designed to channel public anger at Wall Street and sidestep the financial industry, which is fighting to block the measure…

Audiences for the events are drawn largely from the membership of Americans for Financial Reform, a coalition of more than 12 dozen consumer, labor and civil rights groups that joined this year to push for oversight. The coalition includes the Service Employees International Union and the National Community Reinvestment Coalition.

Illinois Roundtable

The group will hold its next roundtable in Aurora, Illinois, on Sept. 21. State Attorney General Lisa Madigan will lead the session, and the group has invited Representative Bill Foster, an Illinois Democrat on the House Financial Services Committee.

Another non-profit group, Boston-based American Business Leaders for Financial Reform, is recruiting corporate executives to make the case for legislation. Tim Duncan, a Republican and founder of advisory firm Cambridge, Massachusetts-based Story Street Investment Management, created the organization after a conversation with Elizabeth Warren, the Harvard Law School professor who oversees the Troubled Asset Relief Program.

“There are a lot of people in the industry who realize reform is needed,” Duncan said in a telephone interview. “I’m surprised at the knee-jerk reaction industry is taking.”

But long-time observers of the financial industry aren’t suprised that a major battle lies ahead—and unions hope to play a leading role in pushing for reform.

And yet if this drive for reform falters, the fate of the entire economy is at stake. As Robert Reich described the risks we’re now facing:

Put simply, the Street has been given too many opportunities to play too many games with other peoples’ money.

But, like the health care industry, Wall Street has platoons of lobbyists and an almost unlimited war chest to protect its interests and prevent change. And with the Dow Jones Industrial Average trending upward again — and the public’s and the media’s attention focused elsewhere, especially on health care — it will be difficult to summon the same sense of urgency financial reform commanded six months ago.

Yet without substantial reform, the nation and the world will almost certainly be plunged into the same crisis or worse at some point in the not-too-distant future. Wall Street’s major banks are already en route to their old, dangerous ways — now made more dangerous by their sure knowledge that they are too big to fail.

About the Author: Art Levine is a contributing editor of The Washington Monthly who has also written for The American Prospect, Alternet, In These Times, Salon, The New Republic, The Atlantic and numerous other publications. He’s written investigative articles on unionbusting and other corporate abuses, and recently completed Cornell University’s Strategic Corporate Research summer program. He blogs regularly for Huffington Post, and co-hosts a weekly Blog Talk Radio show, “The D’Antoni and Levine Show,” every Thursday at 5:30 p.m. ET.

This article originally appeared in Working In These Times on September 20, 2009. Re-printed with permission from the author.

Nearly a year after the $700 billion bailout of the nation’s financial system began, banks—especially regional and smaller banks—are still threatened by the billions of dollars in bad loans on their balance sheets. More could fail if the economy worsens, according to a new report from the Congressional Oversight Panel (COP), which oversees the spending of the bailout funds.

“The Continued Risk of Troubled Assets,” released today, warns that if unemployment rises sharply or the commercial real estate market collapses, the banking system could again nosedive into a crisis.

In the report, the panel says:

The financial system [remains] vulnerable to the crisis conditions that [the bailout] was meant to fix.

The report says many of the Obama administration’s financial stability efforts are working—including infusions of new capital for banks, heightened scrutiny of capital ratios and “stress-testing” of large financial firms.

But the way the Troubled Asset Relief Program (TARP) funds have been spent has placed some banks in danger, COP says. TARP was originally proposed as a plan to buy bad mortgage-backed loans from ailing banks. But by the time the program was signed into law in October 2008, the Treasury Department had decided to go in another direction and use the money to provide banks with a capital buffer and to build reserves. That left many of the bad loans on the books.

According to the COP:

These steps have…allowed the banks to take significant losses while building reserves. Nonetheless, financial stability remains at risk if the underlying problem of toxic assets remains unresolved.

Small banks are especially vulnerable, the report says. Most of their bad loans are not covered by the Treasury Department’s main program for buying up bad assets. In addition, the report says, regional and smaller banks hold greater numbers of commercial real estate loans, “which pose a potential threat of high defaults.”

You can read the full report here.

The COP, which includes Damon Silvers, AFL-CIO associate general counsel, is charged with reporting on the Treasury Department’s effort to stabilize our nation’s financial system and make recommendations to improve it.

The COP has issued monthly reports since January, finding among other things that the Treasury Department has not produced a plan for restoring lending to consumers, questioned the overall plan to rescue the financial industry and raised concerns about the administration’s plans to stem foreclosures.

James Parks: My first encounter with unions was at Gannett’s newspaper in Cincinnati when my colleagues in the newsroom tried to organize a unit of The Newspaper Guild. I saw firsthand how companies pull out all the stops to prevent workers from forming a union. I am a journalist by trade, and I worked for newspapers in five different states before joining the AFL-CIO staff in 1990. I also have been a seminary student, drug counselor, community organizer, event planner, adjunct college professor and county bureaucrat. My proudest career moment, though, was when I served, along with other union members and staff, as an official observer for South Africa’s first multiracial elections.

This article originally appeared at AFL-CIO Blog and is reprinted here with permission from the source.

Employment of older workers has increased by almost 1 million in the downturn.

The economy lost 247,000 jobs in July, bringing the rate of job loss over the last three months to 331,000. This is down sharply from the 700,000 monthly rate of decline in the months from November to February. The unemployment rate actually slid slightly to 9.4 percent, although this was entirely attributable to people dropping out of the workforce. The employment-to-population ratio fell by 0.1 percentage points to 59.4 percent, four full percentage points below the pre-recession peak.

The slower rate of job decline is largely due to a moderation of the pace of job loss in manufacturing and employment services, two sectors that had seen employment plummet during the worst of the downturn. Manufacturing lost 52,000 jobs in July; by contrast, it lost 205,000 jobs per month between November and February. This improvement was, in turn, driven largely by the auto sector, which lost jobs at a rate of 30,000 per month in the winter plunge. By contrast, employment in the auto sector rose by 28,200 in July. This is entirely a seasonal story as unadjusted employment in the sector actually decreased by 8,600 in July. Workers who ordinarily would have been laid off for retooling in July had already lost their jobs earlier in the year.

The employment services sector lost 25,600 jobs in July, compared to an 86,000 monthly rate of job loss between November and February. Temporary jobs are always the easiest for firms to shed. The July data still shows that the direction is clearly negative, but the rate is far slower than in the months of free fall. Construction lost 76,000 jobs, with all sectors of the industry still shedding employment, although the pace is down from a 115,000 peak monthly rate.

The establishment data showed a modest 0.1 hour increase in the average workweek. This was driven largely by the 1.6 hour increase in the workweek reported in the auto sector. However, even though the increase may prove to be an artifact of seasonal adjustment, it appears that the length of the workweek has at least stabilized.

The picture in the household data continues to be mostly bad, but there were a few somewhat encouraging signs. Consistent with the rise in hours reported in the establishment survey, there was a decline of 198,000 in the number of people involuntarily working part-time. As a result, the U-6, the broadest measure of labor market slack, fell from 16.5 percent to 16.3 percent, the first drop since November of 2007.

There continues to be the extraordinary trend of increased employment among older workers in spite of the economic downturn, as employment among workers over age 65 increased by 11,000 in July, even as it fell by 166,000 for everyone else. Since November of 2007, employment of people over age 55 has increased by 957,000 even as it has decreased by 7,581,000 for everyone else. To some extent, this presumably reflects not only the desire of baby boomers to work later in life than the cohorts that preceded them, but also the need of older workers to secure health care coverage through employment.

One especially disturbing item was a jump of 0.9 percentage points to an unemployment rate of 12.6 percent for women who maintain families, the highest rate since the peak of the 1982 recession. While this rate peaked at 13.6 percent in early 1983, there are almost 80 percent more women who maintain families in the labor force today.

The increase in the average hourly wage was 3 cents, bringing the annual rate of increase over the quarter to 1.2 percent. The 14 cent reported rise in manufacturing wages accounted for more than half of the month’s increase.

Given the steepness of the winter decline, this report has to be viewed as positive news. The stimulus has worked in stabilizing the economy and ending the free fall. The main impact to date was felt through tax cuts and benefit increases which raised the annual rate of consumption in the quarter by roughly $100 billion, adding more than 2 percentage points to growth. However, without further stimulus, the economy will have excessive unemployment for years to come.

Dean Baker: Dean Baker is co-director of the Center for Economic and Policy Research in Washington, DC. He is frequently cited in economics reporting in major media outlets, including the New York Times, Washington Post, CNN, CNBC, and National Public Radio. He writes a weekly column for the Guardian Unlimited (UK), and his blog, Beat the Press, features commentary on economic reporting. His analyses have appeared in many major publications, including the Atlantic Monthly, the Washington Post, the London Financial Times, and the New York Daily News. He received his Ph.D in economics from the University of Michigan.

This article appeared originally at CEPR on August 7, 2009 and is reprinted here with permission from the author.

It is not always easy to be a cheering squad for organized labor in these times. Unions across the country are cracking into contracts to give concessions, bargaining away rights to keep jobs and, really, it is pretty messy out here for workers and the unions that represent them. I am getting a lot of email and phone calls from a lot of
disgusted people and everyone is asking in one way or another the same question … why? I don’t know specific answers, but I feel it, too.

The economic crisis gave a sense of militancy to employers for their demands in give-backs. The same militancy, unfortunately, the union movement lacks. The Employee Free Choice Act, the one piece of legislation that the workers’ movement is NOT divided on, is taking a beating from the right wing Capitalists who fear fines if a first contract is not signed within a given time frame, who fear majority sign up, who fear that working people might just have a voice in their workplace and threaten their bottom line. The millions of dollars that are spent on fighting the Employee Free Choice Act is working, and it is a shame. Working people deserve the right to organize a union
without fear and retribution, without the harassment the other side says it fears will come from the organizing unions.

There is not a day in the week that another article pops up from somewhere in the  country spilling lies or exaggerations about EFCA – online articles that allow for comments, and all of the comments are against the unions and working people. The sad stuff is that the comments are probably written by people who carry union cards! There
is so much misinformation and lack of union-to-rank-and-file communication that, well, it is pathetic. It needs to change.

I am of the opinion that one of the ways to counter the negative perception of unions is through education, and doing it online more so than anywhere else. Online organizing and mobilizing just happens to be where my skills (and my trade) are, but lately I find it hard to spread out any news but bad news. But that’s how it goes, labor is riding a weird wave right now, it seems. My biggest concern is that our failure to resist the endless concessions is lowering the standards of all workers – organized or not.

While the news of the day might appear more bleak than usual, there is definitely a ton of good stuff to embrace. The problem is that not a lot of people are forwarding that stuff anymore because we are absorbed with the negative. I do try to promote the good stuff on UnionReview.com and on other sites to do my part in changing the
perception of labor unions. And, if there is anything that the online community has taught me is that I am not alone. We are a growing community of workers concerned about our rights, our unions and each other. While labor leaders and Washington politics at times appear to be leading us astray, we stay firm in our own militancy and mindset to right the wrongs that affect us in a struggle we’d been fighting a
long time.

I continue to see the good fight being fought and won with campaigns driven by workers for workers and won for workers. And I will continue to spread as much of that around, it is just impossible today to not acknowledge the other realities we are all facing in these times.

Richard Negri: Richard Negri is the founder of UnionReview.com and is the Online Manager for the International Brotherhood of Teamsters.

This article originally appeared on Union Review on August 1, 2009 and is reprinted here with permission from the author.

The so-called “green shoots” of recovery are turning brown in the scorching summer sun. In fact, the whole debate about when and how a recovery will begin is wrongly framed. On one side are the V-shapers who look back at prior recessions and conclude that the faster an economy drops, the faster it gets back on track. And because this economy fell off a cliff late last fall, they expect it to roar to life early next year. Hence the V shape.

Unfortunately, V-shapers are looking back at the wrong recessions. Focus on those that started with the bursting of a giant speculative bubble and you see slow recoveries. The reason is asset values at bottom are so low that investor confidence returns only gradually.

That’s where the more sober U-shapers come in. They predict a more gradual recovery, as investors slowly tiptoe back into the market.

Personally, I don’t buy into either camp. In a recession this deep, recovery doesn’t depend on investors. It depends on consumers who, after all, are 70 percent of the U.S. economy. And this time consumers got really whacked. Until consumers start spending again, you can forget any recovery, V or U shaped.

Problem is, consumers won’t start spending until they have money in their pockets and feel reasonably secure. But they don’t have the money, and it’s hard to see where it will come from. They can’t borrow. Their homes are worth a fraction of what they were before, so say goodbye to home equity loans and refinancings. One out of ten home owners is under water — owing more on their homes than their homes are worth. Unemployment continues to rise, and number of hours at work continues to drop. Those who can are saving. Those who can’t are hunkering down, as they must.

Eventually consumers will replace cars and appliances and other stuff that wears out, but a recovery can’t be built on replacements. Don’t expect businesses to invest much more without lots of consumers hankering after lots of new stuff. And don’t rely on exports. The global economy is contracting.

My prediction, then? Not a V, not a U. But an X. This economy can’t get back on track because the track we were on for years — featuring flat or declining median wages, mounting consumer debt, and widening insecurity, not to mention increasing carbon in the atmosphere — simply cannot be sustained.

The X marks a brand new track — a new economy. What will it look like? Nobody knows. All we know is the current economy can’t “recover” because it can’t go back to where it was before the crash. So instead of asking when the recovery will start, we should be asking when and how the new economy will begin. More on this to come.

Robert Reich: Robert B. Reich has served in three national administrations, most recently as secretary of labor under President Bill Clinton. He also served on President-Elect Obama’s transition advisory board. He has written twelve books, including The Work of Nations, which has been translated into 22 languages; the best-sellers The Future of Success and Locked in the Cabinet; and his most recent book, Supercapitalism. Mr. Reich is co-founding editor of The American Prospect magazine. His commentaries can be heard weekly on public radio’s “Marketplace.”

In 2003, Reich was awarded the prestigious Vaclav Havel Vision Foundation Prize, by the former Czech president, for his pioneering work in economic and social thought. In 2008, Time Magazine named him one of the ten most successful cabinet secretaries of the century. He received his B.A. from Dartmouth College, his M.A. from Oxford University where he was a Rhodes Scholar, and his J.D. from Yale Law School.

This article was originally posted on Robert Reich’s Blog on July 09, 2009 and is reprinted here with permission from the author.

Two top business experts have taken to the pages of Business Week to make the case for the Employee Free Choice Act.

Paul Adler, a professor at the Marshall School of Business at the University of Southern California, and Donald Palmer, an associate dean and professor at the University of California-Davis, say corporate hostility to the Employee Free Choice Act and to workers’ freedom to form unions is short-sighted because communities with well-paid workers have economic advantages for business.

Adler and Palmer cite training, job satisfaction and the healthy communities that come from economically secure workers as reasons why businesses benefit when their employees can form unions and bargain.

They write in the op-ed:

When unions raise the wages of the lowest-paid workers, this increases savings and reduces income inequality, which has beneficial effects on a nation’s economic growth and investment, not to mention its health and social cohesion.

Adler and Palmer say the inability of workers to form unions has real consequences, not only for individual workers but also for communities and the entire economy. The failure to allow workers the freedom to bargain has put us in a “low-performing state,” they say:

Once unions are radically weakened, as they have been in the U.S. over the past few decades—and in no small measure as a result of the business community’s hostility—a race to the bottom starts. The whole economy slides to a lower-level equilibrium where workers earn less and have less influence in the workplace, where firms pay less for labor but get less qualified and less committed workers, and, where, as a result, society gets less output from its available resources.

Adler and Palmer say passing the Employee Free Choice Act will “secure a better future”—not only for today’s workforce, but also for tomorrow’s businesses and workers. They authors are among dozens of business and management scholars who share this view.

Read the op-ed here.

About the Author: Seth Michaels is the coordinator of the AFL-CIO’s presidential candidate website, Working Families Vote 2008. Prior to arriving at the AFL-CIO, he worked on online mobilization for Moveon.org, Blue State Digital and the National Jewish Democratic Council. Seth spent two years touring the country as a member of the Late Night Players, a sketch comedy troupe—but the battles of U.S. politics are even more entertaining.

This article originally appeared in AFL-CIO Now on June 26, 2009. Re-printed with permission by the author.

John Kenneth Galbraith wrote The Great Crash 1929, an economic history focused in part on the men of the market who brought on the crash, in graceful and snarky prose. In his last chapter, he tells us of five major weaknesses in the real economy that made it possible for the disaster to destroy a generation. At the top of his list is the badly unequal distribution of wealth.

     

Piketty and Saez, 2003, Quarterly Journal of Economics

He points out that the top 5% of the population earned about one third of all personal income in 1929. Those figures comport well with the figures from Emanuel Saez and Thomas Piketty, whose IRS data indicates that the top 5% earned about 37% of gross income in 1929. P. 194 (references are to the Penguin Books 1992 ed.). For a discussion of the 2006 figures, see this NYT article.

Productivity increased steadily from 1920 to 1929, but wages and prices were stagnant. P. 192 Costs fell, and profits increased, but how were the wealthy to dispose of the money? The choices were consumption of luxuries or capital investment. There is only so much even the rich can consume. If anything happened to reduce the flow of money to capital expenditures, consumer spending could not increase to take its place, and the economy was headed down. In the event, it looks like a huge part of it went to speculation. There is insufficient evidence, according to Galbraith, to be certain that this was the central cause, and bless him for his warning about theorizing with incomplete data, but he thinks the explanation is consistent with the observed facts available to him in 1954.

He identifies four other factors.

1. Bad corporate structures. Although the business press praised the businessmen of that day, the fact (P. 195.) was that

American enterprise in the twenties had opened its hospitable arms to an exceptional number of promoters, grafters, swindlers, impostors, and frauds. This, in the long history of such activities, was a kind of flood tide of corporate larceny.

2. Bad banking structure. Galbraith doesn’t think bankers were any worse or better in the 20s than the 50s, but the structure of banks made runs on banks easier and more likely.

3. The balance of trade. The US was a creditor to most of the world. As the decade wore on, that status increased every year. High US tariffs made it difficult for other nations to balance their imports from the US with exports to the US, so accounts were settled in transfers of gold, or in shaky and crooked loans, like the loans made by National City Bank (predecessor, somehow, of CitiGroup) to Peru. P. 198-9. As this became more difficult, other countries had to reduce imports from the US, which caused strains in sectors of the economy, particularly agriculture.

4. Incompetent economic advice. From p. 200:

The economic advisors of the day had both the unanimity and authority to force the leaders of both political parties to disavow all the available steps to check deflation and depression.

Two and three seem unlikely culprits this time. It looks to me like a good case can be made for one, with all the money lost by the great geniuses of Wall Street and their counterparts in the banking and other businesses. What kind of country did our corporate masters think would be left when they exported all the decent jobs to other nations? Actually, it doesn’t affect them a bit. They just whine that they are being put upon by the great unwashed, and have to pretend they aren’t really all that different from you and me. When Newsweek notices it, it must be real.

As to four, judging competence isn’t easy. What do you think about the economic crowd? If you liked them under Bush, you’ll love them in their new form under Obama, including their supporters in the money party, the Blue Dogs and the rump of the Republican party. John Kenneth Galbraith would recognize these people too.

About the Author: Masaccio has a law degree from Indiana University and is a graduate of the University of Notre Dame. He began his career as a corporate and securities lawyer. He then worked in consumer protection and securities law for several years before becoming the securities commissioner of his home state. He has practiced business and bankruptcy law for the past 25 years. Beginning with an expensive and slightly frightening experience with Small Martingale as a young man, he has had an opportunity to see, investigate, sue and prosecute a wide variety of fraud cases, including check-kiting, critter contracts, churning, insider trading, Ponzi schemes, and stock market manipulation. This background is helpful in his work for FDL, which focuses on explaining the financial industry of today.

This article originally appeared in Firedoglake on June 21, 2009. Re-printed with permission by the author.

We need a Labor Secretary in the mold of Francis Perkins, whose top priority was to help the working man.

In recent days, colleagues have asked me to write about the near-collapse of the economy. My first response was to decline — recognizing all too well that I, like most of our nation’s leaders, was not entirely clear about what was going on. I’ve always been a big believer that wisdom is about knowing when to keep your mouth shut (or fingers away from the keyboard). As Proverbs 17:28 says, “Even a fool, when he keeps silent, is counted wise. When he shuts his lips, he is thought to be discerning.”

Although I must admit that I am still not completely clear about what all has occurred and has not occurred, I am more convinced than ever that we need a Secretary of Labor who cares about workers and who will at least try to address issues faced by workers. Unfortunately for the nation, we have a Secretary of Labor who is Missing in Action.

When the unemployment figures came out last week, Secretary of Labor Elaine Chao issued a one-sentence statement: “Today’s employment report provides further evidence of the need for the House of Representatives to pass an economic rescue package today, before it adjourns, which will protect Main Street America and mitigate further job loss,” said U.S. Secretary of Labor Elaine L. Chao. That’s it. That’s all she could muster on the subject.

The day before, she’d given a lengthy speech to the Chamber of Commerce decrying the “Europeanization” of the workplace and denigrating unions. Meanwhile, her Wage and Hour Administrator, Alexander Passantino, claims the Division is doing a great job enforcing wage and hour laws. I’m sure the Education and Training Administrator says the agency is doing a great job there too. Throughout Chao’s speeches over the last year she’s been claiming what a great job the Bush Administration is doing for working people. Well, the emperor has no clothes.

In the midst of the economic meltdown, dramatically rising unemployment figures, military-style immigration raids in workplaces, employers stealing wages like there’s no tomorrow, young people unprepared for today’s jobs — let alone tomorrow’s — and assaults against unions and the right to organize at an all-time high, we need a Secretary of Labor who sees it as his or her job to protect workers. The Secretary of Labor must be the preacher in the bully pulpit for better working conditions for all the nation’s workers. Even if she can’t do anything, she could reach out and talk with workers.

Frances Perkins.

Frances Perkins was the Secretary of Labor appointed by Franklin D Roosevelt in 1932 to help him address the economic crisis left him by eight years of Coolidge and Hoover leadership.

She came to Washington, D.C. with a mission — in her words, to serve God, FDR and the working man. She came with a vision. She wanted to get people back to work, pass national standards for wage payment, and establish a social security system. She and her colleagues created the jobs programs that built many of our nation’s parks and bridges, she passed the Fair Labor Standards Act, the most comprehensive wage protection law in the nation, and she helped design the Social Security System.

Learning from the lessons of Frances Perkins, here’s what the new Secretary of Labor should do:

First, advocate stopping the workplace immigration raids. When Frances Perkins took over, the Department of Labor was responsible for workplace raids and she stopped them immediately. They were wrong then and they are wrong today.

Although Homeland Security, not Labor, has jurisdiction for Immigration and Customs Enforcement (ICE), the Labor Secretary should speak forcefully against this intimidation of workers that is a gross waste of taxpayer money.

Second, enforce the wage and hour laws in meaningful ways. Employers are stealing billions of dollars annually from the paychecks of millions of workers. Wage theft is a national crisis and the Department of Labor is asleep at the wheel. Just as an unregulated banking industry has brought forth catastrophe, unregulated workplaces have enabled employers to steal wages from workers on a mass scale. In 1941, Frances Perkins had 1,500 investigators in the field visiting 12 percent of the country’s workplaces to ensure that employers were paying people legally. Today, with more than 10 times as many workers covered by the Fair Labor Standards Act, there are half as many investigators. Employers know that the chances of getting caught stealing wages is minuscule and that if they are caught, the consequences are insignificant. The Secretary must go after wage theft. What better economic stimulus for the society than workers getting the wages they are owed and spending them in their communities?

Third, lead the charge in supporting unemployed workers. Unemployment insurance should be available widely to workers and job creation strategies should be pursued aggressively both through public incentives for private job creation and public jobs programs. Let’s create those green jobs everyone is talking about.

Fourth, commit to developing the 21st-century supports America’s workers need. During Perkins’s time, she focused on putting in place social security for America’s workers. Today, we need a national health care program. Forty-seven million workers and their families without health care is not in the best interest of workers or the nation as a whole. The Secretary of Labor should play a role in guaranteeing health care to all Americans.

Fifth, support the fundamental rights of all workers to organize into unions of their choice. Although Perkins wasn’t the first choice of labor unions for secretary, she overcame their hesitations with her steadfast support for workers’ rights to organize in the workplace. Elaine Chao, in contrast, has used her public voice to attack the Employee Free Choice Act, the most significant labor law reform to come along in decades.

When the economy is in shambles, it is America’s workers who take the biggest hit. Perhaps in the coming weeks and months, we will all understand better what has happened to our economy. But as we move forward as a nation in addressing the crisis, we need a Secretary of Labor who knows workers, cares for their concerns and speaks up for them. Our current Secretary of Labor is missing in action. We need to put the Labor back in Secretary of Labor.

About the Author: Kim Bobo, Founder and Executive Director of Interfaith Worker Justice, writes the “Dispatches from the Workplace” column for the online magazine Religion Dispatches. She is the author of Wage Theft in America: Why Millions of Working Americans Are Not Getting Paid — And What We Can Do About It (forthcoming in December from the New Press) and the co-author of Organizing for Social Change, the best-selling manual on progressive activism in the U.S.

This article originally appeared on the God’s Politics Blog (www.godspolitics.com).

For the past 20-30 years, at least since Ronald Reagan and Margaret Thatcher, the US and other advanced countries have sought to solve economic problems by removing impediments to firms and individuals acting in markets. Collective solutions and collective organizations such as labor unions have been viewed as part of the problem in society rather than as part of the solution. Mrs. Thatcher famously said, “there is no such thing as society.” Globalization has proceeded in much the same manner, with the notion that the correct path has been to deregulate, privatize, and trust that markets will work close to perfect.

This view is no longer sustainable. Markets do many things right, but they also screw up royally. This is most striking today in financial markets with the subprime mortgage crisis. If you are religious, pray for Ben Bernanke and the Federal Reserve who are desperately trying to keep financial markets from making an utter mess of the real economy, as they did in the Great Depression. The issue in finance is no longer deregulation, but getting enough regulations to maintain a stable financial system and making sure when we fix the mess that unregulated markets got us into, we neither reward the “villains,” nor put future market participants into such binds that they cannot do what we as a society want them to do: direct investments to socially useful activities rather than to create Ponzi schemes to enrich themselves.

Financial screw-ups aside, the greatest problems currently facing the world are not problems that competitive markets can solve. There is no way profit-seeking firms will come together collectively to solve global warming and climate change, nor to make sure that the huge demands for natural resources from economic growth now in China and India as well as in the US and other advanced countries do not produce disaster for some countries or persons. Profit-seeking firms have no incentive to deal with the danger of some global pandemic, of protecting us from horrific terrorist biological and nuclear attack. They will not invest in the long-term basic research that might give us alternatives to non-renewable resources or the knowledge to deal with global health problems. The problems of the 21st century are public problems that require an active government and active private non-governmental groups working to resolve.

The only way I can see the US overcoming these problems is for us to move beyond the market triumphalism that followed the collapse of communism toward more cooperative public solutions. Social democrats, progressives, unionists, and yes, conservatives and business groups who want to solve social problems have a great opportunity now to press for a new agenda–for the return of public solutions for public problems. For unions and many on the left, this means moving out of the defensive shell of fending off the attacks of market purists to fighting for expanded collective action to deal with the great problems of our time. For 30 years or more, the world stage tilted in favor of individualistic market solutions. Now the problems demand a tilt the other way. To overcome the great public problems before us, we need more solidarity and cooperative activity, not less. We need to support our public sector workers, not to excoriate government. As Katrina showed, we need effective government, not demoralized, eviscerated government.

Fukuyama saw the end of history just as Mrs. Thatcher saw the end of society. They are wrong. The return of the public means the return to public service. Titans of Wall Street, ideologues of the Washington consensus, wheelers and dealers, your time is past. We have great problems to solve as a nation and as a world. Let’s get to work solving them.