Category Archives: Economy

Crash in Oil Prices Should Bury Peak Oil Once and For All

by Arun Gupta Telesur January 29, 2015

In 1977 Isaac Asimov wrote of “The Nightmare Life Without Fuel.” Writing in the wake of the first Middle East oil shock, Asimov imagined cars and air conditioning becoming distant memories, cities mined for valuable minerals and hardware, and the last barrels of oil hoarded for agricultural and military purposes. A future of scarcity seemed in the cards after the 1979 revolution in Iran followed disrupted global supplies, reviving gas lines and rationing in the United States, and sending oil prices to a stratospheric $117 a barrel in today’s U.S. dollars.

The U.S. economy plunged into recession for the second time in a decade. Inflation, food prices and unemployment all shot up. Energy-importing Third World nations were devastated as expensive crude depleted their treasuries even as the U.S. Federal Reserve jacked interest rates, triggering the debt crises that remain unresolved to this day.

But high prices didn’t last long as Saudi Arabia opened its spigots to replace Iran as the West’s top oil supplier, oil exploration boomed in Texas, and vast new fields in the Gulf of MexicoNorth Sea and Alaska ramped up. By the mid-1980s two-hour lines at the filling station were a hazy childhood memory as I’d zip up to the pump and fill my gas-sipping Nissan Sentra for $5.

We are now replaying that era of energy shocks radiating from the Middle East, tight energy markets, expensive oil and an oversupply and bust. The cyclical nature of the fossil-fuel industry disapproves a concept that’s gained wide support, especially on the left, even though it’s flawed in every way: “peak oil.”

Asimov never used the term peak oil in his essay, but that was the underlying idea. Shell Oil geologist Marion King Hubbert developed peak oil theory in the 1950s, predicting domestic U.S. oil production would peak by 1970 and decline steadily thereafter. In exploiting an individual oil field, Hubbert contended, production ramps up quickly and hits a peak at about which time about half the recoverable oil has been extracted. As the oil becomes increasingly difficult and costly to pump out, the field goes into decline. Think of the production as a bell-shaped curve. The top point means half is gone and half is left. But because population and the economy continue to grow, so do energy needs. Hubbert held that his theory about an individual field was applicable to the continental U.S. oil production and even the entire world, which he predicted would peak around 2000.

After that, as one website describes, comes the nightmare future. “Worldwide demand for oil will outpace worldwide production of oil by a significant margin … the price will skyrocket, oil dependent economies are liable to crumble, and resource wars are liable to explode.”

Except panics over looming shortages are as old as the oil industry itself. One snake-oil salesman in 1855 implored buyers to purchase his petroleum-based cure-all “before this wonderful product is depleted from Nature’s laboratory.” The U.S. government warned numerous times in the 20th century that oil supplies would be depleted in a decade or two. The infamous 1972 Limits to Growth projected that by 2013 the world should have run out of “aluminum, copper, gold, lead, mercury, molybdenum, natural gas, oil, silver, tin, tungsten, and zinc.” Peak-oil theorists like Colin Campbell, Kenneth Deffeyes, Richard Heinberg and James Howard Kunstler have been declaring peak oil for more than twenty years but production keeps rising.

Despite this dismal track record many leftists embraced peak oil during the Bush era. It was a secular version of end times in the post-9/11 world. If movement building seems insurmountable, then it’s tempting to find solace in building post-carbon, do-it-yourself communities and wait for the wells to run dry at which point everything from the “war on terror” to climate change is resolved.

Fervent peak oilers are neo-Malthusians, believing the relentless growth of population and society on their own will outstrip natural resources. While Malthus’s ideas were discredited on scientific, historical, and economic grounds in the 19th century, they live on in peak oil, peak waterpeak mineralspeak soilpeak food and peak everything.

From a scientific perspective, peak oil posits geology as determining oil supplies. Of course oil is a finite and non-renewable resource, but the last decade of spiraling oil prices was caused by Middle East wars, Wall Street commodities speculation, and ecological disasters like Hurricane Katrina, not by natural limits. It’s the socio-economic system that determines how much oil, along with every other commodity, is produced, distributed, and consumed. Grasping why peak oil and its variants are flawed offers a deeper understanding of the global energy order, the politics of climate change, and capitalism itself.

Even the term peak oil is problematic, obscuring how the energy industry works. We may imagine oil as gushing out of a steel derrick in a barren desert, but energy companies are after hydrocarbons in any form. Cars on a highway could be powered by fuel derived from tar sands, natural-gas or its condensates, shale oil, biofuels, heavy oil, or coal-to-liquid. One scenario by the U.S. Energy Information Administration estimates such non-conventional sources could account for more than one-third of all oil produced by 2030.

Then there is the concept of a peak. Even though Hubbert was off by only one year—domestic production peaked in 1971—production looks nothing like his bell curve over time. It rose after each seventies shock, went into a twenty-year funk after the mid-eighties crash, and in the last five years it has soared to near its 1971 peak.

The inherent flaw of peak oil is that it naturalizes capitalism. Energy reserves are determined by price, investment and technology. The current oil boom, driven by innovations in fracking and drilling, tar-sands production, low-cost investment capital and persistently high oil prices, have smashed Hubbert’s theory to bits like brittle shale.

The inaccuracy of peak oil hasn’t stopped prominent figures like Paul Krugman and George Monbiot from flirting with the concept. Monbiot admitted his error in 2012, correctly noting the problem is not too little oil, but too much: “There is enough oil in the ground to deep-fry the lot of us, and no obvious means to prevail upon governments and industry to leave it in the ground.” On the left, Michael Klare has pushed versions of peak oil in books like Resource Wars and The Race for What’s Left. In 2005 Klare declared that “the world is headed for a severe and prolonged energy crunch in the not-too-distant future.” In 2008 Klare wrote that “the current energy crisis is almost certain to be long-lasting.” In 2012 he asserted that “oil prices are destined to remain high for a long time to come.”

Like the hardcore peak oilers, Klare confuses the energy economy with oil reserves rather than analyzing how economic, political, and technological forces turn tight markets into gluts, and booms into busts. While Klare tends not to endorse peak oil outright, he often quotes the ideas favorably. In recent years he has shifted to peak oil-lite, proclaiming the end of “cheap oil” or “easy oil.” Most any gas station these days refutes the “cheap oil” notion. The U.S. average is currently $2.03 for a gallon of gas, close to the inflation-adjusted average in the 1950s.

As for “easy oil,” that’s relative. In 1947 when the first commercial oil well was built out of the sight of land in the Gulf of Mexico it was an engineering marvel and in all of 18 feet of water. Today, Brazil has committed $82 billion to develop a “pre-salt basin” of oil under 6,900 feet of water and additional 17,000 feet of seabed. Japan is in uncharted waters with a pilot project to exploit methane hydrates, a form of frozen hydrocarbon on ocean floors that may be twenty-five times the size of all potential natural gas reserves. While there are uncertainties about these projects, especially methane hydrates, they show huge sums of investment are readily available to an energy industry that can rapidly innovate to develop profitable resources.

Klare, however, dismisses new hydrocarbon sources. He claims shale and tar sands oil is “tough oil” that “will have to overcome severe geological and environmental barriers.” The energy industry, however, doesn’t give a hoot about the environment. As Naomi Klein, author of This Changes Everything, puts it, “[Its] business model is fundamentally at war with life on earth.” And just as low gas prices refute the end of cheap oil, the output from Canada’s tar sands, more than 2.5 million barrels of synthetic crude a day, and U.S. shale formations, nearly 4 million barrels a day, proves tough oil is meaningless.

It’s the quest for hydrocarbons in general and geopolitical maneuvers that’s made the current oil crash rapid and steep. The last major crash was in the mid-eighties, and that taught Saudi Arabia to plan ahead. It’s amassed $750 billion in currency reserves and is pumping oil at full tilt rather than give up market share. The Saudis are willing to weather low prices to punish rivals like Iran and to force some unconventional black gold like shale and tar sands into the red. Conspiracy theorists see Washington’s hand because of the pain inflicted on Russia, Iran, and Venezuela, which all need high oil prices to meet their budgetary needs, but as the Socialist Worker points out, “Saudi Arabia’s decision not to prop up prices is the product of its rivalry with U.S. oil producers, not coordination with U.S. policymakers.” Daniel Yergin, author of The Prize, the Pulitzer Prize-winning history of the oil industry, contends we may be entering a new oil era where the United States supplants Saudi Arabia as the “swing producer” that can exert direct control over oil markets.

Critics contend that given ever-increasing thirst for hydrocarbons historically, any assumption about future usage based on current supply is dicey. That’s true, but “proven reserves” of oil and natural gas, which is the most conservative category, keep rising. One figure that has remained consistent over decades is the “reserve-to-production” ratio. In 1995 the world had an estimated 51 years of oil supply based on consumption that year. After burning through half-a-trillion barrels of oil since then, the global reserve-to-production ratio in 2013 was at 53.3 years.

While peak oilers snipe that Middle East producers overstate their supply, the opposite is the case. Officially, Saudi Arabia has 267 billion barrels of oil, but in twenty years, Saudi Aramco estimates it will have 630 billion barrels of recoverable reserves. That’s on top of current production rates of 4 billion barrels annually. The same is true for the United States, Canada, Venezuela, Iran, and Iraq. They can potentially produce far more oil than what’s listed in their reserves. One study of U.S. oil fields found the actual production was more than seven times the initial reserves reported. Conservative estimates of Brazil’s pre-salt oil fields put it at 14 billion barrels, which means they would eventually produce more than 100 billion barrels.

State companies like Saudi Aramco, known as “nationals,” often resist U.S. pressure to pump more oil because that could lead to a price crash. The nationals control 90 percent of global reserves, so many large fields remain untapped. The “majors”—corporations like ExxonMobil, Shell, BP, and Chevron—are left to grab what they can, such as shale oiltar sands, or search in extreme environments like the Arctic Ocean. This tendency only reflects the market imperative to maintain profitability, not a harbinger of the end of oil. But since Klare focuses mainly on the majors, his view is one in which oil is rapidly dwindling. In 2005 he wrote that “in the absence of major new discoveries, we face a gradual contraction in the global supply of petroleum” because “major private oil companies are failing to discover promising new sources of petroleum.” Yet since 2003 global proved reserves have increased by more than 350 billion barrels, and that is in addition to over 300 billion barrels consumed in the same period.

Shortfalls in supply often stem from U.S. policy to control the global spigot of oil. Obama told the U.N. General Assembly in 2013 that because “a severe disruption could destabilize the entire global economy,” he was prepared to use military force to “ensure the free flow of energy from the [Middle East] to the world.”

Since the 1990s, Washington has disrupted many major oil producers. This includes the invasion of Iraq, the overthrow of Muammar Gaddafi in Libya, sanctions on Iran, and dirty tricks against Venezuela. Ironically these actions tightened the oil market such that domestic fracking and tar sands became profitable. But the world is not about some free for all scramble for oil as in Klare’s “resource wars.” He contends that “unsettled resource deposits—contested oil and gas fields, shared water systems, embattled diamond mines—provides a guide to likely conflict zones in the twenty-first century.”

Other than those countries Washington designates as rogue states—like Iran, Iraq, and North Korea—every state accepts, even if grudgingly, the U.S.-managed global oil order. Even countries on the out are looking for an in. The drop in oil prices helped create the conditions for a rapprochement between Cuba and the United States, and it may be pushing Iran to reach a deal with the White House over its nuclear energy program.

A more accurate view of the global oil order is provided by physicist and geopolitical analyst Tom O’Donnell who terms it “one global barrel.” He argues that the pre-1973 oil system had no meaningful open market, making it a form of mercantilism. Back then the majors backed by Western states controlled the production of oil-rich countries. Supply disruptions to one company could affect an entire consuming country. The new system developed after Third World states nationalized oil companies. The global oil order now works through the market, mainly the London and New York commodities exchange, and is dominated by U.S.-protected Gulf States in OPEC and managed by international institutions such as the Organization for Economic Cooperation and Development and the International Energy Agency. Above it all is the U.S. government.

Klare implies national interests still reign supreme and nations are constantly on the brink of war over shrinking energy supplies. While China may chafe at U.S. control and Russia and the United States are at odds, the global oil order is marked by conflict, competition and cooperation at the same time and often in the same place. In Russia, Western oil companies continue to do business despite sanctions. In Iraq some opponents of the war crowed that Russian and Chinese oil companies that won concessions there marked the “declining influence of American capitalism.” But the scope of revamping Iraq’s oil infrastructure is so large that much of the lucrative drilling and exploration work is going to U.S. oil services firms. More important, Washington policymakers are generally indifferent to who is producing Iraq’s oil as long as it flows freely into the global market and U.S. influence holds over the Iraqi state.

If we could fast forward through time to find when oil production and consumption peaks, that would tell us nothing about the social impact. The 1980s crash was due to an increase in supply and drop in demand. Oil consumption may seem to march in lockstep with population and economic growth, but it is elastic. A barrel of oil today generates three times as much economic activity as it did in 1976. Unbelievably, U.S. oil consumption was lower in the first half of 2014 than the high point in 1989. Factors include lower car usage and increasing fuel efficiency that hit a record of 23.6 miles per gallon in 2012. Yet most European economies produce 50 to 60 percent more economic activity per unit of energy as does the United States. We could slash our oil consumption in half in a decade with a concerted effort. It could keep going down until oil is reserved for far more valuable uses such as road building, metal making and specialized lubricants, chemicals, plastics, and pharmaceuticals.

Oil consumption needs to drop dramatically because of the dangerous planetary effects. But that has nothing to do with peak oil. It’s a matter of how we reorganize our society and economy on the surface of the earth so we stop using the stuff that’s under it.



Filed under Climate Change, Corporations, Economy, Energy, Environment

How the Democrats Became The Party of Neoliberalism

by Arun Gupta Telesur October 31, 2014

There is a standard critique of the U.S. political system that seemingly explains why right-wing ideas drive the national agenda even when Democrats control the White House: the Democratic Party does not stand for anything and the Republicans are the party of ideologues.

The six years of Obama’s presidency are exhibit A in the case. During his winning campaign in 2008, Obama presented himself as a blank slate promising amorphous “hope and change.” His campaign encouraged voters to see Obama as a transformational candidate who would wind down bloody U.S. wars, revive the economy with a Green New Deal, open space for labor organizing, resolve the immigration crisis, and take bold steps to alleviate climate change.

Instead, Obama has bombed seven countries (more than Bush), deported record numbers of immigrants, killed immigration reform through neglect, undermined climate change accords in Copenhagen in 2009, attacked teachers unions, abandoned “card-check” legislation that would aid union drives, and offered little more than rhetoric on raising wages.

Obama, however, spared no effort to rescue the sinking yachts. In October 2009 the New York Times noted that the bailouts begun a year earlier were fueling a “new era of Wall Street wealth.”

That will shape his legacy: the real unemployment rate is still at 12 percent, and since 2008, 5.5 million more Americans live in poverty and the median household income has declined 4.6 percent. Corporate profits are at their highest level since record-keeping began in 1929, the effective corporate tax rate is lower than any point since Hoover was president, and workers are taking home the smallest share of national income in 65 years.

Obama and Democratic Party leaders have passed up few opportunities to kick their voting base in the face. They abandon supporters the instant an issue becomes contentious, such as capping carbon emissions, federal funding of reproductive healthcare, or anti-union legislation. In contrast, the Republicans stick to their guns in pursuing an ideological agenda of upward redistribution of wealth, increased police and military force, and reactionary social policies.

This is why Republicans are poised to secure a majority in the U.S. Senate in congressional elections next month. They stand for something and mobilize their base. Obama, however, has done little for working Americans after healthcare reform passed in early 2010.

But it’s time to rethink this notion that Democrats lack principles. They have a clear agenda and are actually more ideological than Republicans. Democrats like Obama are willing to lose power to carry out the neoliberal agenda. Since the Clinton era, Democrats have been the most effective architects of policies that increase the wealth and power of those on the top of the economic pyramid. Now, neoliberalism is often thought of as synonymous with privatization, deregulation, and trade and capital liberalization, but the state will discard these policies for corporate handouts the instant elites get into a self-inflicted mess, as with the Wall Street crash.

This has left the Democratic Party in a bind. It relies on votes from social groups like women, union members, Blacks, Latinos, and environmentalists who favor redistributive policies like gender equity in income, a higher minimum wage, lower healthcare costs, more environmental protection, and stronger immigrant rights. At the same time, Democrats need billions of dollars to run elections and their party machinery. They go hat in hand to corporations and promise more tax breaks and corporate welfare in return. But Democrats can never be as committed to the free-market ideology as Republicans. Democrats need to satisfy some needs of their social base while Republicans can move the goalposts further right and wait for the Democrats to play catch up.

To resolve the contradiction, Democrats like Obama and likely 2016 presidential nominee Hillary Clinton say we will manage trickle-down economics more efficiently. This will increase taxes for modest market-based redistribution in the form of healthcare, housing and higher education subsidies, and tax breaks for the working poor. It’s the same role many traditional left parties play in other countries. Democrats offer a bit more funding, miniscule compared to military spending and corporate welfare, for food stamps, homelessness, and energy assistance. But the commitment to neoliberalism leaves the programs vulnerable. Obama readily cut tens of billions of dollars in social welfare to appease Republicans complaining about a $17.9 billion national debt. Obamacare is part of this framework. While it did extend coverage to uninsured millions, the goal was to reduce costs through intensified neoliberal restructuring, which is reducing overall quality of healthcare.

The Republicans opt for naked class warfare as with huge tax breaks to the wealthy under Reagan and Bush Jr. But the breed of hard-right Republicans that came into Congress in 1994 will play chicken with the economy if that serves their power interests, as they did by repeatedly shutting down the government and damaging the U.S. credit rating.

Lacking a progressive vision, Democrats follow the GOP on economic policy, pushing the center rightward. Most media outlets have little interest in unpacking historical conditions that shape politics, preferring gossip about the personality, values, tastes and lineages of candidates. Yet it’s the historical contradiction Democrats are trapped in that explains how and why Bill Clinton and Obama pursued a neoliberal agenda that dashed the hopes of their supporters, resulting in the biggest midterm losses in Congress of any president in the modern era. It also explains why the Democrats will likely lose the U.S. Senate in November 2014.

Bill Clinton campaigned as a “New Democrat”: tough on crime, fiscally responsible, and stern with welfare recipients. Clinton effectively fulfilled the Reagan Revolution by gutting welfare, passing NAFTA, deregulating telecommunications and the finance sector, and ramping up government spying, policing, and immigrant detention. Clinton could grant the right-wing’s wish list because the Democratic base was conditioned to supporting any deal no matter how bad because the Republicans would supposedly be worse. Yet Clinton needed Republicans to pass NAFTA because the Democrats controlled Congress. He threw millions of poor women and children off welfare to shore up his right flank in advance of the 1996 election. But that cynical calculation was unnecessary Clinton trounced the feeble Republican nominee, Bob Dole in a race that was never in doubt. And deregulation happened in Clinton’s second term when he was freed from election concerns.

Obama has repeated the same pattern. He is more aggressive on foreign policy than Bush. In 2011, before the explosive revelations about NSA spying and Obama’s newest wars in Syria and Iraq, Glenn Greenwald noted, “Obama has continued Bush/Cheney terrorism policies—once viciously denounced by Democrats—of indefinite detention, renditions, secret prisons by proxy, and sweeping secrecy doctrines. He has gone further than his predecessor by waging an unprecedented war on whistleblowers, seizing the power to assassinate U.S. citizens without due process far from any battlefield, massively escalating drone attacks in multiple nations, and asserting the authority to unilaterally prosecute a war (in Libya) even in defiance of a Congressional vote against authorizing the war.”

Because Obama is facing a hostile GOP that comes across as mentally unhinged at times, most of the Democratic base is complacent. The rest are demoralized, leaving little opposition to his right-wing policies, just like the Clinton era. Remarkably, Obama has been less aggressive than Bush on prosecuting Wall Street crime. More significant, in January 2009, days before his inauguration, Obama told the Washington Post he would convene a “fiscal responsibility summit” to “reform” Social Security and Medicare. Rather than using his historic victory and Democratic majority in Congress to push for progressive redistribution, Obama was saying he wanted to decimate the two bedrock programs of retirement to pay for Wall Street’s epic corruption. If Obama succeeded, and the only reason he hasn’t so far is because the right has been so extreme, it would have destroyed what remains of social welfare and the Democratic Party’s base. (Clinton also tried to weaken retirement programs in the nineties.)

Additionally, numerous observers, including myself, pointed out in December 2008 that it was no secret the stimulus would fail. The $800 billion plan that passed amounted to barely 2 percent of GDP through 2011, while the gap due to the economic depression hit 7 percent at one point. The Congressional Budget Office estimated the stimulus produced 500,000 to 3.3 million full-time jobs, but more than 8 million full-time jobs were lost and overall more than 13 million workers lost jobs, dropped out of the labor force or downgraded to part-time work involuntarily.

The stimulus may have prevented a repeat of the Great Depression, but by applying bandages to gaping wounds Obama enabled the right to portray it as a failure and government as the problem. Passing New Deal-style programs would have been tough, but Obama capitulated before he began, losing the chance for stronger stimulus and redistribution.

With Obama entering the twilight of his powers and relevancy, the focus will shift by the New Year to the 2016 horse race. The Democrats will remain devoted to managing the state for the interests of wealthy and powerful. It’s why the Democrats are the true ideologues. Hillary may win office by talking left, but once in the White House she will readily sacrifice the Democrat power base to stay true to the neoliberal project.

The silver lining is this “extreme center,” as Tariq Ali describes it, has opened up space in countries like Spain, Iceland, and Greece that left parties have used for mass mobilization. There are flickers of hope in the United States with Socialist Alternative candidate Kshama Sawant beating Democrats in Seattle and Green Party gubernatorial candidate Howie Hawkins giving New York Gov. Andrew Cuomo headaches in the upcoming election. But it’s a long row to hoe.

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Filed under Austerity, Democratic Party, Economy, Neoliberalism, U.S. Foreign Policy

How Seattle Passed the Highest Minimum Wage In America

by Arun Gupta VICE June 4, 2014

The bill signed into law by Seattle Mayor Ed Murray on Tuesday to raise the city’s minimum wage to $15 an hour by 2021 is historic. It will more than double the current federal minimum wage of $7.25 — something no local government has ever done.

An estimated 46 percent of Seattle’s 100,000 workers who make under $15 an hour will earn that by 2018. The measure could pump $3 billion into the local economy over the next decade, cutting poverty by 30 percent. It is already resonating, as $15-an-hour campaigns are underway in Chicago, Los Angeles, Portland, and San Francisco. New York Gov. Andrew Cuomo just endorsed a plan that could raise the minimum wage in New York City to $13 an hour.

Seattle’s new law has downsides, however, including a seven-year timeline, a lower training wage aimed at teenagers, weak enforcement provisions that encourage wage theft, and allowances for businesses with fewer than 500 employees to count tips and healthcare benefits reflected on pay stubs as wages up to $3 an hour.

But workers elsewhere who flip burgers, fold sweaters, and pull shots of espresso for a living wonder if the victory in Seattle can be replicated. That depends on understanding how it was won. There was no guarantee a year ago that the “$15 an hour” slogan would become law.

The driving force was Kshama Sawant, an avowed socialist who voters elected to the City Council last November on a platform to raise the minimum wage and taxes on the wealthy. She and her political party, Socialist Alternative, mobilized pressure for a wage bill. They fought opponents for months, parrying attempts to block the increase.

Given the obstacles they faced, a bill might have never materialized. Seattle is home to corporate titans like Starbucks and Amazon that have built their profit models on poverty-wage jobs, and during Sawant’s campaign the Seattle Times dismissed her as “too hard-left for Seattle.”

She and her partners made the most of a limited hand nevertheless. Sawant pursued a broad platform, but Socialist Alternative soon realized that $15 an hour should be the banner issue because of the amount of support it generated. The momentum became unstoppable after local newsweekly The Stranger gave Sawant a full-throated endorsement in September. Murray, who was running for mayor at the time, quickly endorsed the measure as well.

After taking office, Murray appointed a business-heavy Income Inequality Advisory Committee to devise a proposal. Sawant and Socialist Alternative countered by establishing 15 Now, a group that organized public marches and rallies, set up chapters in 11 neighborhoods, and canvassed widely.

Meanwhile, some Seattle restaurant owners pushed their staffs to oppose the $15-an-hour increase. Jess Spear, 15 Now’s organizing director, told VICE News that two prominent restaurateurs told their staff that prices would increase and that they would lose tips and even their jobs.

A group composed of servers and bartenders called Tips ARE Wages threatened to turn a key group of workers against the proposal. But Spear said that 15 Now met with the group and won them to their side after leaked documents revealed that restaurant owners were orchestrating the anti-$15 campaign.

But rallies and meetings are little match for billion-dollar corporations, which put small-business owners out front, moaning that jobs and business would be lost if $15 an hour became law. In March, Sawant and 15 Now made a strategic retreat by conceding that small businesses should have a longer phase-in period for the increase. At the same time, they deftly argued that businesses like McDonald’s, which amassed $5.5 billion in profit last year, could afford a much quicker timetable.

Meanwhile, 15 Now launched a ballot initiative to remind councilmembers that if they failed to pass a strong bill, voters could decide the issue for themselves. On April 26 it held a national conference in Seattle where attendees approved a plan that established a $15 an hour increase by 2017, with no tip credit or training wage. The conference was timed to anticipate the unveiling of Murray’s proposal on May 1. The Stranger noted that Murray’s plan was “so complicated reporters can’t understand it,” but it did take the wind out of 15 Now’s sails because it gave the impression that the battle had been won.

Labor leaders quickly closed ranks behind Murray.

“It’s a very delicately constructed deal and my advice to council would be to change nothing,” David Rolf, the president of the 40,000-member Service Employees International Union 775, told me in early May. He said that a ballot initiative would result if the measure were watered down — but that’s exactly what happened. The bill introduced on May 15 was weakened with a training wage, the tip/healthcare allowance, a three-month delay, and slap-on-the-wrist enforcement measures. Rolf still reversed course. “We fully support the ordinance,” he later said.

Socialist Alternative’s leaders privately conceded that they couldn’t win a ballot initiative without full support from organized labor, but they pushed one forward anyway to keep up the pressure on the council as it considered the ordinance. The City Council approved the bill on Monday afternoon, sending it to Murray’s desk for his signature.

Though the push for a $15 minimum wage is expected to go national, it’s unclear whether 15 Now will find similar success in other big cities. Sawant was aided by unusual factors like a non-partisan election and The Stranger’s backing. Even so, the proposal’s success in Seattle demonstrates a new model of grassroots resourcefulness that has the potential to widely advance a pivotal social agenda.

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Filed under Economy, Inequality, Labor, Politics

Learning from a Socialist in Seattle

A city councilwoman’s nuanced minimum wage battle has national potential

by Arun Gupta Al Jazeera May 21, 2014

When Kshama Sawant ran for a Seattle City Council seat in 2013, she campaigned as a candidate of the Socialist Alternative party on a platform of a $15 minimum hourly wage. Many observers scoffed that her politics and wage demand made the likelihood of victory scant. Sawant went on to win her seat — and on May 5, it was her turn to scoff.

When Sawant and her fellow Seattle council members were reviewing Mayor Ed Murray’s proposal to raise the minimum wage to $15 an hour for all private-sector workers, she wanted to give credit where it was due. Sawant told the hundreds packed into the council chambers that the plan materialized not because “business and politicians came from on high and delivered this but because workers demanded this.” Her supporters wore red T-shirts reading “15 Now.”

Just a slogan a year ago, it is now a plan of action in the nation’s 12th-biggest economic engine (PDF). On May 15, Murray unveiled a bill to make a $15 hourly minimum wage a reality. If it is passed, Seattle’s private-sector workers will eventually earn more than double the current federal minimum wage; an estimated 102,000 workers currently making less than $15 an hour will see their incomes jump in 2015, and many households will be lifted out of poverty.

Sawant and her party, instrumental in putting the issue on Seattle’s agenda, are now engaging in realpolitik, decrying the bill’s limits even as they call it a victory for the movement. Philip Locker, Sawant’s campaign manager, pointed to “serious weaknesses as a result of the political establishment catering to business” — such as allowing companies with billion-dollar annual profits such as Starbucks three to four years before they must start paying $15 an hour. But he maintained the movement “forced business to accept the highest minimum wage in the country.”

Sawant’s ascendancy has shown that being a socialist is no longer a liability in running for public office. More important, the $15-an-hour campaign has nurtured a model of grass-roots democracy that challenges the corporate-controlled political process. Observers expect the bill to pass by the end of May. If it passes, the win — though imperfect — will validate Socialist Alternative’s approach, swell its ranks and crack open more space for socialist politics in the United States.

A wage plan weakened

Grass-roots pressure for a wage bill gained momentum once Sawant helped found 15 Now in January. The organization established 11 neighborhood action groups throughout the city that mass-distributed leaflets, organized rallies and engaged citizens in one-on-one conversations. The efforts included quick parries to Big Business arguments about the harmful effects of raising the wage. Such tactics, says Locker, “transformed the political climate.”

The skirmishing continues as Sawant and 15 Now try to close pro-business loopholes in the bill.

Murray’s proposal gives large businesses, defined as more than 500 employees, up to four years before they must begin to pay $15 an hour. Smaller businesses have until 2021 to hit $15 an hour and an 11-year window to pay some wages in tips and health care credits under a guaranteed minimum compensation clause. Because the wage schedules are complex, with four categories and annual timetables determined by the size of business, benefits and cost-of-living adjustments, the bill creates an enforcement nightmare.

Socialism isn’t going to happen in one city, but Seattle has taken a remarkable, if shaky, step toward helping workers that could spread nationwide.

As the plan was hammered into a bill, it was weakened further. Franchises of fast food giants such as McDonald’s, Subway and KFC may now qualify as small businesses. There is a subminimum training wage for learners, apprentices, messengers and the disabled — a legal trick that allows fast food chains to hire and fire teenagers in an industry with 90 percent annual turnover in its workforce. The bill also encourages wage theft: Businesses need pay back wages only the first time they are caught underpaying workers and a $250 fine for the second violation.

At the May 5 hearing, Sawant read an email from a Domino’s Pizza driver lamenting the lengthy implementation timeline. He wrote, “We need an immediate hike to at least $12 hourly … Most of us are one paycheck away from financial tragedy. Living paycheck to pawn shop is no way to live when you’re working full time.”

To counter the effects of Big Business on the bill, Socialist Alternative and 15 Now are returning to grass-roots politics. On May 15, they announced they would seek to place a ballot before Seattle voters in the fall to amend the city charter. If approved, the measure, which would trump the city council’s, would raise the wages of all workers to $15 an hour more quickly. There would be no subminimum training wage and no tip or health care credit window, and all for-profit companies with more than 250 employees would have to pay $15 an hour starting Jan. 1, 2015.

Presaging a national shift?

Sawant and her party must tread carefully with what they consider an imperfect bill, not least because organized labor, a powerful force in Seattle, supports the bill and has ties to the rival Democratic Party.

David Rolf, who co-chaired the mayor’s Income Inequality Advisory Committee, which drafted the initial plan, and is the president of Service Employees International Union Healthcare 775NW, told me he stood by the “delicately constructed” deal but would support a ballot initiative if the current bill were “watered down further.” However, even after the latest changes — the training wage, weakened enforcement and loophole for franchises — Rolf responded in an email, “We fully support the ordinance submitted by Mayor Murray to the city council and encourage the council to pass the ordinance as is.”

Beyond the dance with labor, Sawant and the 15 Now movement are aware that outside parties that specialize in fighting pro-worker measures — such as the U.S. Chamber of Commerce, Americans for Prosperity and Americans for Tax Reform — could easily rumble into Seattle or the state capital, Olympia, with bundles of cash to try to overturn the measure.

Despite the flaws, Sawant offered her support for a bill that she said represented “a phenomenal shift that has happened in the city,” one that “shows leadership for the rest of the country.”

Already, politicians in Chicago and Portland are running for city posts on $15-an-hour platforms with grass-roots backing. In New York state, a socialist on the Green Party ticket is running for lieutenant governor. On May 16, Jess Spear, a member of Socialist Alternative and a climate scientist, filed to run in November’s election against Democrat Frank Chopp, speaker of the Washington state House. Said Sawant, “We want many more left challenges to the Democratic Party.”

Socialism isn’t going to happen in one city, but Seattle has taken a remarkable, if shaky, step toward helping workers that could spread nationwide.

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Fight For 15 Confidential


On August 29, fast-food workers and supporters gather outside a Los Angeles McDonald’s to take part in a nationwide strike. (Photo courtesy of Frederic J. Brown)

How did the biggest-ever mobilization of fast-food workers come about, and what is its endgame?

by Arun Gupta In These Times November 11, 2013

The Service Employees International Union (SEIU)-backed campaign to organize fast-food workers nationwide is on a roll. It’s entering its second year in the public eye, having staged four one-day strikes, culminating in a 60-city walkout on August 29. It’s a bold move by one of the nation’s largest unions to organize an unorganized private-sector workforce numbering in the millions.

The movement has no official name, though each city-level campaign has one: Fast Food Forward in New York, Raise Up MKE in Milwaukee, We Can’t Survive on $7.35 in St. Louis, Stand Up KC in Kansas City, and, in Chicago, Fight for 15 (which refers to a $15 minimum wage and has become the name most commonly used for the national campaign). The campaign has revived the use of the strike to build worker solidarity and employs a strategy of minority unionism, which aims to build a core of militant workers who can sidestep labor law that nowadays hinders worker organizing more than abuses by management. Most importantly, the fast-food organizing campaign has set in motion thousands of working poor, mainly African Americans and Latinos, who are acting collectively to better their lives. The campaign is generating excitement that a popular movement can finally go on the offensive against corporate power.

As the fast-food organizing campaign continues to build, Marco (not his real name), an SEIU organizer in the Midwest, says, “Workers are getting empowered, standing up to their bosses, and they’re not taking shit anymore. If managers do try to clamp down, they’re going to have 60 people march into their shop and disrupt their business. The creation of solidarity that’s happening is exciting.”

Why fast food, and why now? Simply put, it’s where a dying labor movement sees the most opportunity. Private-sector union density has plunged from its peak of 35 percent in the 1950s to only 6.6 percent now. One of the key factors in labor’s decline has been the growth of the non-unionized service sector, where low wages have become the norm and workers who try to organize often face retaliation. Workers in the fast-food industry, which employs more than 4 million Americans, earned an average of $8.72 an hour in 2010.

The fast-food organizing campaign is one of many efforts to organize the low-wage sector, along with OUR Walmart, warehouse worker and university adjunct campaigns, and the spread of worker centers. But it’s the one that has generated considerable media buzz and excitement among organized labor and progressives.

SEIU says its role has been more servant than shepherd. “It’s really a privilege for us to support” fast-food workers, SEIU President Mary Kay Henry told Salon’s Josh Eidelson in August. Henry portrayed the campaign as a surprise: “We don’t yet understand the scale of it,” she said, adding that she was “amazed at the degree to which it spread.”

So what exactly did set the movement off? And could its development serve as a model for future campaigns? To discover exactly how Fight for 15 began and grew and whether we can expect similar upsurges among other groups of workers, In These Times talked to 40 low-wage workers, labor organizers, reporters, historians, union officials and media strategists. All of the more than 20 organizers and workers who discussed their involvement requested to speak on background or be identified by pseudonyms, expressing fear of damaging either job prospects or relationships with others involved in the campaign. Based on these interviews and hundreds of pages of internal documents from the campaign, In These Times can offer the most detailed examination to date of how Fight for 15 originated, what its goals are, where it might be headed and who is making the decisions.

Nearly all of the low-wage workers and organizers involved in the campaign who spoke with In These Times expressed concerns about the campaign’s direction. They made clear they do support Fight for 15—often enthusiastically—for providing space for workers to build relationships, share knowledge and, in some cases, embark on shop-floor organizing. But many questioned whether Fight for 15 is fundamentally a worker organizing campaign or a “march on the media,” and many believe the endgame will be determined by an SEIU leadership that is not in contact with the daily realities of the campaign.

How the fight began

The tale being told in the media is one of a spontaneous, worker-led uprising. In New York and Chicago, the story goes, the movement was born in early 2012 after advocacy groups organizing in low-income communities kept hearing complaints about the difficulty of surviving on fast-food industry wages. According to Bloomberg News, “The advocacy group New York Communities for Change” (NYCC)—an offshoot of the now-defunct ACORN—“originally was trying to halt planned school closings in low-income neighborhoods of Brooklyn. Organizers shifted focus after hearing fast-food jobs were keeping local residents poor.”

The official story in Chicago is virtually the same as in New York. In April, Salon reported that Katelyn Johnson, executive director of Action Now, a local organizing group also formerly affiliated with ACORN, said the Chicago-based group “took a leadership role in organizing fast-food workers after discovering on door-to-door canvasses about [bus] fare hikes that ‘people were more concerned with their jobs.’”

But three former organizers in Chicago who joined the campaign in late 2011, and two former organizers with NYCC who began petitioning in March 2012, all dispute this story. All say that from the get-go, the stated goal was to organize low-wage or fast-food workers. All say they were told within weeks or months that SEIU was funding the organizing, and all say that it became increasingly clear that SEIU was directing the campaign.

Sidney (not his real name) says that when Action Now hired him in November 2011, it was to join a campaign to raise the minimum wage. For the first few weeks, organizers armed with postcards calling for a $10-an-hour state minimum wage prowled fast-food and retail joints in the Loop in downtown Chicago and gathered names, phone numbers, emails and home addresses to meet daily quotas. But when managers started kicking the organizers out of establishments because they were talking to workers about low wages, Action Now changed tactics, according to Sidney and Maria (not her real name). Maria, who was hired by Action Now in December 2011, says she and other organizers “started to brainstorm what can attract people’s attention … and everybody said, ‘Well you know a lot of these workers take public transportation.’ So we made it about public transportation and stopping the fare hikes.” There was some media speculation around hikes at the time, but no specific proposal on the table. According to Sidney, he and Action Now organizers came up with “a scenario where the CTA [Chicago Transit Authority] was raising the prices. … From then on, we started going around to the same establishments in the Loop and telling them the CTA was going to raise the prices two, three bucks.” The tactic worked, the organizers say: The petition met with less opposition from managers than the minimum-wage postcards.

Brooke (not his real name), who was hired by Action Now in December 2011, says that despite close supervision, organizing leaders denied they were in charge: “I was told, ‘It’s all about the workers. We have to leave it up to the workers.’ Then [SEIU leadership] tells the media, ‘It’s spontaneous; the workers came to us.’ It’s duplicitous. It’s to get people to stop asking questions.”

Maria, Brooke and Sidney say they soon learned that SEIU was bankrolling the project. Sidney says that early in the campaign, Action Now leaders were meeting with SEIU officials and saying they were trying to secure money. In December 2011, SEIU’s Washington, D.C. headquarters disbursed about $36,000 to Action Now for “Support for Organizing.” Sidney says that in January, Action Now leaders told them, “SEIU is funding this, they’re happy with the work you guys are doing, so we’re going to continue for at least six months.” On January 19, 2012, SEIU headquarters contributed $191,797 to Action Now, the first in a series of donations that would total more than $3 million by year’s end.

An SEIU staffer with knowledge of union politics in Chicago explains, “Action Now here is very closely connected to the largest SEIU local in the region—SEIU Healthcare Illinois/Indiana. They have a history of cooperative, overlapping campaigns.” Starting in its first full year of operation in 2008, Action Now has received $100,000 or more annually from the healthcare local.

As for who’s calling the shots, Carter Wright, a communications organizer with SEIU, describes a bottom-up process of a movement that “emerged after organizers in those groups found that there were way too many fast-food workers making way too little money in the areas they were canvassing. They worked with SEIU to develop a campaign to build a movement so those workers could fight for better pay.” He notes. “Members of SEIU have supported groups like NYCC, Action Now and their predecessors for a long time.”

In contrast, all three Chicago organizers say that by February, SEIU personnel were coming to their offices specifically to train them in union organizing. In other words, while SEIU maintains that Fight for 15 is a bottom-up project, the organizers who did the legwork concluded that SEIU funded and directed it from early on.

Full steam ahead

By early April 2012, organizers had gathered 20,000 contacts. Then, on June 6, the day after the anti-union Wisconsin Gov. Scott Walker handily won a recall election, a supervisor walked into the Action Now office and told them it was full steam ahead with the fast-food campaign. In the previous week, SEIU headquarters had transferred more than $300,000 to Action Now. Brooke says organizers were given a rap sheet (also obtained by In These Times) and told to call petition signers and say, “We were successful in stopping the fare raise. When we were talking to you and other workers downtown we found a lot of other workers were talking about wages or lack of healthcare or lack of respect of managers. Do you have any problems like that? Would you like to meet and talk about it?”

Because of delays, the lists had grown stale. “It was hard to track down workers and talk to them, and when we did there was a lot of hesitation and fear,” Brooke says. “A lot of workers didn’t even remember signing the petition.”

In July, the first citywide meeting was held. After nearly eight months of work by more than a dozen organizers, at least $1.7 million spent by SEIU, and 20,000 contacts, Brooke says the meeting brought together “about six workers, who were all very afraid.”

Meanwhile, in New York City, SEIU headquarters started pouring money into NYCC in February 2012, outlaying more than $2.5 million by year’s end. Chris (not his real name) was hired by NYCC in early 2012 to organize fast-food workers and was dispatched to Manhattan to gather a daily quota of signatures on low-income-housing petitions. Similarly, another organizer, Carlos (not his real name), also says he was hired by NYCC in early 2012 to organize fast-food workers and spent months gathering names on petitions in favor of low-income housing and against police “stop and frisks.” Both were told SEIU was paying the bills behind the scenes. Carlos believes that “[SEIU’s] name has a lot of baggage, so they don’t want it out there. They want to funnel it through smaller organizations so it looks like more of a grassroots effort.”

In the summer, when organizers shifted to phoning workers about unionizing, Chris says he conducted a dozen one-on-one meetings with workers and “typically most workers were fearful. Most of them were not happy with their work situation, but they did not want to lose what they had.” He recalls that the first meeting in lower Manhattan in late August 2012 attracted about 30 workers, and at least two more meetings drew similar crowds before Nov. 29, 2012—the campaign’s first big strike.

Who’s calling the shots?

By early 2013, the second year of the organizing effort, the Chicago campaign was finally gaining momentum. Sam (not his real name), a cashier at a health-food store who was part of an informal committee organizing at two stores in his chain, says the Chicago Teachers Union strike in September 2012 opened space to discuss work-related issues with his coworkers, as did a strike the next month by warehouse workers just west of Chicago and the nationwide Black Friday strikes at Wal-Mart stores staged by the United Food and Commercial Workers-backed OUR Walmart campaign. These events, says Sam, “dramatically transformed” his conversations with coworkers from “Wouldn’t it be nice if we could get something going?” to “If it could happen at McDonald’s and Wal-Mart, then it could happen here.”

Looking for assistance in early 2013, Sam and co-organizers started attending meetings of the Worker Organizing Committee of Chicago, which was formed in November 2012 to lead the Fight for 15 campaign.

Sam and his co-worker Jason (not his real name) say they initially found some tactics off-putting. The decision to stage the first low-wage worker walkout in Chicago on April 24, was made a few weeks in advance, at a meeting where New York workers were flown in to talk to the Chicago workers. After a rousing description of the New Yorkers’ experience walking off their jobs, Jason says, the Fight for 15 organizers asked, “‘Who wants to go on strike?’ Everyone cheered, and of course we want to go on strike after you just hear what they said. They called it a strike vote, but it wasn’t a vote in any meaningful way. They didn’t count [votes]; they didn’t say who is opposed to going on strike; there was no discussion.”

Sam says, “If it’s been decided at some level that there will be an action on a given day, then it’s going to happen. It’s just a question of going through the motions of getting people to come to the decisions that they want them to.” Marco describes a similar process in his city: “The organizers say, ‘All the other cities have decided to go on strike on this date, do you want to join them?’ And the workers are like, ‘Yeah!’ Do I think it’s ideal? No. But do I have any better ideas? No, and that’s the problem.”

The decision to conduct a nationwide strike on August 29 was made in a similar manner, at an SEIU-led convention in Detroit on August 15 to 16 that brought together about 700 low-wage workers, organizers and staff from around the country. Sam says that on the second day, an SEIU organizer got in front of the crowd and said,“We have this idea to do a national day of action, Chicago, what say you?” According to Sam, someone preselected by SEIU stood up and replied, “We in Chicago are ready to do a national day of action.” Sam says the process was repeated with the other cities.“There had been no discussion on it previously in any meaningful sense. The first time most people [from Chicago] had heard about it was on the bus to Detroit.” Two other workers confirm they had little say in the decision other than being asked to rubberstamp a prepared statement when they showed up in Detroit.

Media frenzy

By the spring, strikes were staged in a different city every week, rolling through New York, Chicago, Detroit, St. Louis, Milwaukee, Kansas City, Washington, D.C., Seattle and Flint, Mich., and generating a national media buzz.

To help get out the word, SEIU is employing several communications consultants. Journalist Peter Rugh, who has been tracking the fast-food campaign since 2012, says that according to employees of New York-based company Purpose, which specializes in “21st-century movements,” the firm is helping with branding. In Washington, D.C., SEIU worked with M+R Strategic Services to coordinate an extensive social media effort around a May 2013 fast-food and low-wage worker strike.

Nationwide, sources say, SEIU has retained the aid of BerlinRosen. The communications firm declined to comment on the record, but Charles (not his real name), a Detroit organizer with knowledge of SEIU strategy, says his impression is that BerlinRosen is “helping in every spot” around the nation, and its work included “local communications, teamwork … advising on communication strategy, generating coverage.” He adds that, in addition to “showing strength to the workers [and] getting the community behind it,” the purpose of the campaign is generating a media buzz. In 2012, combined payments to BerlinRosen from SEIU Healthcare Illinois/Indiana and SEIU headquarters soared to $1.2 million, doubling from 2011 and tripling from 2010.

Why SEIU’s role is problematic

A few SEIU organizers voiced concerns to In These Times that airing criticisms of Fight for 15 would aid right-wing and anti-union forces trying to undermine the campaign. That may be true. But the criticisms are coming from workers and field organizers across the country who say they’re concerned that the top-down organizing may benefit SEIU leaders at the expense of the workers.

For instance, some workers say that while they welcome the spotlight, the glare can be damaging. Media generates public support, but also more pressure on organizers to turn out workers for high-profile actions. Some organizers worry that a lack of time for proper back-up or training may put workers at risk of employer retaliation.

In many instances, the fast-food campaign has vigorously defended workers against retaliatory firings by picketing the employer or filing unfair labor practices. But Jason criticizes Fight for 15 in Chicago for mounting strong defenses after a firing, but not helping workers develop skills to prevent retaliation in the first place. “The strategy is to wait until [bosses] actually fire you because they can get more publicity. But it’s easier to keep your job instead of fighting to get it back.” He believes that in general, the media emphasis undercuts shop floor organizing.

In Marco’s eyes, an SEIU action at a recent fast-food corporation shareholder meeting revealed another way that the media focus can disempower workers. He says, “I don’t like the fact that these people, the workers, are being used like pawns. Shuffle them in, shuffle them out, tell them what to say, what makes the best story for the media.”

Workers say developing solidarity and organizing and leadership skills would be more effective, as they would be able to act quickly when bosses retaliate at the job. “You can’t just call the union office and wait for someone to do something,” Jason says. “You have to be able to respond immediately and in a way that actually has power at work, and you have to have networks built with your coworkers to be able to do that.”

Chicago is one city where worker-led organizing is thriving. Sam says, “At the shop level we control the messaging, we control the tactics, we decide what we want to organize around, we motivate the strikers.” Following the April 24 strike, workers demanded a greater say in meetings. The next decision to strike, in mid-July, was a vote with a 30-minute discussion and a count of those for, against and abstaining. It passed overwhelmingly. “It represented a very big step forward in terms of the actual practices within the union,” says Jason. Now, up to 200 workers attend meetings in Chicago every other week. They have been given resources to publish a newsletter for workers to help “tighten organization between the stores.” There’s a women’s caucus where women can strategize about “sexual harassment at work and unsupportive husbands who don’t want them to be involved,” and workers can also discuss how managers use racial discrimination to divide and control workers.

Outside of Chicago, however, there’s little evidence of worker-to-worker organizing. In Seattle and Washington, D.C., sources say active workers number a dozen or less, about the same as the number of paid organizers.

Victor (not his real name) in Seattle says the campaign is faltering because workers are “babied at the meetings.” He says the process involves workers getting “amped-up” and “rubber-stamping some decisions that are already made,” which wears thin after the first meeting.

While optimistic about the campaign, one long-time SEIU staffer expresses reservations as well. “SEIU still does not have a clear picture of what to do with Fight for 15, where to take it. Some staffing here is frustrated with the very heavy and somewhat manipulative ‘media moment’ approach that ignores the voices and the democracy/development of the natural shop floor leaders who have emerged. How to begin a bottom up process is a big challenge, especially as the SEIU leadership is not fixed on that as a goal at all. … Retreat is very possible, leaving militant organizers high and dry.”

That retreat is a reference to SEIU’s troubled history, especially under the 1996-2010 presidency of Andy Stern. Many workers are wary of SEIU’s track record of “coziness with big employers, limits on internal democracy, [and] excessive deference to Democratic party leaders,” as In These Times staff writer David Moberg wrote in July 2012. Workers also fret about SEIU’s tendency to sign neutrality pacts that “surrendered basic worker rights” in return for new members, Moberg noted.

The endgame

Sam speculates that when SEIU sees “a win, they’re going to focus on it narrowly.” He says, “Then the concern becomes: What about all the other workers who are now mobilized, who have organized themselves, but don’t necessarily fit into SEIU’s focus for a win?”

And what will that win be?

SEIU appears to be pursuing several strategies simultaneously. Campaigns in Seattle and Washington, D.C., have pushed for living-wage ordinances. SEIU seems also to be interested in supporting fast-food worker centers—workplace advocacy organizations that are not formal unions. Two sources say SEIU is helping to start a new branch of Restaurant Opportunities Center United in Seattle and is considering supporting ROC chapters in other cities.

But conversations with various SEIU sources—as well as statements from the leadership and developments in fast-food organizing around the country—indicate SEIU also has a comprehensive national plan in the works, centered on the two public demands of $15-an-hour pay and the right to unionize free of intimidation. If successful, the multi-stage strategy would allow SEIU to secure collective bargaining agreements and gain thousands of new union members.

The first step is to challenge the legal distinction between a corporation and its individual franchises. Take McDonald’s: Ninety percent of its 14,000 U.S. restaurants are franchises, but the corporate parent micromanages key aspects of the business—menus, promotions, insurance, software, advertising, cleaning and so on. At the same time, McDonald’s takes pains to spell out in contracts that it has “no implied employment relationship” with a franchisee or their workers. SEIU aims to hold corporations liable for their franchises’ actions.

Second, SEIU is pouring resources into compiling data about wage theft in the fast-food sector. Sam says researchers come to worker meetings and state: “If your register is short and that difference comes out of your paycheck, come talk to us. … If you get your paycheck on a debit card and there are fees associated with it, come talk to us.” In May, Fast Food Forward, the New York chapter of the fast-food organizing campaign, released a survey finding that 84 percent of 500 fast-food workers reported at least one form of wage theft.

The third planned step, organizers say, is for SEIU to use legal liability for wage theft to pressure fast-food companies into accepting “neutrality agreements” that allow employees to unionize without management interference. Fourth, SEIU plans to mount an international campaign by enlisting unions in other countries to pressure fast-food chains with global operations.

Though several SEIU insiders confirmed on background that this is SEIU’s overarching plan, SEIU spokesperson Carter Wright would not do so, saying that “community organizations that are part of the coalition and workers continue to brainstorm and expect to experiment with a variety of actions and strategies.”

But in the interview with Salon in August, SEIU President Mary Kay Henry and her assistant Scott Courtney hinted this is the path being pursued, saying that options include a “political or legal challenge” to the fast food industry’s franchising.

2014 or Bust

The coming year could make or break Fight for 15. According to one SEIU official, “The money going into this is a gamble. These workers aren’t paying dues; they’re not financing this right now. Definitely over the next two years we’re going to have to take a look at this and see where we’re going.”

Despite the uneasiness some organizers have about SEIU’s role, others doubt that a truly spontaneous, worker-led uprising would have been possible without SEIU leadership.

“Without SEIU this shit would not have happened,” Marco says. “Fast-food workers are not going to self-organize. They’ve been so beat down for so long by circumstances and an anti-labor environment. You look at the Civil Rights Movement—a lot of that was top-down, orchestrated movement.”

But this attitude can also foster paternalism. Speaking in September, Jason says some organizers “really do think we’re stupid and we need to have our hands held and things like that.”

Still, Sam credits SEIU for “pushing people out into the struggle. It’s very easy to be critical of an organization like SEIU for its behind-closed-doors activities and top-down organizing,” he says.“This is an instance when the labor bureaucracy is encouraging people to demonstrate, to go on strike, to take action in the workplace. And I’m excited about that.”

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Arun Gupta on MSNBC’s Melissa Harris-Perry show

Sunday, March 23, 2014

Click the image below to watch the interview.

Arun Gupta appears on the Melissa Harris-Perry show on MSNBC

Arun Gupta appears on MSNBC’s Melissa Harris-Perry show to talk about pensions

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Make New York City Ungovernable: Lessons from the Anti-Apartheid Struggle in the Age of Bill de Blasio

If liberals drew the unambiguous conclusion that real power lies in the markets, with the corporate-owned media, and think tanks and universities endowed by the wealthy, then they would be calling for massive street protests to counter the full-court press Wall Street is placing on new Mayor Bill de Blasio, says Gupta.

NYC Mayor Bill de Blasio.

NYC Mayor Bill de Blasio.

by Arun Gupta December 31, 2013

Saints make the worst role models. How precisely can one emulate Nelson Mandela, a “supernatural human” who moved mountains of injustice, except by becoming him, which is impossible because he was a saint?

Saints stand above history, making choices based on internal moral struggles and exhibiting unimpeachable fortitude, faith and grace. This implies events were ordained and could not have been otherwise. We are afraid to see Mandela as captive of history because it may tarnish his memory. But that’s a mistake. The bitter history of post-liberation South Africa does not diminish the heroic and costly struggle to end apartheid.

The Afrikaner elite negotiated the end of apartheid after mass movements made South Africa ungovernable in the ’80s, and its military was defeated in a regional war. Mandela and the ANC (African National Conress) made a fatal miscalculation, however. They decided that political liberation for all people meant economic liberalization for corporations that propped up and profited off the racist system.

Consequently, argues political analyst and author Patrick Bond, “South Africa’s democratization was profoundly compromised by an intra-elite economic deal that, for most people, worsened poverty, unemployment, inequality and ecological degradation, while also exacerbating many racial, gender and geographical differences.”

In short, racial apartheid was replaced with class apartheid. In 1993 a transitional government that included the ANC endorsed an IMF (International Monetary Fund) structural adjustment package. The roots of this policy were planted a decade earlier when leaders of the United Democratic Front, which coordinated the antiapartheid resistance, gambled that democratic rights should be secured before economic rights. Critics presciently argued that socialism delayed would be socialism denied. Because the defeat of liberation forces by capital happened rapidly in South Africa under a revered leader like Mandela and with the majority thirsting for economic and social justice, there are important lessons for our time. South Africa’s shift to class apartheid parallels US history in which Jim Crow was dismantled but eventually replaced by Reaganomics class warfare.

One lesson is to keep up the street heat. After being elected in 2008, Obama ditched progressive rhetoric for austerity policies: protecting banks, dithering on the home foreclosure crisis, calling for Social Security and Medicaid cuts and deficit reduction. It was only thanks to Occupy Wall Street that the national debate was flipped from austerity to economic inequality. Occupy has faded but its impact is still felt in low-wage worker organizing, minimum-wage initiatives, climate-justice organizing, and the elections of Kshama Sawant to the Seattle City Council and Bill de Blasio, who will be inaugurated on January 1, 2014, as the 109th mayor of New York City.

The 99% Mayor, de Blasio’s “tale of two cities” has resonated across the country because most Americans are locked out of gilded communities zoned by race and class. De Blasio is no Mandela, but his candidacy was propelled by low-wage worker movements, the grassroots coalition against stop-and-frisk policing, and anger over economic inequality. Rather than lead the charge against this soft apartheid, however, de Blasio will be another liberal enforcer for the 1%. Once victory was in hand, De Blasio moved to appease the markets by calling himself a fiscal conservative, tapping stop-and-frisk architect Bill Bratton as police chief and a Goldman Sachs exec to fight inequality, and signaling that mega-real-estate projects would be approved, if with less public aid. He and his officials will now move in a world of boardrooms, penthouses, Michelin-starred restaurants, and galas where they will hear the woes of the oligarchy. At least he won’t be as cartoonish as Bloomberg, who fantasized about every Russian billionaire moving to the city, police profiling minorities more, and poor neighborhoods hosting waste incinerators. But his policy-making will involve horse-trading with liberal bigwigs and union leaders who will agree to toss crumbs to millions of struggling New Yorkers and call it progress.

There is another option: Strive to make the city ungovernable.

Let me explain. What made Occupy potent was that it was a continuous, populist protest that rattled Wall Street and paved the way for de Blasio. His victory has raised hopes, but he will not address inequality unless movements from below disrupt the status quo, like the anti-apartheid movement did in South Africa. If movements can learn from Occupy’s failures and organize strategic protests and strikes that mobilize the public to confront de Blasio’s proposals as inadequate, which they will be, then there’s a chance to redistribute some wealth and power in meaningful ways to the 99%.

Learning From South Africa

The modern history of the antiapartheid movement begins with the 1960 Sharpeville Massacre. The killing of 69 peaceful anti-pass law protestors and subsequent repression left the public traumatized and led to the jailing of Mandela and other leaders, the banning of the ANC, and its turn to armed struggle. Organized resistance did not resurface until 1973 when about 100,000 workers in Durban went on strike, reviving politicized trade unionism. The 1976 Soweto Uprising by students opposing Afrikaner-language education baptized a new generation with “bullets and tear gas.” This was the coming of age for the Black Consciousness movement (influenced by Amílcar Cabral, Frantz Fanon, and the Black Panthers), which promoted an ideology of racial assertiveness and psychological liberation over racial inferiority. Anthony Marx points out in Lessons of Struggle that Black Consciousness was the main game in town as young activists saw the ANC and other foreign-based groups as “not only irrelevant, but wasteful.” (Much of the analysis that follows is based on Marx’s excellent history of South Africa’s internal resistance from 1960 to 1990.)

Despite months of organizing, a quarter-million students joining walkouts, and workers’ sympathy strikes, the state crushed the uprising, leaving hundreds dead and thousands jailed and tortured. The Black Consciousness movement’s emphasis on ideas as prior to physical liberation appealed mainly to students, especially those in universities, instead of the black working class it needed to win over. This limited organizational development and the chance to keep up the momentum from Soweto. The breadth of the uprising also showed the movement had achieved its aim of changing consciousness. This spurred a turn in the movement overall from a racial analysis to class and nonracial organizing. Additionally, events in mid-70s South Africa were influenced by liberation struggles that freed Angola and Mozambique from racist European rule similar to apartheid. Many youth gravitated to ANC politics after serving time in prison with senior leaders. Thousands of others fled the country and were recruited by the ANC, which alone had the resources, discipline, and organization to house, educate and train, allowing it to rebuild its internal network and popular stature.

Obviously there are huge differences with the here and now, but there are intriguing similarities as well. For example, Occupy Wall Street was also influenced by international events, such as the Arab Spring, learned the hard way that the movement behind the ideas can crumble, and succeeded in changing consciousness by popularizing the terms 99% and 1%. But after the state counterattacked in late 2011, Occupy groups failed to develop strategies beyond attempted re-occupations, solidarity campaigns and service work. Additionally, while Occupy’s power lay in its elegantly simple class critique, internal fissures erupted across the country between radical and liberals and over identity politics. The former led to splits over whether to work within the political system or build utopian models outside of it. Debates over identity politics often led to internal struggles that alienated many participants. These self-inflicted blows were compounded by Occupy’s disregard for strategy or even organization. Not surprisingly, liberal outfits, unions, community groups and workers centers picked up the banner of inequality. One exception is climate-justice organizing, which has attracted post-Occupy activists to its radical grassroots bent. But it’s also sundered by a class analysis, similar to what happened in South Africa. Radicals argue for an anti-capitalist strategy as it’s the main culprit in global warming, while those who call themselves realists contend system change is a luxury as the collapse of civilization is nigh, so we should pursue green solutions compatible with capitalism.

Marx notes Black Consciousness adopted a class analysis after Soweto to provide common values of resistance, and it could help build mass organization by overcoming an individualistic approach to fighting oppression. Many Occupiers went the other way, from collective politics to individualism by fixating on the abstractions of identity – fighting “privilege” – rather than the material effects of oppression linked to identity. Consequently, Occupy, as a movement, missed an opportunity to organize low-wage workers, who are disproportionately people of color and female. Just like the ANC attracted youth after the anarchic Soweto Uprising was quashed, unions have used their resources and organizational structure to attract Occupy activists looking to continue the fight against the 1%. Members of socialist and anarchist organizations have joined the campaigns as well, enabling them to collectively analyze strategies and debate and implement plans to radicalize the low-wage worker movement. But Occupiers rarely join as part of a group engaging in collective strategizing. Additionally, liberals and unions use dumbed-down class analysis for partisan or instrumental ends, instead of wielding class as a strategic tool to forge different social relations. During the 2012 election, they stole Occupy’s thunder by tarring Mitt Romney as an out-of-touch one percenter, playing a big role in the re-election of Obama, who has dutifully managed the interests of the 1%.

In South Africa, movements learn from history and their mistakes. When a brutal crackdown in the mid-’80s cooled mass rebellion that was destabilizing South Africa, activists did not blame the state. They took repression as a given, and instead criticized the United Democratic Front for what they saw as a lack of militancy. With Occupy, however, many still cling to the myth that police ended the movement despite copious evidence it disintegrated because of internal conflicts and strategic missteps like futile re-occupations. More recently, South Africa’s largest union, the National Union of Metalworkers, announced it was cutting funding to the ANC and would not back it in the 2014 elections. Outlining a strategy that would be unimaginable coming from an American labor leader, NUMSA plans to form a “new United Front that will coordinate struggles in the workplace and in communities, in a way similar to the United Democratic Front of the 1980s,” and launch a new labor party by 2015.

The South Africa of today was forged in the 1980s. Compromises made by the UDF, such as delaying economic restructuring and enforcing top-down leadership and the dominance of the ANC, left the liberation movement ill-prepared to counter the coming neoliberal regime. The ANC lost nerve on the international stage after the collapse of the Soviet Union. Ronnie Kasrils, a storied leader of both the ANC and the South African Communist Party, is one of many who argues signing on to the IMF’s neoliberal program was a “Faustian Pact.” Kasrils says “the balance of power was with the ANC, and conditions were favorable for more radical change at the negotiating table than we ultimately accepted.”

The 99% Mayor in 1% Clothing

Under de Blasio, modest reforms are possible including strengthening a flawed paid sick leave act, boosting the minimum wage for those employed in city-subsidized projects and extending it to more than 600 workers a year covered by a 2012 bill, and creating a municipal ID to help undocumented immigrants access services. But this is tinkering at the edges, and wish lists are barely more ambitious. The Nation calls for implementing de Blasio’s proposal to tax the wealthy to fund universal pre-K. It’s a fine idea, which requires the approval of the state legislature, but it won’t begin to “reverse” the dramatic widening of the income gap, unless one has a timeline of 20 years to evaluate results.

Tellingly, de Blasio has steered clear of proposals to redistribute wealth downward instead of up. He’s been silent on the plan by his primary opponent, City Comptroller John Liu, to increase the citywide minimum wage to $11.50 an hour, raise $15 billion in new revenue through progressive fiscal and tax policy, and build 100,000 units of affordable housing in four years. De Blasio’s strategy is to be a better manager of neoliberalism to generate a little more tax revenue that can be spread around. He will replay the Obama era on a smaller stage. As soon as he surrenders to the rich and powerful, his liberal defenders will attack critics for being naïve about the power of the markets and the reality of governing a city with 448,000 government employees and a budget of $50 billion, which is greater than the GDP of 110 nations. However, the argument that his hands are tied contradicts declarations that “just about everything [is] at stake in de Blasio’s mayoralty.”

Supporters assume de Blasio can wrest concessions from the rich without any leverage over them. He won’t challenge the class apartheid suffocating most New Yorkers. He won’t be a reverse Bloomberg, re-engineering the city to make it the playground of workers instead of the gilded elite. Even if the overt racial profiling is rolled back, it will be replaced with class profiling of the homeless, panhandlers and street vendors that is defined by race, which is what Bratton did as Los Angeles police chief a decade ago. If de Blasio installs Bratton with minimal opposition progressives will embolden him to pursue Wall Street’s agenda, which is why it’s positive that opposition has emerged to Bratton, led by parents whose children were killed by the NYPD during his previous tenure as police chief.

Without organized opposition, De Blasio’s policies will not alter the 46 percent of city residents in or on the cusp of poverty or alleviate the extreme housing crisis that ranges from hedge funds and investors buying 70 percent of homes in Brooklyn to extended families of a dozen or more stuffed into two-bedroom apartments in my tenement building to the Lower Manhattan “human kennel,” where men pay $300 a month to live in squalid “chicken-wire cages” smaller than a jail cell. Any more social welfare is welcome, of course, but if de Blasio won’t commit to even an $11.50 an hour minimum wage, how will he address inequality? The wealth divide in the city is so extreme a household with two full-time workers earning $15 an hour would find its entire pre-tax income consumed by the average rent of $3,800 in Manhattan. And Brooklyn’s not far behind, with an average rent of more than $3,000.

If liberals drew the unambiguous conclusion from their arguments that real power lies in the markets, with the corporate-owned media, with think tanks and universities endowed by the wealthy, then they would be calling for massive street protests to counter the full-court press Wall Street is placing on de Blasio.

Now, nurturing an uprising is far from simple or even likely, but we do live an era where they are increasingly common because the political center is so slavishly devoted to capital. In the United States alone, since 1999, there’s been the global justice movement, the anti-Iraq War movement, the immigrant May Day general strike and Occupy Wall Street. If there are any illusions, it’s among the liberals who expect dramatic change from a de Blasio administration while they tell the left and workers to be quiet.

They would do well to remember the words of O.R. Tiro, who was killed by a letter bomb in 1974, two years after telling his fellow South African university students, “The price of freedom is blood, toil and tears . . . History has taught us that a group in power has never voluntarily relinquished its position. It has always been forced to do so.”

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Filed under Economy, Inequality, Occupy Movement, Politics

Don’t Let Obama Cut Medicare, Medicaid and Social Security

The Progressive
November 15, 2012
by Arun Gupta

If you voted this election, whether for Barack Obama, Jill Stein or even Mitt Romney, you did not vote for austerity. But that’s of little consequence to Obama and the Republicans. The two parties are currently drafting measures that will undermine Social Security, Medicaid and Medicare as the economy approaches the “fiscal cliff” at the end of this year when more than $600 billion in tax increases and spending cuts will kick in absent a new budget deal.

They hope to strike a “grand bargain,” but are bickering over how much to increase taxes and cut spending. The spotlight has been on the Bush tax cuts, which Obama campaigned on repealing for the rich, but this issue is a sleight of hand that distracts the public from the bipartisan plotting against your retirement income and healthcare.

Surely, you say, Obama will thwart the Republicans’ scheme to dismantle social welfare. After all, it’s well known that retirement programs are healthy. Social Security is solvent through 2033 and Medicare is solvent through 2024. Both can be strengthened for decades to come with relative tweaking.

Trusting a Democratic president with protecting the general welfare is ill-advised when the last one gave us NAFTA, welfare “reform” and the repeal of Glass-Steagall. Not only has Obama been gunning for retirement programs since 2008 (I’ll explain), he’s so hell-bent on reducing deficits that he’s willing to damage the economy. The Congressional Budget Office estimates if the economy plunges over the cliff, recession will hit in 2013. Interestingly, the CBO calculates that if all the tax cuts are left in place and no spending cuts are enacted the economy will grow by 4.4 percent next year and add 2.3 million full-time equivalent jobs. This would be the highest rate of growth since the late 1990s.

Now, it’s a stone-cold fact that the Democrats are willing to gut social welfare. Listen to New York Times chief political correspondent Matt Bai: “Mr. Obama, during his ‘grand bargain’ negotiations with the House speaker, John A. Boehner, in the summer of 2011, had already signed off on painful cuts to Medicare, Medicaid and Social Security.” Bai says there was “near unanimity” among Obama’s advisers and Harry Reid and Nancy Pelosi said “they would get behind it.” Paul Krugman’s assessment is harsher, saying Obama was “willing to sign on to … draconian cuts in key social programs.”

During the summer of 2011 the Obama White House and the Republican House played chicken over raising the federal debt ceiling. Bai says the two sides were haggling over the amount of cuts, not the question of bleeding retirement programs. Obama was willing to sacrifice $1 trillion in Medicare cuts over two decades, $110 billion in short-term Medicaid cuts, and acquiesced to “changing the Social Security formula so that benefits would grow at a slower rate.”

Mind you, the Budget Control Act Obama and Boehner eventually inked not only put the fiscal cliff in place, it cut spending for a second time in 2011. Over the next decade this will chop $900 billion in non-defense discretionary spending.” This is wonk-speak for social programs, which will shrink to pre-1962 levels by 2021. Simply put, Washington already plans to roll back the Great Society – even before the fiscal cliff is reached.

But wasn’t Obama at the mercy of a Tea Party Congress threatening default unless he forked over $2 trillion in spending cuts? That’s what Bai argued last April: “Not only was [Obama] bent on avoiding a catastrophic debt default, but he needed to get out from under the debt issue, to demonstrate that he cared about reducing deficits before public concerns about government spending, stoked by rhetoric on the right, overwhelmed his presidency.”

There are more things wrong about this than a penguin in the desert. Allowing Republicans to use economic blackmail only emboldens them. The fiscal cliff is the third time the right is using mafia tactics – “Nice country you got here. Shame if something were to happen to it” – as Krugman describes it. The only way to call the right’s bluff is to allow the economy to go wobbly so Wall Street, the GOP’s masters, will bring their attack dogs to heel.

Also, notice that Bai thinks allowing a default is unthinkable, but pilfering food, medicine and money from more than 100 million Americans is perfectly fine. As for Bai’s contention that “public concerns about government spending” stoked by the right would overwhelm Obama’s presidency, it’s utter bullshit.

Take a look at this site, which covers 25 polls on public priorities going back to June 2010. When pollsters list options, which skew responses, the economy and jobs poll close to 50 percent as the top priority, trouncing the deficit, which averages in the low twenties. The latter figure, incidentally, is similar to the percentage of voters in the 2010 mid-term elections who said they supported the Tea Party. In six polls, the response was open-ended, which better reflects what the public thinks. Economy and jobs still notched 49 percent on average. The deficit and national debt was barely a blip, averaging 4 percent.

No matter how the data is sliced then, the deficit is an inside-the-Beltway obsession that at most inflames right-wing firebrands who are never going to support the Democrats.

Nate Silver crunched the numbers on the debt deal in July 2011 – if there’s only one lesson from this election, it’s that Silver’s number-crunching is unparalleled – and found House Republicans to be “extremely conservative on fiscal matters and … significantly out of step with the public as a whole.” As for the mix of spending cuts and tax increases Obama put on the table, it was “quite close to, or perhaps even a little to the right of, what the average Republican voter wants, let alone the average American.”

So why didn’t Obama tune out the chattering classes and stare down the Tea Party? It would have strengthened his standing with the public going into the 2012 election. From this evidence, it’s impossible to claim Obama is hostage to the right. The truth that remains, even if it seems improbable, is that Obama is a right-wing politician who has had the welfare state in his sights from day one.

Don’t take my word for it. Obama said it on January 15, 2009, in a “wide-ranging” interview with the Washington Post five days before his inauguration. The article was headlined: “Obama Pledges Entitlement Reform; President-Elect Says He’ll Reshape Social Security, Medicare Programs.” Obama said this was part of his legacy, declaring that he was “willing to spend some political capital” so that the “the hard decisions are made under my watch, not someone else’s.”

This was not idle chatter. Here is a sampling of what Obama said and did the next two years.

In February 2009 Obama held a “Fiscal Responsibility Summit” at the White House, in which he issued dire warnings of future generations being “saddled with our debts.”

In his 2010 State of the Union Address he proclaimed, “Like any cash-strapped family, we will work within a budget to invest in what we need and sacrifice what we don’t,” and called for a three-year spending freeze that fell heavily on social programs.

On February 18, 2010, Obama signed an executive order creating the “Simpson-Bowles Commission” tasked with making “recommendations that put the budget in primary balance.” In November 2010, right before the midterm elections, it proposed reducing corporate tax rates by 20 percent and on the wealthy by 30 percent while raising rates on middle incomes and the retirement age to 69. Remember, this was in the name of cutting the deficit.

This is before the Tea Party swept into Congress, so there was no pressure on Obama to appease the right. By adopting Tea Party talking points on spending and comparing government to a family – what family do you know that has 8,100 tons of gold reserves, a space program and embassies in some 200 countries? – Obama legitimized debt as a major concern going into the 2010 election.

A little more history. Obama ran in 2008 on repealing the Bush tax cuts. But he reneged on his promise just one month into his presidency even though he was gushing with political capital, the right was in disarray and the Democratic-controlled Congress was ready to pass it. (After campaigning in 2012 on abolishing tax cuts for households earning more than $250,000, Obama indicated he was willing to renege once more days after being re-elected.)

For his first term Obama followed the script penned by Larry Summers, his chief economic adviser in 2008 and the Clinton-era architect of the financial bubble that exploded four years ago. Writing on September 28, 2008 in the Financial Times, Summers outlined the Rosetta Stone for Obama’s presidency.

Summers’ article was published right after Lehman Brothers’ collapse, the financial Pearl Harbor that threatened the global economy. It was a classic case of The Shock Doctrine: using the meltdown to go after social welfare. He argued for a stimulus, while taking pains to mention, “We still must address issues of entitlements and fiscal sustainability.” He also said no “new entitlement programs or exploding tax measures,” which included “healthcare restructuring,” but not single-payer healthcare. Summers’ silences were notable: nothing about regulating finance, strengthening labor organizing or addressing the home foreclosure crisis.

Fiscal sustainability is simply a euphemism for cutting social spending to pay for deficit reduction. Economists like Dean Baker and Paul Krugman have demolished every rationale for deficit reduction under present circumstances: with interest rates below the rate of inflation, bondholders are paying the U.S. government to hold their money; reducing the deficit would strangle growth; the best way to reduce the deficit is through growth and inflation; and the plan to hack away $4 trillion in a decade will not reduce the national debt meaningfully.

Even if the deficit does need to be reduced, then the reasonable course is to have the Pentagon and wealthy pay for the two unfunded wars, Bush tax cuts and Wall Street crash that blew up the national debt. Which is why Obama’s song and dance about “shared sacrifice” is so grating – and probably music to granny-starver Paul Ryan’s ears. Obama and Boehner are wrangling over whether or not the Gulfstream set has to part ways with a 4.6 percent nudge in income tax, but they agree that grandma must skimp on food, heat and her meds. “Hey, we’re all in this together.”

Whatever your politics, you’ve probably been savoring the humiliation of “the biggest loser” Karl Rove, cackling over Bill O’Reilly’s lament that “the white establishment is now the minority” and sharing “White People Mourning Romney.” 

Well it’s time to wipe the gloating off our faces and get to work stopping Obama from stealing our healthcare and retirement income, otherwise it will be Wall Street’s turn to gloat. Yet again.


Filed under Austerity, Economy, Politics

What Happened to the Green New Deal?

by Arun Gupta

Out of the ashes of Obama’s green-collar vision, a worker-run business may point the way to the economy of the future.

Last election, Obama had an economic plan and wasn’t afraid to embrace government as a primary creator of jobs. With markets melting down, almost half a million people being fired a month, and automakers and banks emitting a death rattle, Obama presented a sweeping vision of tackling health care, global warming, a rogue Wall Street and reshaping the decaying industrial economy with a green-collar one. Liberals dubbed it a Green New Deal and fantasized about the land blossoming with solar panels, electric cars and high-speed trains as new regulations cut corporations down to size.

Obama botched the plan, however. He inflated hopes in 2008 that his policies would create 5 million green-collar jobs in a decade. He then skimped by allocating only $90 billion in stimulus money for clean energy, producing a measly 225,000 jobs after 18 months by the White House’s own estimates.

Republicans blasted Obama’s green economy as failed central planning imported from Europe. They believe the government that’s best is the one that governs the least. Its purpose is to spur the private sector, but how it does so is mysterious. This was Romney’s position, but it seems to have become Obama’s, as well. During the election campaign, the two mouthed the same invisible-hand mumbo-jumbo, offering little chance of reviving an ailing economy.

In the real world, corporations clasp onto the public teat like squealing piglets. Big business would starve if deprived of state-organized central banking, transport, electricity, water, sewage, courts, zoning, police, environmental remediation, customs and labor regulation. Pick an industry and you’ll find tailored public aid. Banks and car makers get bailouts; energy and forestry companies mine, drill and log public lands; the health care industry thrives thanks to the Food and Drug Administration (FDA), National Institutes of Health (NIH), Medicare and Medicaid; agribusiness soaks up crop insurance and subsidies; home construction is built on Fannie Mae, Freddie Mac and the Federal Reserve; and perhaps the largest part of the economy – the military-surveillance-police-and-prison sector – is assembled piece by piece by government.

Clearly, government policies create many millions of jobs. (That’s not counting 22 million government employees and an estimated 14 million other jobs created by government contracting and consumer spending by public-sector workers.) This is known as industrial policy. Every country does it, and the United States is no exception. We just tend to do it worse because it is heresy to question the god of the free market. If the public realized how much big business depended on public support, then there might be a loud clamor for more activist government.

The lesson is not that the Obama administration did too much to spur a green economy; it did too little. Answers to why the green-collar economy withered and where its future may lie can be found in the story of Serious Energy and workers from the former Republic Windows and Doors factory in Chicago.

A New Era

Obama’s green jobs plan had one missing element – labor. A healthy economy requires plenty of good-paying, stable jobs with benefits. However, the titans of Wall Street aren’t going to voluntarily give up profits so the proles can get better wages and social programs; the proles have to fight for it.

As if on cue, a glimmer of labor’s revival emerged after Obama’s election. On December 5, 2008, 240 workers at Republic Windows and Doors staged a sit-down strike after receiving notice that their factory would be mothballed. The workers, members of Local 1110 of the United Electrical, Radio and Machine Workers of America, raised expectations that a wave of labor militancy could turn the tide against runaway corporate power.

Soon, all the elements came together. Serious Materials, a clean-technology firm, purchased the bankrupt Republic plant, which specialized in manufacturing high-energy-efficiency windows. Serious Materials (since renamed Serious Energy) billed itself as a green-economy pioneer ready to revolutionize manufacturing with green products. Obama’s stimulus would open up the market for its goods. And Serious was intent on showing profits, sustainability and social responsibility were compatible by keeping the unionized workforce in place.

Serious was one of many companies that hitched its wagon to Obama’s plans to green old markets and catalyze new ones. Despite shifting business models, Serious flailed along with the green economy. Now, Serious is no Solyndra, the solar-panel manufacturer that defaulted on a $535 million taxpayer-backed loan. The Republicans successfully saddled Obama with Solyndra’s bankruptcy, turning it into “a case study of what can go wrong when a rigid government bureaucracy tries to play venture capitalist and jump-start a nascent, fast-changing market,” as he Washington Post called it. Serious shows the private sector can be just as wrong. Ten venture capital firms poured more than $140 million into Serious and have little to show for it.

But rising out of the ashes are the Republic workers. They’ve raised hundreds of thousands of dollars to purchase machine tools and lease factory space to open the New Era Windows Cooperative. Modeling themselves on cooperatives in Argentina’s recovered factory movement and Spain’s Mondragon, the New Era workers will collectively decide how to manage the business, what products to manufacture and what to do with the profits. While they make green windows, they hope to inspire other self-managed enterprises across the United States and could provide an alternative to free-market capitalism.

Ironically, if New Era succeeds, it will do so with zero government support. One might have expected both presidential candidates to heap praise on the cooperative. Romney could have touted the workers’ entrepreneurial initiative, while Obama could have pointed to it as a new model for domestic green manufacturing.

In terms of Serious and Solyndra, their breakdowns are par for the course. The clean-tech sector is littered with so many casualties it looks like a Civil War battlefield. It is an unavoidable part of the process, and the Obama administration made a big mistake in shrinking away from failures.

Josh Whitford, a professor of sociology at Columbia University who studies industrial policy, says, “Novel technologies are areas in which the rewards are very uncertain and where a lot of things will not pan out. Venture capitalists deal with this by funding lots and lots of companies in the hopes of hitting a winner. They expect a lot of their investments to fail. In fact, if none failed, they’d think they were too far from the ‘possibilities frontier.'”

Government’s goal, says Whitford, “is not to hit a big financial winner, but to promote policies judged to be socially beneficial. He explains, “In the case of industrial policy, the purpose is often to push a technological direction,” such as cutting-edge clean energy that benefits society by curbing greenhouse gasses. Government is up against the same constraints as venture capitalists, however. Whitford says it does not know which projects will succeed. “So, government should, like venture capitalists, be spreading resources around and betting on multiple horses in the hopes that some do win. If the government has no failures, it’s being too conservative.”

Windows of Opportunity

The story of Serious and the Republic workers begins in 2007. Serious Material was planning to market EcoRock, which it touted as requiring only 10 percent of the energy used to make standard drywall. It raised $50 million to build factories in the United States that could crank out 400 million square feet of EcoRock a year. It’s the type of project that excites wonks: Serious Materials would reinvent the archaic drywall industry, which spews out more than 20 billion pounds of carbon dioxide annually, with a stateside 100-kilowatt solar-power plant that would create hundreds of good-paying manufacturing jobs while eliminating nearly all greenhouse gas emissions.

To make the product viable, Serious was counting on Obama enacting a cap-and-refund carbon tax. As small-batch production of EcoRock costs nearly twice as much as regular gypsum drywall, it needed a carbon tax to entice contractors to use it. But the carbon-tax bill died in Congress, so EcoRock was doomed to the green-building niche. This added to Serious’ woes because it jumped into the building market just as the economy collapsed in 2008. Furthermore, EcoRock may be great for the environment, but not for the bottom line. As one report noted, it “does not insulate or curb power consumption in buildings.” In 2010, CEO Kevin Surace explained to Greentech media that Serious “never pulled the trigger” on constructing a full-scale factory because “Gypsum (drywall) plants are 75 vacant.”

“New construction is down 80 percent from the peak,” said Surace.

Flush with cash to build factories, Serious Materials pivoted to plan B: manufacture windows that slash heating and cooling by 40 percent. Even though home building was in the dumps, Serious calculated that it would “ramp up production [in 2009] by tenfold” because of anticipated demand. It had been in the windows business for a few years, and in 2008, it purchased Alpen Windows in Colorado. In 2009, it added the defunct Kensington Windows factory in Pennsylvania, where 150 workers had been booted out of work the previous year.

The real prize was the Republic factory. The workers there won $1.75 million in wages and benefits after a six-day-long sit-down strike. They were unemployed, however, joining more than 600,000 workers who lost their jobs in December 2008. With 4,000 news articles published on their fight, Serious was paying attention. At Serious’ headquarters in Sunnyvale, California, CEO Suracewatched the drama unfold and pondered riding to the rescue of the beleaguered facility.

An engineer and entrepreneur, Surace first considered the downside. He told Inc. magazine: “The workers were up in arms. The equipment had been pillaged. The computers were destroyed. The customers didn’t want to buy. The records weren’t accurate. There was no management team. No one but the craziest person on earth would take over that.”

At Serious Materials’ holiday party that December, co-founder Marc Porat pushed Surace to consider the upside: “Think what can happen! We’re creating green-collar jobs. We’re creating an energy-efficient product. We’re hitting climate change. And it’s Chicago!”

“It will come to the White House’s attention,” said Porat. “It’s a perfect expression of their policy.” According to a detailed account in Inc., which named Surace “Entrepreneur of the Year” for 2009, the board of Serious Materials approved the acquisition of the idle factory based on “owning one of the largest window-glass facilities in the country, with a seasoned work force and a fabulous location.”

Not lost on anyone was the “public relations potential” of aligning with the Obama administration’s plan for a green-collar economy. The stimulus included $5 billion for the Weatherization Assistance Program. Much of this was for tax credits for energy-efficient retrofits that included windows. Serious was eager to cash in because its windows exceeded Energy Star ratings by up to 400 percent.

Surace became a rock star in the clean tech field, hit the TED circuit and shared stages with politicians. He gave Sen. Mark Udall (D-Colorado) a tour of Serious Energy’s Boulder facility, wielded scissors with Pennsylvania Gov. Ed Rendell for a “green ribbon-cutting ceremony” at the Kensington plant, and basked in the limelight with Joe Biden as the vice president heaped praise on the re-opened Chicago factory. Surace was on a mission to save the world from climate change with green windows and drywall that would generate serious greenbacks for Serious Materials’ investors.

Despite the grim economy, Serious hauled in $60 million from investors in 2009, one of the largest venture capital deals of the year, and its backers were salivating. In a newsletter from 2009, the Chicago-based Mesirow Financial, which pumped $15 million into Serious that year, wrote glowingly of how its “private equity investors” would benefit because $10.5 billion of stimulus money was in the pipeline “for home weatherization and federal building efficiency retrofits.”

Everything was going according to plan. As Serious collected factories, it boasted of “creating green collar jobs in plants across the country including … the President’s home town of Chicago,” wrote an Inc. editor. Inc. noted: “The Republic rescue has paid off handsomely in publicity … Aspiring vendors, curious dealers, and assorted well-wishers began stopping by the plant after its reopening. These days, salespeople rarely need to introduce Serious Materials to their prospects; the White House has already done that for them.” Revenue in 2009 reportedly increased by 50 percent; the company was employing more than 300 people, and in March 2010, Serious landed a coveted contract to upgrade the Empire State Building’s 6,514 windows.

Best-Laid Plans

Cracks were appearing in the façade, however. By the end of 2009, only 20 workers had been hired back at the old Republic plant, and Serious was spending $100,000 a week to keep the space open, which could hold 600 workers. Surace admitted the company had erred in thinking “we’d be hot and heavy into weatherization of thousands of homes in the Chicago area.”

Serious put its chips on weatherization, but the recession weakened its hand. The Department of Energy inspector general found that by December 2009, only 8 percent of the money had been spent “and few homes had actually been weatherized.” Because the $4.73 billion in the pipeline was divided into 58 spigots to cover every US state and territory, “State hiring freezes, problems with resolving significant local budget shortfalls, and state-wide planned furloughs delayed various aspects of the program.” On top of that, little money was being spent on windows like those built by Serious because weatherization also covered furnaces, insulation, water heaters, weather stripping, cooling systems and storm doors.

By the summer of 2010, Serious was back on the PowerPoint circuit, imploring funders for $56 million to become a player in the building management market. Its new model – the third in three years – was software “for monitoring and lowering energy consumption in commercial buildings.” Serious was acquiring more companies – software firms like Valence Energy and Agilewaves. It boasted of 60 customers in the wings and products that could deliver “immediate energy savings of 10 to 15 percent with payback in one to two years.”

But Serious was trying to muscle in on the turf of heavyweights like Siemens, Honeywell and General Electric, so it was back to the drawing board. After changing its name, Serious Energy unveiled a new division and plan number four in November 2011. A spokesperson announced Serious Capital would finance energy efficiency retrofits of buildings for free: “We install, at no cost to customers, energy conservation measures that will save energy,” they said, “and we become the agent for utility bill payments.” Serious Energy figured the revenue stream would allow it to pay the bills and lenders and leave enough for a tidy profit. For the third time, it was eyeing a government angle, committing to perform $100 million in retrofits as part of Obama’s Better Buildings Initiative.

The initiative is one of those so-called “public-private partnerships” that are economic quackery. The Better Building Initiative promises to cure every ill – “creating jobs, growing our industries, improving businesses’ bottom lines, reducing our energy bills and consumption, and preserving our planet for future generations” – with no pain in the form of taxpayer financing or altering business as usual. For Serious, the initiative made little difference. As Greentech Media pointed out, it was unclear how it was going to “get the backing to meet its stated goal of $2 billion in potential project financing.” Plus it would need to buy insurance as a hedge in case the savings did not materialize.

Once exalted as the poster child for exemplifying Obama’s vision of “green-collar jobs at the hands of a resurgence in American innovation,” Serious Energy shriveled into a new economy shell reminiscent of Enron, chucking aside manufacturing for software, finance and hedging. The venture capital taps were also running dry. Serious raised less than $20 million of its 2010 goal of $56 million, and less than $3 million of a $33 million round in 2011.

The free retrofit plan unraveled in weeks. In February 2012, Surace was canned, and Serious announced it was closing the Chicago factory. On February 23, it summoned the 38 remaining workers to “the offices of the notorious union-busting law firm Seyfarth and Shaw,” as Labor Notes put it. The workers were told they would get their 60 days pay under the law, but the factory would be cannibalized and the machines shipped to Serious’ plants in Pennsylvania and Colorado. Not given to taking things lying down, the workers sat down once more. Less than 12 hours later, they emerged victorious with a written agreement that the factory would operate for 90 days longer while Serious Energy looked for a buyer. As for Serious Energy, Porat says it is returning to its roots of producing soundproof drywall, a business he admits has very little to do with clean tech.

Working World

UE Local 1110 had no illusions that a white knight was in the wings, however. During a visit last May to the headquarters in Chicago, local President Armando Robles confided: “Nobody is going to buy the factory after two occupations. They don’t want troublemakers there.” Having shown themselves to be innovative risk-takers by winning two sit-down strikes that were technically illegal, the workers decided they would run the factory themselves. They joined forces with The Working World, which provides “investment capital and technical support for worker cooperatives,” and raised the money to buy the window-making equipment and establish the worker-run and -owned business.

The cooperative is still in the works. The big question is, can it blaze a path for labor to revive manufacturing? Small, worker-run cooperatives can’t replace an advanced industrial base, but they could democratize the US economy and employ millions in stable, living-wage jobs.

Networks of cooperatives could also provide a model to supplant the warmed-over Keynesianism beloved by liberals. Stimulating demand or creating public-works programs would still be effective today; Obama has done far too little of it. Trying to reshape the industrial base as happened under FDR (and that’s mainly because of World War II) is far more difficult because back then, US capital had limited options beyond the domestic market for consumers, factories and workers. That’s not the case in the globalized economy. The biggest US employer, Walmart, pays poverty-level wages to most of its 1.4 million workers. The most valuable corporation in the world, Apple, has only 13,000 US-based employees outside of its retail stores. And both source most of their goods from China.

The free-market solution is to subsidize corporations, a point upon which Romney and Obama agreed. For instance, states like Alabama, Tennessee and Mississippi already gift $300 million or more to automakers opening plants they were planning to build. Imagine if instead of padding the profits of Fortune 500 companies, the public sector funded tens of thousands of worker-run cooperatives. Many would go bankrupt, but that’s the price of innovation. The upside would be successful worker-run cooperatives rooted in communities. Such enterprises would be unable to move operations to Mexico or Malaysia, while abuse of employees that is far too common here would be almost impossible in democratic workplaces.

A new economy demands new answers, not the failed free market or nostalgia for a past that no longer exists. The New Era Windows Cooperative might just provide some of those answers.

Copyright, Truthout. May not be reprinted without permission.


Filed under Economy, Environment, Labor, Politics

Freeport Is Not a Democrat vs. Republican Issue

By Arun Gupta, November 2, 2012, The Progressive

The Rev. Al Sharpton, host of MSNBC’s Politics Nation, led a rally in support of Sensata workers in Freeport, Illinois on Saturday, October 20, 2012. Standing next to him is 16-year-old Karri Penniston, who was arrested in October protesting the offshoring of the Sensata factory to China by Mitt Romney’s Bain Capital, which will cost 170 workers their jobs, including Penniston’s mother.

FREEPORT, Illinois—The central business district in this city of 25,000 is lined with century-old brick buildings housing mom-and-pop shops – Edith’s Bridal, Christina’s Bakery, Mort’s Bar & Grill, Heinrich Accounting and Kunz Brothers Auto Parts. At Nine East Coffee, a block away from Classic Cinemas, the staff greets customers by name. The Stephenson County Farm Bureau office downtown attests to the thousands of acres of corn, wheat, soy, and hog and cattle farms that envelope this Northern plains city.

Freeport’s small-town feel is not all by choice. Its timelessness stems from being a backwater in the global economy. Locals say more than 90 commercial buildings and many more houses lie abandoned. An avenue downtown has been closed since September as the city struggles to find $100,000 to repair a crumbling bridge. Hip retailers have forsaken the town, and the chains sprinkled on the edges, Dollar General, Payless Shoes, McDonald’s and Walmart, specialize in squeezing profit from threadbare households. With a shrinking population and an unemployment rate near 12 percent, Freeport’s economy is so depressed that discount retailer Kmart plans to close its doors in January 2013 after 20 years in the town, throwing 45 employees out of work.

Right before Kmart goes dark Sensata Technologies will finish moving its production line from Freeport to China, leaving 170 more workers without jobs. The offshoring of the factory, which makes electronic sensors and controls for automobiles, would not raise eyebrows. Since NAFTA went into effect in 1994, millions of U.S. jobs have fled to countries with low wages and lax regulatory environments.

Sensata is different, however. It’s become an election lightning rod because it was created in 2006 by Bain Capital, the company founded by the GOP presidential nominee Mitt Romney. In October 2010 workers learned their factory and three others owned by Honeywell had been sold to Sensata. Newspapers quoted assurances from Honeywell that “all of the affected employees in Freeport … will be offered jobs with Sensata when the deal is closed.”

Cheryl Randecker, who’s worked at the Honeywell plant for 33 years, says in January 2011 the workers were ushered into a room where “a big spread of food” was laid out. Within three minutes, she says, “We were told, ‘Welcome to Sensata. We’re closing the plant and outsourcing to Malaysia, Mexico and China.’ ” The workers were resigned to getting the short end of the stick until a chance encounter in June with Chicago-based labor organizers galvanized them to make a stand against shipping jobs overseas.

After local protests and dogging Romney at the Republican National Convention in Tampa, workers built the “Bainport” encampment on the Stephenson County Fairgrounds across from Plant. No. 4 on Sept. 12 and have occupied it for more than 50 days. Liberals and labor have flocked to the camp, which has featured rallies and protests led by the Rev. Jesse Jackson and the Rev. Al Sharpton, and hosted live broadcasts by Democracy Now! and “The Ed Show.”

While grateful for the support, the Sensata workers and unions backing them are at a loss for how to stop offshoring that leaves part-time, low-wage jobs in its wake. They want American workers to “wake up,” but pin their hopes on the Democrats who encourage job flight abroad and McJobs at home as much as the Republicans. A few unions have taken up the challenge of organizing the Walmart economy, but the projects are in their infancy. So the Sensata workers and unions have retreated to a fortress of conservatism – mourning the lost “American Dream” appealing to national interest, and excoriating “Communist China.”


The Bainport protesters have two goals. Tom Gaulrapp, a 33-year-long employee at the plant, says at first they “hoped for a miracle that we would get our jobs saved. Now we’re trying to be an example. Maybe some other businesses planning to outsource will take a look and say we don’t want that publicity.”

The second goal is to get their full severance, which was cut from one year to six months for many longtime employees two years ago.

Adding insult to injury, workers were told they had to train their replacements if they wanted any severance. Dot Turner, who’s worked at the plant since 1969, says “it’s demeaning” to train the workers from other countries. “Normally a plant can just move an operation and train them over there. It tells you the jobs are highly skilled.” She says until the protests began, “They used to have 40 to 50 workers from Mexico and China at one time.” Now they’re all gone.

With cameras trained on their camp, the protesters also want to ignite a bigger movement. On a crisp Saturday afternoon, Turner told a rally of a few hundred people, “If we did this all over the country we could stop … the outsourcing to Communist China. We’re fighting the rich. The wealthy are trying to stamp out the middle class.”

Their defiance is matched by fear. Worry clouds Randecker’s face as she says, “I don’t know what the future holds. It’s lose-lose around here. There aren’t opportunities to make this kind of money.” A single mother, Randecker says her 20-year-old daughter moved back home from an out-of-state college to save money and now struggles as she works work part time and continues her nursing studies full time at a community college. Randecker says a friend started at Kmart the same week the store announced its closing.

Gaulrapp asks, “Who’s going to hire me?” Turner sums it up bluntly, “Most of the employees have concluded they’re going to be without jobs in a town without jobs.”

They’re aging workers in a dilapidated city that begins each day a little poorer and a little less relevant to the markets. Randecker, Gaulrapp and Turner decry greed, a community left devastated, and the lost ideal of secure jobs in exchange for hard work and loyalty. They pine for a time when products were “made in America,” manufacturing jobs were plentiful, and paychecks could support a family and their dreams.

Reflecting on 43 years of work at the factory, Turner says, “You know it’s got to be a nice place to work. The pay is good. My husband and I put three children through college. All three have master’s degrees.” When Turner started work there as a newly married 18 year old, she says, “I thought I died and went to heaven the conditions were so nice.” She had left a job at Structo, a long-gone local manufacturer of toys and barbecue supplies. Decades later Turner still winces at the memory of hoisting grills to overhead hooks all day. At Honeywell, Turner says, “You could take bathroom breaks, smoking breaks, as long as you made your productivity.”


The Sensata workers’ perspective is echoed by workers from as far away as Indiana, Iowa and Wisconsin who’ve made the pilgrimage to Bainport. On a Friday night, as Ed Schultz prepared to broadcast, there were machinists, teamsters, autoworkers, electricians, government employees, aerospace workers and hundreds of steelworkers, who unsuccessfully tried to organize Sensata decades ago.

Jeff Scanlan, an organizer with the Sheet Metal Workers International Association, says, “I’ve watched the steady decline of manufacturing in this area for the last 30 years. We built it better over here.” The 55-year-old Scanlan adds, “I had a good career in the trades. I was able to send my two girls to college. But I’m scared to death they’re going to do worse than I did.”

Scanlan and others rattle off manufacturers that once thrived in Freeport: Structo, Burgess Battery, and the W.T. Rawleigh Company, which sold household and nutritional products, are gone. Honeywell, Newell Rubbermaid and Kelly Tire (now Titan Tire), remain but factories have been padlocked shut and workforces have been chopped by 50 percent or more.

As for how to bring back good-paying jobs, Scanlan says, “Put tariffs on everything coming in from overseas. … We used to manufacture it, now we just install it.” When asked what about slapping tariffs on the thousands of goods found on Walmart shelves, he reiterates, “Everything.”

Just as Freeport exemplifies a conservative ideal, so does organized labor at Bainport. They accept the language of the market, returning value, increasing productivity, keeping labor flexible, prizing the home-owning nuclear family as the social building block. They proclaim, “The American worker can work as hard as anyone.” In return they only ask for stable jobs that pay “fair wages.” Few oppose, much less question, the dominance of corporations.

The darker times seem, the harder labor clings to the fading memory of the social compact, oblivious to the fact that Wall Street’s agenda transcends party labels. When I mention Clinton bulldozed Congress to ratify NAFTA, the usual reply is, “He now admits it was a mistake.” So what about Obama pushing the Trans Pacific Partnership, described as NAFTA on steroids? Silence. Though Jeff Scanlan confides, “It’s tough out there. I don’t have the answers.”


Solidarity does cross borders at times. Randecker says Chinese engineers asked her about an anti-outsourcing sticker on her shirt. “We explained it to them. We said it’s not your fault. It’s our government, your government and the corporations’ fault.” But with few opportunities to build international linkages among workers, the path of least resistance is appealing to patriotic capital and flirting with China-bashing, just as labor in the 1980s blamed its woes on Japan.

Programs like “The Ed Show” reinforce this tendency by obscuring the issue in partisan fog. Schultz described Freeport as “the belly of the beast of Mitt Romney`s economy.” The show was devoted to blaming Republicans for decades of job loss. The mantra was: The problem isn’t capitalism; it’s unpatriotic businessmen cutting deals with Communist Chinese. The entire political system isn’t responsible; it’s Republicans.

The solution is voting for Democrats, who tried to pass the “Bring the Jobs Home Act” that Senate Republicans killed last summer. What does this bill do? It gives a tax break to companies “relocating” jobs in the United States. Never mind that such tax breaks are ripe for abuse by corporations and there’s little evidence they create new jobs.

Turning Sensata into a partisan bludgeon will not help the workers. On Sensata’s website are two lists of plants: one from December 2008, and the other dated October 2012. The factories in Brazil, the Netherlands and Japan have vanished, but new ones have popped up in the Dominican Republic, Bulgaria and Shanghai. It’s a worldwide race to the bottom, and trying to plug the holes in the porous homeland with scraps of legislation is futile.

Take the Freeport plant. Randecker claims GM directed Sensata to shift the line manufacturing automotive sensors and controls to an experienced factory in Changzhou. Of course this is the same GM saved by the auto bailout that will likely win Obama re-election by putting Ohio in his column because of support from autoworkers whose jobs were saved. Then again, GM is doing what it has to in the kill-or-be-killed coliseum of the globalized car industry.

In the meantime lights will disappear by Nov. 7 and a few weeks later so will the last jobs. Labor organizers vow to nurture the storm brewing in the heartland. If it joins with others it could reshape the landscape, but if it gets sucked into Washington’s dead zone, then it will dissipate.

As for the workers, Randecker says, “There are a lot of people floating around here.” Freeport will be one step closer to a ghost town, haunted by one more specter of manufacturing past.


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Filed under Economy, Labor, Presidential Election 2012