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Today's
Stories
October
18 / 19, 2003
Robert
Pollin
Clintonomics:
the Hollow Boom
October
17, 2003
Stan Goff
Piss
On My Leg: Perception Control and the Stage Management of War
Newton
Garver
Bolivia
in Turmoil
Standard
Schaefer
Grocery Unions Under Attack
Ben Terrall
The Ordeal of the Lockheed 52
Ron Jacobs
First Syria, Then Iran
David
Lindorff
Michael
Moore Proclaims Mumia Guilty
October
16, 2003
Marjorie
Cohn
Bush
Gunning for Regime Change in Cuba
Gary Leupp
"Getting Better" in Iraq
Norman
Solomon
The US Press and Israel: Brand Loyalty and the Absence of Remorse
Rush Limbaugh
The 10 Most Overrated Athletes of All Time
Lenni
Brenner
I
Didn't Meet Huey Newton. He Met Me
Website of the Day
Time Tested Books
October
15, 2003
Sunil
Sharma / Josh Frank
The
General and the Governor: Two Measures of American Desperation
Forrest
Hylton
Dispatch
from the Bolivian War: "Like Animals They Kill Us"
Brian
Cloughley
Those
Phony Letters: How Bush Uses GIs to Spread Propaganda About Iraq
Ahmad
Faruqui
Lessons
of the October War
Uri Avnery
Three
Days as a Living Shield
Website
of the Day
Rank and File: the New Unity Partnership Document
JoAnn
Wypijewski
The
New Unity Partnership:
A Manifest Destiny for Labor
October 14, 2003
Eric Ridenour
Qibya
& Sharon: Anniversary of a Massacre
Elaine
Cassel
The
Disgrace That is Guantanamo
Robert
Jensen
What the "Fighting Sioux" Tells Us About White People
David Lindorff
Talking Turkey About Iraq
Patrick
Cockburn
US Troops Bulldoze Crops
VIPS
One Person Can Make a Difference
Toni Solo
The CAFTA Thumbscrews
Peter
Linebaugh
"Remember
Orr!"
Website
of the Day
BRIDGES
October
11 / 13, 2003
Alexander
Cockburn
Kay's
Misleading Report; CIA/MI-6 Syrian Plot; Dershowitz Flaps Broken
Wings
Saul Landau
Contradictions: Pumping Empire and Losing Job Muscles
Phillip Cryan
The War on Human Rights in Colombia
Kurt Nimmo
Cuba and the "Necessary Viciousness" of the Bushites
Nelson P. Valdes
Traveling to Cuba: Where There's a Will, There's a Way
Lisa Viscidi
The Guatemalan Elections: Fraud, Intimidation and Indifference
Maria Trigona and Fabian
Pierucci
Allende Lives
Larry
Tuttle
States of Corruption
William A. Cook
Failing America
Brian
Cloughley
US Economic Space and New Zealand
Adrian Zupp
What Would Buddha Do? Why Won't the Dalai Lama Pick a Fight?
Merlin
Chowkwanyun
The Strange and Tragic Case of Sherman Marlin Austin
Ben Tripp
Screw You Right Back: CIA FU!
Lee Ballinger
Grits Ain't Groceries
Mickey Z.
Not All Italians Love Columbus
Bruce
Jackson
On Charles Burnett's "Warming By the Devil's Fire"
William Benzon
The Door is Open: Scorsese's Blues, 2
Adam Engel
The Eyes of Lora Shelley
Walt Brasch
Facing a McBlimp Attack
Poets'
Basement
Mickey Z, Albert, Kearney
October 10, 2003
John Chuckman
Schwarzenegger
and the Lottery Society
Toni Solo
Trashing
Free Software
Chris
Floyd
Body
Blow: Bush Joins the Worldwide War on Women
October
9, 2003
Jennifer
Loewenstein
Bombing
Syria
Ramzi
Kysia
Seeing
the Iraqi People
Fran Shor
Groping the Body Politic
Mark Hand
President Schwarzenegger?
Alexander
Cockburn
Welcome
to Arnold, King for a Day
Website of the Day
The Awful Truth about Wesley Clark
October
8, 2003
David
Lindorff
Schwarzenegger
and the Failure of the Centrist Dems
Ramzy
Baroud
Israel's
WMDs and the West's Double Standard
John Ross
Mexico
Tilts South
Mokhiber
/ Weissman
Repub Guru Compares Taxes to the Holocaust
James
Bovard
The
Reagan Roadmap for Antiterrorism Disaster
Michael
Neumann
One
State or Two?
A False Dilemma
October
7, 2003
Uri Avnery
Slow-Motion
Ethnic Cleansing
Stan Goff
Lost in the Translation at Camp Delta
Ron Jacobs
Yom Kippurs, Past and Present
David
Lindorff
Coronado in Iraq
Rep. John Conyers, Jr.
Outing a CIA Operative? Why A Special Prosecutor is Required
Cynthia
McKinney
Who Are "We"?
Elaine Cassel
Shock and Awe in the Moussaoui Case
Walter
Lippman
Thoughts on the Cali Recall
Gary Leupp
Israel's
Attack on Syria: Who's on the Wrong Side of History, Now?
Website
of the Day
Cable News Gets in Touch With It's Inner Bigot
October
6, 2003
Robert
Fisk
US
Gave Israel Green Light for Raid on Syria
Forrest
Hylton
Upheaval
in Bolivia: Crisis and Opportunity
Benjamin Dangl
Divisions Deepen in Third Week of Bolivia's Gas War
Bridget
Gibson
Oh, Pioneers!: Bush's New Deal
Bob Fitrakis and Harvey
Wasserman
The Bush-Rove-Schwarzenegger Nazi Nexus
Nicole
Gamble
Rios Montt's Campaign Threatens Genocide Trials
JoAnn
Wypijewski
The
New Unity Partnership:
A Manifest Destiny for Labor
Website
of the Day
Guerrilla Funk
October
3 / 5, 2003
Tim Wise
The
Other Race Card: Rush and the Politics of White Resentment
Peter
Linebaugh
Rhymsters
and Revolutionaries: Joe Hill and the IWW
Gary Leupp
Occupation
as Rape-Marriage
Bruce
Jackson
Addio
Alle Armi
David Krieger
A Nuclear 9/11?
Ray McGovern
L'Affaire Wilsons: Wives are Now "Fair Game" in Bush's
War on Whistleblowers
Col. Dan Smith
Why Saddam Didn't Come Clean
Mickey
Z.
In Our Own Image: Teaching Iraq How to Deal with Protest
Roger Burbach
Bush Ideologues v. Big Oil in Iraq
John Chuckman
Wesley Clark is Not Cincinnatus
William S. Lind
Versailles on the Potomac
Glen T.
Martin
The Corruptions of Patriotism
Anat Yisraeli
Bereavement as Israeli Ethos
Wayne
Madsen
Can the Republicans Get Much Worse? Sure, They Can
M. Junaid Alam
The Racism Barrier
William
Benzon
Scorsese's Blues
Adam Engel
The Great American Writing Contest
Poets'
Basement
McNeill, Albert, Guthrie
October
2, 2003
Niranjan
Ramakrishnan
What's
So Great About Gandhi, Anyway?
Amy Goodman
/ Jeremy Scahill
The
Ashcroft-Rove Connection
Doug Giebel
Kiss and Smear: Novak and the Valerie Plame Affair
Hamid
Dabashi
The Moment of Myth: Edward Said (1935-2003)
Elaine Cassel
Chicago Condemns Patriot Act
Saul Landau
Who
Got Us Into This Mess?
Website of the Day
Last Day to Save Beit Arabiya!
October 1, 2003
Joanne
Mariner
Married
with Children: the Supremes and Gay Families
Robert
Fisk
Oil,
War and Panic
Ron Jacobs
Xenophobia
as State Policy
Elaine
Cassel
The
Lamo Case: Secret Subpoenas and the Patriot Act
Shyam
Oberoi
Shooting
a Tiger
Toni Solo
Plan Condor, the Sequel?
Sean Donahue
Wesley
Clark and the "No Fly" List
Website of the Day
Downloader Legal Defense Fund
September
30, 2003
After
Dark
Arnold's
1977 Photo Shoot
Dave Lindorff
The
Poll of the Shirt: Bush Isn't Wearing Well
Tom Crumpacker
The
Cuba Fixation: Shaking Down American Travelers
Robert
Fisk
A
Lesson in Obfuscation
Charles
Sullivan
A
Message to Conservatives
Suren Pillay
Edward Said: a South African Perspective
Naeem
Mohaiemen
Said at Oberlin: Hysteria in the Face of Truth
Amy Goodman
/ Jeremy Scahill
Does
a Felon Rove the White House?
Website
of the Day
The Edward Said Page
September 29, 2003
Robert
Fisk
The
Myths of Western Intelligence Agencies
Iain A. Boal
Turn It Up: Pardon Mzwakhe Mbuli!
Lee Sustar
Paul
Krugman: the Last Liberal?
Wayne Madsen
General Envy? Think Shinseki, Not Clark
Benjamin
Dangl
Bolivia's Gas War
Uri Avnery
The
Magnificent 27
Pledge
Drive of the Day
Antiwar.com
September
26 / 28, 2003
Alexander
Cockburn
Alan
Dershowitz, Plagiarist
David Price
Teaching Suspicions
Saul Landau
Before the Era of Insecurity
Ron Jacobs
The Chicago Conspiracy Trial and
the Patriot Act
Brian
Cloughley
The Strangeloves Win Again
Norman Solomon
Wesley and Me: a Real-Life Docudrama
Robert
Fisk
Bomb Shatters Media Illusions
M. Shahid Alam
A Muslim Sage Visits the USA
John Chuckman
American Psycho: Bush at the UN
Mark Schneider
International Direct Action
The Spanish Revolution to the Palestiniana Intifada
William
S. Lind
How $87 Billion Could Buy Some Real Security
Douglas Valentine
Gold Warriors: the Plundering of Asia
Chris
Floyd
Vanishing Act
Elaine Cassel
Play Cat and Moussaoui
Richard
Manning
A Conservatism that Once Conserved
George Naggiar
The Beautiful Mind of Edward Said
Omar Barghouti
Edward Said: a Corporeal Dream Not Yet Realized
Lenni Brenner
Palestine's Loss is America's Loss
Mickey
Z.
Edward Said: a Well-Reasoned Voice
Tanweer Akram
The Legacy of Edward Said
Adam Engel
War in the Smoking Room
Poets' Basement
Katz, Ford, Albert & Guthrie
Website
of the Weekend
Who the Hell is Stew Albert?
September
25, 2003
Edward
Said
Dignity,
Solidarity and the Penal Colony
Robert
Fisk
Fanning
the Flames of Hatred
Sarah
Ferguson
Wolfowitz at the New School
David
Krieger
The
Second Nuclear Age
Bill Glahn
RIAA Doublespeak
Al Krebs
ADM and the New York Times: Covering Up Corporate Crime
Michael
S. Ladah
The Obvious Solution: Give Iraq Back to the Arabs
Fran Shor
Arnold and Wesley
Mustafa
Barghouthi
Edward Said: a Monument to Justice and Human Rights
Alexander Cockburn
Edward Said: a Mighty and Passionate
Heart
Website
of the Day
Edward Said: a Lecture on the Tragedy of Palestine
The Great Alejandro Escavedo Needs Your Help!
September 24, 2003
Stan Goff
Generational
Casualties: the Toxic Legacy of the Iraq War
William
Blum
Grand Illusions About Wesley Clark
David
Vest
Politics
for Bookies
Jon Brown
Stealing Home: The Real Looting is About to Begin
Robert Fisk
Occupation and Censorship
Latino
Military Families
Bring Our Children Home Now!
Neve Gordon
Sharon's
Preemptive Zeal
Website
of the Day
Bands Against Bush
September
23, 2003
Bernardo
Issel
Dancing
with the Diva: Arianna and Streisand
Gary Leupp
To
Kill a Cat: the Unfortunate Incident at the Baghdad Zoo
Gregory
Wilpert
An
Interview with Hugo Chavez on the CIA in Venezuela
Steven
Higgs
Going to Jail for the Cause--Part 2: Charity Ryerson, Young and
Radical
Stan Cox
The Cheney Tapes: Can You Handle the Truth?
Robert
Fisk
Another Bloody Day in the Death of Iraq
William S. Lind
Learning from Uncle Abe: Sacking the Incompetent
Elaine
Cassel
First They Come for the Lawyers, Then the Ministers
Yigal
Bronner
The
Truth About the Wall
Website
of the Day
The
Baghdad Death Count
September
20 / 22, 2003
Uri Avnery
The
Silliest Show in Town
Alexander
Cockburn
Lighten
Up, America!
Peter Linebaugh
On the Bicentennial of the Execution of Robert Emmet
Anne Brodsky
Return
to Afghanistan
Saul Landau
Guillermo and Me
Phan Nguyen
Mother Jones Smears Rachel Corrie
Gila Svirsky
Sharon, With Eyes Wide Open
Gary Leupp
On Apache Terrorism
Kurt Nimmo
Colin
Powell: Exploiting the Dead of Halabja
Brian
Cloughley
Colin Powell's Shame
Carol Norris
The Moral Development of George W. Bush
Bill Glahn
The Real Story Behind RIAA Propaganda
Adam Engel
An Interview with Danny Scechter, the News Dissector
Dave Lindorff
Good Morning, Vietnam!
Mark Scaramella
Contracts and Politics in Iraq
John Ross
WTO
Collapses in Cancun: Autopsy of a Fiasco Foretold
Justin Podur
Uribe's Desperate Squeals
Toni Solo
The Colombia Three: an Interview with Caitriona Ruane
Steven Sherman
Workers and Globalization
David
Vest
Masked and Anonymous: Dylan's Elegy for a Lost America
Ron Jacobs
Politics of the Hip-Hop Pimps
Poets
Basement
Krieger, Guthrie and Albert
Website of the Weekend
Ted Honderich:
Terrorism for Humanity?
Hot Stories
Alexander Cockburn
Behold,
the Head of a Neo-Con!
Subcomandante Marcos
The
Death Train of the WTO
Norman Finkelstein
Hitchens
as Model Apostate
Steve Niva
Israel's
Assassination Policy: the Trigger for Suicide Bombings?
Dardagan,
Slobodo and Williams
CounterPunch Exclusive:
20,000 Wounded Iraqi Civilians
Steve
J.B.
Prison Bitch
Sheldon
Rampton and John Stauber
True Lies: the Use of Propaganda
in the Iraq War
Wendell
Berry
Small Destructions Add Up
CounterPunch
Wire
WMD: Who Said What When
Cindy
Corrie
A Mother's Day Talk: the Daughter
I Can't Hear From
Gore Vidal
The
Erosion of the American Dream
Francis Boyle
Impeach
Bush: A Draft Resolution
Click Here
for More Stories.
|
October
18 / 19, 2003
Clintonomics: a Reappraisal
The
Hollow Boom
By
ROBERT POLLIN
[Editors' note: The following
essay is excerpted from economist Robert Pollin's explosive new
book, Contours
of Descent: US Economic Fractures and the Landscape of Global
Austerity, published in September by Verso.--AC/JSC]
"Watch what we do, not what we say."
-- John Mitchell, Attorney General under
President Richard Nixon
"It's the economy stupid,"
was the one memorable slogan to have emerged out of Bill Clinton's
successful first run at the Presidency in 1992, and it became
the overarching theme of his full eight years in office. Clinton
came into office pledging to end the economic stagnation that
that had enveloped the last two years of the Bush-1 administration
and advance a program of "Putting People First" through
large investments in job training, education, and rebuilding
the country's public infrastructure.
But Clinton's economic program changed
drastically even during the two-month interregnum between his
November election and his inauguration in January 1993, as Bob
Woodward of the Washington Post documented in compelling detail
in his first Washington insider book on economic policy, The
Agenda. As reported by Woodward, Clinton himself acknowledged
only weeks after winning the election that "We're Eisenhower
Republicans here.We stand for lower deficits, free trade, and
the bond market. Isn't that great?" Clinton further conceded
during this same time period that with his new policy focus "we
help the bond market and we hurt the people who voted us in."
Clinton never abandoned the idea that
"it's the economy stupid" should remain the watchwords
of his Presidency. It was just that the "Putting People
First" agenda of his 1992 campaign would have to yield top
priority to the prerogatives of the financial markets and the
wealthy. How could Clinton have undergone such a lightening
reversal from the program on which he was elected to office?
The answer was straightforward, and explained with unvarnished
candor by Robert Rubin, who had been Co-Chair of the premier
Wall Street firm Goldman Sachs before joining the Clinton administration
and who was to become Clinton's most influential economic advisor
and Treasury Secretary. Still during the interregnum before
Clinton's first inauguration, Rubin pointed out to members of
the more populist camp within the newly forming administration
that the rich "are running the economy and make the decisions
about the economy."
What happened when Clinton put the agenda
of the financial markets at the top of his administration's concerns?
There is no doubt that dramatic departures from past U.S. economic
trends did occur during the Clinton era, including the simultaneous
fall of inflation and unemployment; the reversal of the federal
budgetary situation from persistent deficits to three years of
surplus at the end of Clinton's second term in office; and the
unprecedented run-up in stock prices. But these developments
can themselves be adequately understood only within a broader
context that includes  consideration of both Clinton's
main policy initiatives and the overall performance of the economy
in the Clinton years-including the macroeconomic performance,
the performance of the financial markets, as well as what happened
to "the people" of the abandoned "Putting People
First" agenda. This chapter begins by examining Clinton's
main initiatives in the areas of trade policy, regulation of
labor and financial markets, and fiscal and monetary policy.
With this overall policy environment as background, we then
evaluate the economy's overall performance in the Clinton years.
In Chapter 3, we sharpen the focus of the discussion, considering
in detail the three extraordinary developments in the Clinton
years-the simultaneous fall of inflation and unemployment, the
transition from fiscal deficits to surpluses; and the stock market
bubble.
WHAT HAPPENED
TO THE INFLATION/UNEMPLOYMENT TRADE-OFF?
Whatever else may be said of macroeconomic
performance under the Clinton presidency, the simultaneous fall
of unemployment and inflation clearly defied the expectations
of virtually all orthodox economists. Between 1993-2000, the
unemployment rate fell steadily from 7.5 -- 4.0 percent. Meanwhile,
the inflation rate also declined steadily, to a low point of
1.6 percent by 1998. Inflation did increase in 1999-2000, but
only to 2.2 percent in 1999 and 3.4 percent by 2000. Most economists,
adhering to the Natural Unemployment/Non-Accelerating Inflation
Rate of Unemployment (NAIRU) doctrines dominant since the early
1970s, had long predicted that unemployment in the region of
4 percent, or even 5 percent, must lead to headlong inflation.
This is because with low unemployment rates, workers would gain
increased bargaining power. They would demand higher wages and
businesses, in turn, would pass on their higher labor costs to
their customers through price increases. An inflationary wage-price
spiral would ensue. Supporters of this position thus held that
policy-makers were obligated to maintain unemployment at or above
its NAIRU rate - that is, above the unemployment rate at which
inflation would take off. To this end, it was generally believed
that unemployment needed to be perhaps as high as six percent.
What caused the dramatic shift in the
trade-off between unemployment and inflation, and to what extent
was the Clinton administration responsible for it? Some leading
economists have conceded that the inflation-safe unemployment
rate-that is, the threshold unemployment rate, or NAIRU, below
which inflation would begin accelerating-is subject to change
over time. Robert Gordon, for one, concludes from an extensive
econometric analysis of the past two decades that inflation-safe
unemployment rate varies over time-falling, for example, from
6.2 percent in 1990 to 5.6 by mid-1996. Douglas Staiger, James
Stock, and Mark Watson concur, finding in a 1997 paper that the
inflation-safe unemployment rate in that year was between 5.5
and 5.9 percent, a full percentage point below its level for
the early 1980s. They also admit that "the most striking
feature of these estimates is their lack of precision".
Their 1997 estimate of the inflation-safe unemployment rate
not only varies over time but also has the capacity to range
widely at a given point in time. In an updated 2002 study, they
conclude that the inflation-safe unemployment rate varies in
close correspondence with the trend in the actual unemployment
rate.
The general thrust of these broad econometric
findings appears solid enough. Indeed, they are difficult to
dispute precisely because they are so broad. But in focusing
exclusively on the details of how the inflation-safe unemployment
rate varies over time, they miss the fundamental question that
leaps out from these results - namely, what causes the inflation-safe
unemployment rate to vary in the first place? It is remarkable
that leading economists who have devoted so much time to estimating
values for the inflation-safe unemployment rate have also largely
neglected this question. Staiger, Stock and Watson do attempt
to answer it in their 2002 paper but come up empty. After showing
the close correspondence between the inflation-safe unemployment
rate and the trend for the actual unemployment rate, they then
acknowledge that their data "fail to isolate any economic
or demographic determinants of the trend unemployment rate (p.
7)."
Slowly, however, some new modes of thinking
are emerging. Almost as an aside in his 1997 paper, Gordon,
for example writes,
The two especially large changes in the
NAIRU [i.e. inflation-safe unemployment rate]...are the increase
between the early and late 1960s and the decrease in the 1990s.
The late 1960s were a time of labor militancy, relatively strong
unions, a relatively high minimum wage and a marked increase
in labor's share in national income. The 1990s have been a time
of labor peace, relatively weak unions, a relatively low minimum
wage and a slight decline in labor's income share.
Gordon also casually refers to intensified
world competition in product and labour markets, and increased
flows of unskilled immigrant labour into the United States, as
factors contributing to a decline in the inflation-safe unemployment
rate. Though again these observations are mere asides in Gordon's
paper, the overall point is clear: it is changes in the balance
of forces between capital and labour, and the growing integration
of the US into the global economy-which has increased the difficulty
of U.S. firms raising prices and U.S. workers getting wage increases-that
have been the main forces that have weakened the pressure for
inflation to accelerate even at low unemployment rates.
Gordon's general hunch is fully consistent
with econometric models of the unemployment/inflation relationship
that-unlike Gordon's own model-incorporates the effects of falling
wages and benefits for workers relative to productivity growth.
I present the main results of such an exercise in Appendix 2
of this chapter, in which I include the effects of falling wages
and benefits for workers relative to productivity growth in a
simple econometric model. The model shows that adding this one
factor alone generates predictions of the actual movements of
the inflation rate of the 1990s between 2-3 times more accurate
than the typical model that ignores the effects of low wages
and benefits relative to productivity at low unemployment rates.
The model does an even better job of predicting the movements
of the actual inflation rate when, in line with Gordon's suggestions,
we also take account of intensified global competition, which
led to lower import prices.
The central point is that, as we have
seen, wage gains for average workers during the Clinton boom
remained historically weak, especially in relationship to the
ascent of productivity (see Figure 2.1 and Table 2.7). These
facts provide the basis for the poll findings reported in Business
Week at the end of 1999 that substantial majorities of US citizens
expressed acute dissatisfaction with various features of their
economic situation. For example, 51 percent of American workers
interviewed by the magazine declared that they 'felt cheated
by their employer'. When asked their view of what Business Week
termed the 'current productivity boom', 63 percent said that
the boom has not raised their earnings, and 62 percent that it
had not improved their job security. Such negative popular reactions
are striking, given the persistent portrayal by the media of
the Clinton economy as a time of unparalleled prosperity.
But such attitudes were not lost on leading
government policymakers at the time. Thus, Bob Woodward's paean
to Alan Greenspan published in 2000, Maestro: Greenspan's Fed
and the American Boom, includes the following revealing passage:
The old belief held that with such a
low unemployment rate workers would have the upper hand and demand
higher wages. Yet the data showed that wages weren't rising
that much. It was one of the central economic mysteries of the
time. Greenspan hypothesized at one point to colleagues within
the Fed about the "traumatized worker"-someone who
felt job insecurity in the changing economy and so was accepting
smaller wage increases. He had talked with business leaders
who said their workers were not agitating and were fearful that
their skills might not be marketable if they were forced to change
jobs
(p. 168).
Greenspan openly acknowledged his "traumatized
worker" explanation for the dampening of inflationary pressures
in his regular semi-annual testimony to Congress in July 1997.
Saluting the economy's performance that year as "extraordinary'"
and "exceptional," he remarked that a major factor
contributing to its outstanding achievement was "a heightened
sense of job insecurity and, as a consequence, subdued wages."
During her stint as a Federal Reserve Governor, Janet Yellen,
co-author of The Fabulous Decade, reached similar conclusions
as to the sources of declining inflationary pressures at low
unemployment, reporting to Fed's Open Market Committee on September
24, 1996 that "while the labor market is tight, job insecurity
also seems alive and well. Real wage aspirations appear modest,
and the bargaining power of workers is surprisingly low."
As we have seen, these facts of declining bargaining power for
workers did not deter Prof. Yellen from nevertheless concluding
that the overall economic performance in the 1990s was "fabulous."
This 'heightened sense of job insecurity'
lies at the very foundation of the Clinton administration's economic
legacy. But what lies behind the heightened sense of job insecurity
itself, even as unemployment fell to a level unseen since the
1960s? It will be helpful here to return to what I called the
"Marx problem" in Chapter 1. Marx's explains in his
theory of the reserve army of labor that workers have less bargaining
power than employers in labor markets because they do not own
their own means of production. But Marx also stressed that workers'
bargaining power diminishes further when unemployment and underemployment
are high, since that means that employed workers can be readily
replaced by the reserve army outside the factory gates.
In terms of the contemporary global setting,
the dynamics of the reserve army effect in the United States
and other high-wage economies changes when firms operating in
low-wage economies can produce export-competitive manufactured
products. In this situation, the potential size of the reserve
army necessarily expands to also include both the unemployed
and, even more to the point, employed but low-paid workers in
the developing economies. As such, U.S. capitalists gained an
additional bargaining advantage in wage-setting negotiations.
This is because firms can now credibly claim that their
own relatively high labor costs will threaten their export markets
and increase import competition from low-wage competitors. In
addition, the firms whose operations are not tied to a specific
location can credibly threaten to move to low-wage economies
if costs in their current locations appear too high. The crucial
issue here is not that firms actually leave their existing high-wage
location but that they can brandish a credible threat to exit.
Moreover, what makes such threats credible
is not the rise of low-wage countries manufacturing capacity
alone. Rather, it is that, given the rise in export competitiveness
among low-wage countries, the Clinton administration did not
act to counter the increased bargaining power accruing to capitalists.
Quite the contrary as we have seen-by not advancing policies
that would strengthen workers' bargaining position in any of
the key areas of trade, labor market regulations or macroeconomic
policies, the Clinton administration enabled business to consolidate
its increased relative bargaining strength.
Kate Bronfenbrenner of Cornell University
has conducted the most directly relevant study of how threats
by employers have influenced labor negotiations. Through a
series of surveys of workers and union organizers throughout
the 1990s, she has found that threats by employers have both
inhibited organizing drives and held down wage demands. For
example, in her 1993-95 survey, she found that 50 percent of
all firms and 65 percent of manufacturing firms that were targets
of union organizing campaigns threatened to close their shops
and relocate if the workers voted to unionize. Though only 12
percent of those firms that ended up unionized did then carry
through on their threat to relocate, workers nevertheless found
the threats credible. In particular, in cases where firms did
make threats to shutdown or relocate, unions lost a significantly
larger percentage of elections. Her general finding from her
series of surveys is that
Throughout the last decade, the increasingly
rapid pace of global capital mobility, and the job dislocation
and corporate restructuring that follows in its wake, has fostered
a climate of intense economic insecurity among U.S. workers.
This rising sense of economic insecurity has effectively served
to hold down wage demands and wage increases even during a period
of economic expansion, low unemployment and tight labor market.
(2001, p. 2-3).
In a related study on this issue, Minsik
Choi of University of Massachusetts-Boston considers what happens
to unionized workers employed by U.S. firms with a high proportion
of their investments in foreign operations. Everything else
equal, we would expect firms with a larger number of foreign
plants would have greater capacity to make credible threats against
their U.S.-based workers in wage negotiations. Choi has found
this to be especially true in industries with the highest proportion
of foreign plants operating in conjunction with their domestic
activities. For example, in firms producing soap, cleaners,
and toilet goods, Choi finds that workers in the U.S. plants
of these firms earn about 18 percent less than even non-unionized
workers employed by firms with no foreign investment.
Overall then, the absence of inflationary
pressures as unemployment fell under Clinton should be no mystery.
Class conflict has always been the spectre haunting the analysis
of inflation and unemployment. With the Clinton administration
providing virtually no support to workers as the bargaining strength
of business increased, it is not surprising that workers felt
"traumatized"-as Alan Greenspan put it-and therefore
scaled back their wage claims even in a period of low unemployment.
Robert Pollin
is professor of economic and founding co-director of the Political
Economy Research Institute at the University of Massachuesetts-Amherst.
He is also the author of the Living Wage (with Stephanie Luce).
He can be reached at: pollin@counterpunch.org.
Weekend
Edition Features for Sept. 26 / 28, 2003
Alexander
Cockburn
Kay's
Misleading Report; CIA/MI-6 Syrian Plot; Dershowitz Flaps Broken
Wings
Saul Landau
Contradictions: Pumping Empire and Losing Job Muscles
Phillip Cryan
The War on Human Rights in Colombia
Kurt Nimmo
Cuba and the "Necessary Viciousness" of the Bushites
Nelson P. Valdes
Traveling to Cuba: Where There's a Will, There's a Way
Lisa Viscidi
The Guatemalan Elections: Fraud, Intimidation and Indifference
Maria Trigona and Fabian
Pierucci
Allende Lives
Larry
Tuttle
States of Corruption
William A. Cook
Failing America
Brian
Cloughley
US Economic Space and New Zealand
Adrian Zupp
What Would Buddha Do? Why Won't the Dalai Lama Pick a Fight?
Merlin
Chowkwanyun
The Strange and Tragic Case of Sherman Marlin Austin
Ben Tripp
Screw You Right Back: CIA FU!
Lee Ballinger
Grits Ain't Groceries
Mickey Z.
Not All Italians Love Columbus
Bruce
Jackson
On Charles Burnett's "Warming By the Devil's Fire"
William Benzon
The Door is Open: Scorsese's Blues, 2
Adam Engel
The Eyes of Lora Shelley
Walt Brasch
Facing a McBlimp Attack
Poets'
Basement
Mickey Z, Albert, Kearney
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