Why Unions Should be Supported by the Government

For roughly the last 500+ years, ever since the Golden Age of the Dutch Republic, just to pick a starting point, Western civilization has created laws and institutions to make it easier for capitalists to combine and coordinate their money through corporations.

When a lot of money is collected into a single entity, like a corporation, that entity has an excellent bargaining position in negotiating wage agreements with individual workers. Since most individual workers are much more replaceable than that big wad of capital that we have legally enshrined as a corporation, the corporation ends up negotiating a really good deal for itself when it can negotiate with workers one-by-one. The modern economy is very much a team effort where we all depend on everyone else to hold up their end, but most of the money ends up going to the capitalists, because they combine with each other while workers, operating as individuals, end up in competition with each other. And, as I said, we've spent 500 years crafting laws and building institutions to make it easy for capitalists to combine their efforts.

Which is why it is very appropriate for the government to pass and enforce laws that make it easy for workers to combine and negotiate as a group when they're negotiating with corporations. These combinations of workers are called unions, and they are really one of the few ways that you can level the playing field between workers and corporations.

Back in the glory days of the New Deal, when the Federal government actively supported unions (and taxed the rich, by the way) we had a distribution of income in this country where the middle class actually received most of the income in the nation. There was a class of rich people, but as a group they didn't receive most of the wealth. They just received more, as individuals, than middle class people received as individuals.

But America has abandoned unions (and abandoned taxes on the rich) and now the American middle class as we knew it is wrecked, and most of the income goes, year after year, to people who already have most of the income. Because that, kids, is how the free market works.

And that's why unions should be supported by the government. I'm not saying that unions were or are perfect, or that there aren't reforms and improvements in unions that we should demand. But without unions we will never again have the America where I grew up, the America built around middle-class people who were proud to work for a living and who made a good living by working for a living.

This great example from Robert Reich puts the whole issue of income concentration into such clear perspective.

Last year, America’s top thirteen hedge-fund managers earned an average of $1 billion each. One of them took home $5 billion. Much of their income is taxed as capital gains – at 15 percent – due to a tax loophole that Republican members of Congress have steadfastly guarded.
If the earnings of those thirteen hedge-fund managers were taxed as ordinary income, the revenues generated would pay the salaries and benefits of 300,000 teachers. Who is more valuable to our society – thirteen hedge-fund managers or 300,000 teachers? Let’s make the question even simpler. Who is more valuable: One hedge fund manager or one teacher?

We're in Year 21 of the Reagan Era, where we have steadily reduced taxes on the wealthy, and reduced the government services that those taxes used to pay for, in a determined effort to conjure up the magic, free market pixies who will make everything wonderful once they're not frightened away by nasty, scary democracy. But all we have to show for our efforts is an economy where the rich have gotten so much richer that merely by requiring 13 guys (and, yes, they're all guys) to pay the normal tax rates that the rest of us pay, you would get enough money to cover the salaries of 300,000 normal, middle-class people. And let me be real clear here: I'm not saying that 13 guys make as much money as 300,000 people, I'm saying that roughly 35% of the income of 13 guys equals the full income of 300,00 people. Clearly, the free market magic is working for some people...

Irony

A story appeared in Slate the other day about the telecom industry's campaign of misinformation about the state of broadband access in the U.S. The key paragraph of the story, describing the millions of dollars that go to lobbyists to spread misinformation, appears over an ad from "Americaspower.org" for Clean Coal.

The FCC Speed Test

The FCC is teaching out directly to the citizenry for data about the state of broadband in America. If you go to Broadband.gov, a new site created by the FCC, you can have them test your Internet connection speed and add it to their database.

They will also ask you for your home address, and that is the good part, because I already know how fast the crappy DSL is around Santa Cruz. The whole point of this is that I want the FCC to know too.

California Will Propser from Clean Tech

Boy, I hope this is true.

Start Financial Reform with Cap and Trade

One of the main criticisms of using a cap and trade system to fight global warming is that allowing markets in carbon permits and (especially!) in carbon offsets, opens the door to financial manipulations such as we just saw with the real estate derivatives markets. We probably won't get a full blown bubble in carbon offsets, but we will get a lot of wasted money and energy channelled into useless derivatives when we need that money and energy for building a renewable energy economy.

So let's start financial reform with the cap and trade bill. Keep the auctions and aftermarkets as simple and regulated as possible. And in a best case scenario there are no carbon offsets.

Obama and Clinton

Robert Reich has a good post today, after the State of the Union, comparing Obama's administration to Clinton's. I am reluctantly starting to agree that there is a comparison to be made. Obama seems deadset determined to recapitulate the Clinton administration.

Start your administration expecting an easy victory on health care. Of course it will be easy because it's necessary, the people want it, and it just makes so much sense. Then, when you get your behind whupped on your first major initiative, immediately retreat to the right. And in moving to the right you promote the legislative defeat you've just suffered into an actual surrender, handing the conservatives a triumph which their actual power does not justify.

What a depressing day.