The economic crisis and the assault on unions and working people

by Duane Campbell

Duane Campbell

The nation and the states continue to suffer from the Great Recession and working people remain in crisis.  The crisis was caused by the greed and avarice of the financial class and aided by the politicians of both major political parties.   The  major banks and corporations looted the economy creating an international meltdown.  Now, they have been rewarded with bail out money and have returned to high profits.  The crisis was not caused by students, teachers, public employees  nor recipients of social security.     The  continuing economic decline has had a devastating impact on state budgets in  at least  42 states.   Revenues have continued to plunge and  legislatures  have been forced to make a series of deep cuts to virtually all of the state’s programs, health care, police protection, education and university systems.

The national unemployment rate edged down in February to 8.9 %, but remained high in many states and regions.  In California it is over 12.5%.  According to the Labor Center at U.C. Berkeley, the Black unemployment rate is 15.3 % and the Latino unemployment rate hovers around 11.6% in February.   These sustained high levels of unemployment and long term unemployment are devastating to families.

The corporate class is using the state budget crises to assault union workers in Wisconsin, Ohio, Indiana, and Pennsylvania, Colorado  among others.  They do not need this assault in Texas, Arizona, Utah,  Virginia, and much of the South where public workers are already restricted from bargaining.

This assault on union workers is a direct consequence of the Republican victories in the elections of November.  The Obama Administration was blamed by many for the continuing economic crisis and job losses.  During the 2008/2010 period the Democrats in the House of Representatives had passed significant progressive legislation and budgets, included needed economic stimulus packages.  These efforts were stalled in the Senate where the Democrats held a 56-44 majority, but at least 6 of these Senators were unwilling to vote for any particular bill from Single Payer Health Care to adequate economic stimulus.

A discouraged liberal/left complained and stayed home on election day.  Each constituency was disappointed- the anti war movement got a wider war in Afghanistan, organized labor did not get the Employee Free Choice Act, independent voters who had voted for Obama did not get bi-partisanship and leadership toward a rational economic policy- among others.   Meanwhile  a well funded corporate right  organized (mostly white) working class voters to vote Republicans into office.  Now we have the union crises in the several  states.  The Obama Administration was able to win legislative victories to save corporations  and bankers during the crisis, but was unable to gain majority support  in creating the necessary jobs and  to respond more aggressively to the unemployment crisis.  The votes were not there.  As described well in Failure by Design: the Story behind America’s Broken Economy (2011) by Josh Bivens of the Economic Policy Institute, Democrats, liberals, and  the left has lost the ideological battle on how to respond to this  severe economic crisis.  In 2011, the Administration  will be unable to secure further fiscal stimulus to the states causing even more lay offs of teachers, fire fighters, police, and other public employees.

Robert Kuttner, in A Presidency in Peril: The Inside Story of Obama’s Promise, Wall Streets Power, and the Struggle to Control our Economic Future, (2010) explains why the Obama administration was able to mount a defense of the corporate looters while failing  in its tepid  efforts to respond to the economic crisis with a progressive jobs policy.     He provides detailed description  of the perspectives and economic vested interests of the major policy advisors in the Obama Administration.

Prior to reading this book I remained an Obama supporter.  Even though I recognized his failure in Afghanistan and the Obama-Duncan assault on teachers, I continued to explain how the  economic crisis along with Republican intransigence produced the limited gains in health care legislation, in tax reform, economic reform,  and in the needed economic stimulus to create jobs in the face of the worse recession since the great depression.  I continued to make the case for a progressive view of the Obama Administration as the best we could get under the circumstances.

This book turned the tide for me.  By 2010 after nearly three years of the financial crisis where finance capital regained its power and wealth at the expense of all of the rest of us, the government has become increasingly willing to intervene  to protect, promote, and to directly fund the large banks.  We have a new economic order in which the government is used to loot the economy for the benefit of the very rich.  The Administration has acted as the Washington branch of Wall Street.

Let us be clear.  Barack Obama and his advisors chose the economic team that has done this to the nation, Larry Summers, Tim Geithner,  and others.  It is their policy.   And, they have opposed the few people who tried to keep from handing the store over to Wall Street such as Elizabeth  Warren and  Republican Shiela Blair.

We need to spend more public  money to improve schools, to develop roads and infrastructure, and to create jobs.  The  government must protect and empower our citizens. To foster prosperity  it must prepare the young for civic participation.   Protection includes health care, social security, safe food, environmental protection, safe streets, job protection, etc.   Our economy needs roads, bridges, telephone lines, communications systems, energy and quality education.

Kuttner traces the role of key financial advisers from Robert Rubin of Citi Bank, and the many major crooks of Goldman Sachs who have made billions off of this crisis.   This is finance  capital’s relentless  class war against the rest of us while it continues to profit from the economic crisis.  Their demands for unconscionable tax breaks for the rich  while refusing the rescue of bankrupted states and municipalities thus forcing  budget cuts that decimate schools, force lay offs of nurses and health care workers, police, and firefighters and now they even dare to propose cutting social security while preventing banking  regulation to stop the reckless behavior that plunged the country and the world into the deepest recession since the Great Depression.

Kuttner’s position is further confirmed by the change to a new set of economic advisors in late 2010 and 2011 advanced the financial corporate agenda in the Obama Administration and further distanced the Administration from a labor and/or progressive perspective.  The appointments of  Austan Goolsbee. Bill Daley, and Jeffrey Immelt, among others, reflects a conscious and deliberate choice on the part of the Obama team to expand further in the direction of corporate liberalism, the very people who brought the economic crisis to the nation

Looking at both the financial vested interests of this group and their organizational ties provides a much better informed position on how the Obama Administration came to support Wall Street both in the bail outs and in preventing real regulatory reform.   Economic self interest and institutional self serving, such as the individual history of Larry Summers  provided by Kuttner, better explains the policy decisions than does references to pragmatism and the views of some of Obama’s law professors.

The Presidency in Peril goes over some of the same ground as  Dean Baker in Plunder and Blunder (2009) and Nomi Prins in ,It Takes a Pillage; Behind the Bailouts, Bonuses, and Backroom Deals from Washington to Wall Street, (2009) on the role of insider financial manipulation and profiteering.  Kuttner concentrates particularly on Robert Rubin and his protégé Larry Summers.  He does indeed focus on the inside story of political networks and their close linkage to corporate networks.  While there may be differences between Democratic aligned finance capital and Republican aligned finance capital, neither group is interested in advancing prosperity for working people and the middle class.  They are more alike than different.

In the end Kuttner is optimistic. It is optimism of the will, not of the analysis. He describes some of the weaknesses of labor campaigns and the lack of grass roots organization building by most political groups. The left has yet to develop a useful  narrative to explain the crisis to working people in a manner that focuses the righteous anger on the real culprits- the corporate ruling class.  Lacking a convincing narrative corporate interests have created and used the Tea Party and Right Wing populism to focus anger at immigrants, unions, and public sector unions.

Labor needs to return to the basics.  The outpouring of support for the Wisconsin public workers and the tactical skill used to organize this support is encouraging.  In the 2012 elections we  will need to defeat the anti union Republicans who have taken over several state houses. To recover, not just manage the pain, we need to elect a progressive majority in the states and in Congress who provide the necessary stimulus  to create new jobs.

A jobs bill would be like  the legislation proposed this year  by Rep. John Conyers  (D – Detroit).  H.R. 870 “The Humphrey-Hawkins 21st Century Full Employment & Training Act” would fund jobs by imposing a very small tax on the trading of financial assets: stocks, bonds or currencies.  Even a tax at the rate of 0.25% ($1 on every $400 dollars worth of stock, debt or currencies traded) as suggested in the bill would generate more than $500 billion annually, enough to fund a very large jobs program – more than 5 million jobs.

Having suffered such a devastating defeat at the polls and still suffering devastating high unemployment, the tasks before us are formidable.

Some on line resources on the economy.

Chicago Political Economy Group.

Economic Policy Institute.

United for a Fair Economy.

Center for Economic and Policy Research.

New Deal.

To calculate the benefits that the rich in your state received from the Obama/Republican compromise.   Citizens for Tax Justice.


Gar Alperovitz, America Beyond Capitalism: Reclaiming Our Wealth, Our Liberty, and Our Democracy.  (2005) John Wiley and Sons

Dean Baker,  Plunder and Blunder: The Rise and Fall of the Bubble Economy, (2009)

Josh Bivens, Failure by Design: The Story behind America’s Broken Economy. (2011)

Campbell, Duane.  Choosing Democracy: a practical guide to multicultural education. (2010)

Justin Fox,  The Myth of the Rational Market: a History of Risk, Reward, and Delusion on Wall Street. (2009)

Jeff Faux, The Global Class War: How America’s Bipartisan Elite Lost Our Future- and What It Will Take to Win It Back. ( 2006)

Simon Johnson and James Kwak,   13 Bankers : The Wall Street Takeover and the next Financial Meltdown. 2010.

David Harvey, The Enigma of Capital and the Crisis of Capitalism.  (2010)

Paul Krugman,  The Return of Depression Economics and the Crisis of 2008.  (2009)

Nomi Prins.  It Takes a Pillage: Behind the Bailouts, Bonuses and Backroom Deals from Washington to  Wall Street. (2009)

Joe Schwartz,  The Future of Democratic Equality; Rebuilding Social Solidarity in a Fragmented United States. (2008)

Joseph E. Stiglitz.  Free Fall, America, Free markets, and the Shrinking World Economy.  (2010

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5 Responses

  1. Voting is only one tool in working class bag. It’s a tactic. Labor got sucked into Dem Party “stragedy” of electoral politics. No independent power, no leverage. The Wisconsin uprising shows the way. “Another world is possible.”

  2. Lifting the Veil: Obama and the Failure of Capitalist Democracy


    “Barack Obama and the failure of capitalist democracy”, this film explores the historical role of the Democratic Party as the “graveyard of social movements”, the massive influence of corporate finance in elections, the absurd disparities of wealth in the United States, the continuity and escalation of neocon policies under Obama, the insufficiency of mere voting as a path to reform, and differing conceptions of democracy itself.

    Original interview footage derives from Noam Chomsky, Michael Parenti, Michael Albert, John Stauber (PR Watch), Sharon Smith (Historian), William I. Robinson (Editor, Critical Globalization Studies), Morris Berman (Author, Dark Ages America), and famed black panther Larry Pinkney.

    Non-original interviews/lectures include Michael Hudson, Paul Craig Roberts, Ted Rall, Richard Wolff, Glen Ford, Lewis Black, Glenn Greenwald, George Carlin, Gerald Cliente, Chris Hedges, John Pilger, Bernie Sanders, Sheldon Wollin and Martin Luther King.

    Visit for more info.

    “Lifting the Veil is the long overdue film that powerfully, definitively, and finally exposes the deadly 21st century hypocrisy of U.S. internal and external policies, even as it imbues the viewer with a sense of urgency and an actualized hope to bring about real systemic change while there is yet time for humanity and this planet. See this film!” – Larry Pinkney – Editorial Board Member & Columnist – The Black Commentator

    Viewer discretion advised – Video contains images depicting the reality and horror of war.

    Posted March 11, 2011

    Lifting the Veil from S DN on Vimeo. By grtv

    • While I am sympathetic to this argument and I read it regularly, the argument has a problem. It is asserted in each campaign. It is precisely the abandonment of the Democratic Party that led to the current anti union assaults in Ohio, Wisconsin, Indiana, Tennessee, Pennsylvania, and more. So, if you want to abandon the Democratic Party, fine. Show me what you have got.

    • Now I have seen the film. It is very good. I agree with some 80% of it. The central arguments are well done.
      I recommend all to see it.
      But, it does not resolve the question raised – in my opinion. In considering participation with the Democrats, it is not an either or position.
      First, electoral work is only a small part of the political work necessary. We need to analyze why a left has not emerged and strengthened in this crisis.
      Our organization supports an inside outside strategy, working both within and outside of the D.P.
      PDA has a similar approach,
      The film is compelling. Some of the cases are over stated. The chris Hedges piece at the end has much to recommend it. However, the argument that morally based small individual actions are what we have available has several limitations. See Amy Dean’s writings here on Talking Union.
      And, again, see the result of political abstention in the assaults on unions in Wisconsin, Ohio, Pennsylvania, etc.
      Thanks for the film recommendation.

  3. Support Union Workers!

    We’ve created a workers’ rally song “Down On The Line” in support of the hardworking middle class brothers & sisters nationwide. You can listen & download it free here:

    Fight on! The Joe Hill Heartlanders

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