Bold Action Isn’t Always Best—at Least at First

by Mike Elk

Mike Elk

A few months ago, Ezra Klein and I got in an argument about former SEIU labor organizer Stephen Lerner’s idea of a mass strategic default on mortgages, in which many Americans whose mortgages are “underwater” would default on their mortgages in order to hurt big banks and force them to deal with the foreclosure crisis. Klein wrote: “It’s unlikely that the union movement would actually adopt Lerner’s plans, or that they’d even have the power to make good on them if they wanted to adopt them.”

Aside from radical farmers in the Dust Bowl during the 1930s, a a strategic mortgage default campaign is practically unheard of in American history. Unions have never tried this, and it would be unlikely they could cause enough defaults to hurt the banks. Unions rarely are successful in significantly hurting the profits of major corporations when they threaten boycotts against corporations. But the threat of a boycott (rather than the actual boycott) can be a powerful tool in forcing a corporate executive to negotiate because of the negative publicity boycotts can produce, and the anxiety an unpredictable corporate campaign of escalation can produce for executives.

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