March 2011, Week 3


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Mon, 21 Mar 2011 00:15:35 -0400
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The Key to Rebuilding Workers' Power: Unrig the Rules
Dean Baker
t r u t h o u t | Op-Ed
Monday 14 March 2011

The battle in Wisconsin over the rights of public-sector
workers holds the potential to reawaken workers across
the country to demand their fair share of the economic
pie. This could be an important turning point. However,
if workers are to make real progress, they must move to
alter the rules of the game. These rules have been
deliberately rigged against them over the last three

The most obvious of these rules are those governing the
rights to unionize, such as those that Gov. Scott Walker
directly attacked in Wisconsin. However, this is just
part of the story. Unionization has become almost
impossible in the private sector, since companies
routinely fire workers engaged in an organizing drive.

It is illegal to fire workers for trying to organize,
but the penalties are trivial, even if a fired worker
presses a case before the National Labor Relations Board
long enough to win. Companies will gladly pay a few
dollars to the organizers they fire in order to avoid
having a union.

It would be a very different world if there were real
penalties for violating labor law. A woman in Minnesota
got fined more than $200,000 for allowing people to
download copyrighted music from her computer. Suppose
companies paid the same penalty for illegally firing
workers trying to organize a union as this woman had to
pay for violating copyright laws. That might encourage
some respect for the law.

But this is just the beginning. Over the last three
decades, the government has signed trade agreements like
NAFTA, the major purpose of which is to put US
manufacturing workers in direct competition with low-
paid workers in countries like Mexico and China.
According to economics and common sense, workers in the
United States will lose jobs or see their pay cut when
they have to compete with workers in other countries
earning one-tenth as much.

This situation is made even worse when the dollar is
overvalued. If the dollar is overvalued by 20 percent,
we are effectively giving a subsidy of 20 percent to
foreign producers competing with our workers. It is not
easy to overcome a 20 percent subsidy. Therefore, a
lower valued, or more competitive, dollar should be at
the top of progressives' lists of demands.

The Treasury and the Federal Reserve Board can bring
down the value of the dollar in international currency
markets. If the current crew claims not to be smart
enough, we can find people who are up to the job. A more
competitive dollar would go an enormous way toward
eliminating the trade deficit and generating jobs in
manufacturing and other sectors that are open to trade.

The practices of the Fed more generally should be front
and center in every progressive's agenda. The Fed's
actions are enormously important in determining the
course of the economy. If Alan Greenspan and Ben
Bernanke had done their job, and reined in the housing
bubble, we would not be sitting here with 25 million
people who are either unemployed, underemployed or have
given up looking for work altogether.

We need the Fed to be governed by people who take its
commitment to full employment seriously, not by people
who see its job as serving the big banks. The Fed should
be moving more aggressively now to bring down the
unemployment rate.

More generally, it has to be prepared to occasionally
take the risk of somewhat higher inflation if that is
the cost of bringing down the unemployment rate. The
world looked very different for workers back in 2000
when the unemployment rate was 4.0 percent than it does
today. The Fed should be pressed to get the unemployment
rate back down to a level that we reasonably call "full

There are many other important "rules of the game"
issues that should concern progressives. Corporate CEOs
walk away with paychecks in the tens or hundreds of
millions of dollars in the United States because they
largely pick the board that determines their pay.
Increased shareholder power should be effective in
bringing CEO pay in the United States back in line with
pay elsewhere in the world.

We also need to rein in our patent and copyright system,
which create enormous distortions in the economy while
pulling hundreds of billions of dollars a year out of
consumers' pockets and putting it in the hands of the
pharmaceutical and entertainment industries. We pay an
additional $250 billion a year from prescription drugs
alone as a result of government granted patent
monopolies, more than five times the cost of the Bush
tax cuts to the wealthy.

The list of rules that need changing is long, but this
is where a successful effort to rebuild the middle class
must focus its efforts. As long as the economy is rigged
to redistribute income upward, tax and transfer policies
designed to help the middle class and the poor will
inevitably fail. The right knows this; if progressives
can't learn this basic fact, then we are spinning our
wheels no matter how angry and organized we get.


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