The First Steps-and a Few Beyond
Harrington, Michael
What are the first steps—and then a few beyond—that a newly elected administration should take in 1989? If the Republicans win, the most we can expect is a backing-away from the more extreme...
...We have, in short, been running a kind of negative industrial policy as a result of the Reagan arms buildup...
...This, then, is the overview that frames all of my specific proposals...
...There is no way the United States can compete with the newly industrializing countries in a contest to pay the lowest wage...
...That can only happen with something like the new departures advocated here...
...Including these, the total number of unemployed and underemployed workers in June 1987 was 13.6 million, or 11.2 percent of the workforce, up from 9.7 percent in 1979...
...Reagan has been the most radical redistributionist president in the twentieth century, and if his reactionary transfer of income from the middle and the bottom to the top is not reversed, the Democratic party can forget about its social priorities...
...It had to create a vast supply of savings that would automatically turn into new plants and enhanced competitiveness...
...It was the Mexican bailout in the late summer and fall of that year which, by pumping money into creditor banks in the United States, undermined the monetarist rigidity of Volcker and the Reaganites, policies that did so much to deepen and prolong the crisis...
...It would not be in the business of underwriting corporate takeovers, greenmail, golden parachutes, or any other ingenious device of the paper entrepreneurs...
...Indeed, there should be an emphasis on grass-roots participation and initiative in the planning process...
...It had been through the capitalist cultural revolution...
...As a Congressional Budget Office study stated this problem, "the largest amounts of funds are spent to develop radiation-hardened . . . integrated circuits, which are used solely in military or space applications, represent only a small fraction of semiconductor sales, and have only limited commercial potential...
...If one assumes, as almost all of the workfare proponents do, that our job structure will remain as it is, then the "best" that can be accomplished is to temporarily shift those women from poverty welfare to poverty work...
...until after the 1988 elections, and thus saves both parties from embarrassment...
...That would require them, in effect, to create a huge balance of payment deficit in U.S...
...That little 2.8 percent "blip" upward for the elite was worth $40 billion in additional income—deducted from the shares of the other 80 percent...
...The central instrument of that Reaganite redistribution was the "Economic Recovery" Tax Act of 1981, which significantly increased taxes for the poor while sharply reducing those for the rich...
...The investment bank urged here would not cost tax funds, but would raise its capital in financial markets with relative ease because its borrowings would be federally guaranteed...
...It continues to this day...
...The latter would, in a good many cases, be financed by debt—in this case by productive debt rather than corporate crapshooting with borrowed money —and paid off over time, like any long-lived investment...
...The nation has been shocked in recent years by the specter of public homelessness, of people sleeping on grates to get a bit of warmth in the urban winter...
...But it is also an oversimplification...
...However, during the course of any year many more workers experience unemployment...
...The bishops were then subjected to a vicious attack by Catholic conservatives...
...Prior to the transformation of banking in the last two decades, it was official policy to give savers who invested in housing a premium interest rate...
...What about social policy, i.e...
...So it is, as Louis Uchitelle reported in the New York Times in September 1987, that there were people leaving the labor market in Massachusetts even as the unemployment rate went down...
...The trouble is that more than $300 million of that total is focused on narrow military uses, which has left the industry, only a few years ago a great success story of "entrepreneurship," hanging on the ropes...
...The wage demands of the working people and the entitlements of the poor were seen— as long, however, as they did not challenge the prevailing distribution of income and wealth— as promoting the well-being of everyone...
...If there is the equivalent of a new Keynesian synthesis in existence, adequate to a world never dreamed in Keynes's own philosophy, we don't yet know it...
...There were more than a few groans in the fall of 1987 when the number of those officially out of work fell below 6 percent for the first time in years...
...None of the sketchy details I have just outlined is sacred...
...At the same time, there are companies that have been liquidating profits from their funded pension programs, claiming that they are legally required only to be able to pay fixed sums and can cream anything in excess of that...
...But if one assumes, as I do, that the security of the United States is, in a world not yet converted to Gandhiism, a political priority, then the attack on Reagan's defense budget and the proposed alternatives must be framed in terms of protecting this country...
...trade with the region, since they would have to earn a surplus to finance their debt repayment...
...That is a secondary argument against such expenditures...
...Conversely, a massive commitment of development funds from the Northern economies could create jobs in the rich as well as in the poor countries...
...But a national housing policy is a key to solving both problems...
...The evidence presented by Stephen Cohen and John Zysman in Manufacturing Matters is, I think, utterly persuasive: that we cannot export our manufactures and then shift into high-tech services (plant and technology design, business services, etc...
...In the first draft of their excellent pastoral letter on the economy, the Catholic bishops came out for full employment defined as 3 percent-4 percent unemployment...
...without runaway inflation—only if there are around seven million people out of work...
...In the nation, Uchitelle estimated, there were six million people who want work but are not looking for jobs (which means they are not part of the jobless statistics...
...But the problem is even more profound than I've just said...
...The workers and the poor were turned into "special interests" and the betterment of "entrepreneurs" —read: the giant corporations—was the way to social progress for all...
...today, it is a cause of our relative backwardness vis-a-vis the Japanese, West Germans, Swedes, and others...
...The city," Messinger said, "pays $270 a month in rent to a family of four on welfare, even though it pays close to $2,500 a month to keep the same family in a 10 x 10 room in a welfare hotel...
...But AFDC, food stamps, the 60 percent of Medicaid that goes to the nonaged poor will cost around $36 billion in 1988...
...But it then imposes extremely steep targets in order to achieve a balanced budget in 1993...
...This is an area in which measures to eliminate poverty and help the middle class can be linked, always a political plus...
...Indeed, the RFC played a major role, as Kenneth Davis pointed out in The New Deal 48 • DISSENT Years, 1933-1937, in undermining a national transportation policy that might have saved us from much social grief...
...Extend the Social Security tax to all income, rather than to the first $43,800 (the existing rule yields a flat tax rate of 14.3 percent for all those at, or below, that sum, and 6.2 percent for someone with $100,000 a year), but exempt the first $4,000 of earnings from the tax (which would end the hiring disincentive which now exists at the bottom of the wage scale because, nominally at least, employers pay half the tax...
...Free trade has been a utopia for well over a century and has had little or nothing to do with the reality of the international economy...
...But for now, a public investment bank with federal guarantees could provide voluntary no-risk outlets for the funds of democratized pension funds...
...The neoliberals then compounded their error: they acted as if Ronald Reagan had, by hook or by crook, pulled the economy out of crisis...
...A vibrant economy is the precondition for being able to pay for what I suggest— and social decency also requires that the great mass of the people believe that their lives are improving significantly and thus allows them to be more generous...
...Savings have plummeted...
...But the advantages that would have automatically followed from that fact in the 1960s, or earlier, have not appeared...
...Our neglect in recent years has been so spectacular that a few, rather simple, measures can accomplish a world of good...
...That was never fully done, of course, but it was the goal, with "de-skilling" of the labor force the means...
...To do that, full-employment policy should explore the possibilities of quality work in "liberal arts" jobs—in the "social" as well as the production sector—where educational breadth is as important as technical mastery...
...America—and the Democratic party—will not respond to the present challenge unless they understand that it is a part of a structural transformation of the world economy more momentous than anything that has happened in a century...
...Health...
...A new administration should promise to take industrial policy away from the Pentagon and to create democratic planning institutions which will consider the economic- and socialstrategic importance of our basic industries as well as their military value...
...More often than not, however, the ESOP provision is used to get government subsidies for management without really involving the workers in any decision making...
...that the Rapid Deployment Force and the 600-ship Navy are fantasies...
...Of course...
...Welfare...
...Since, as I will detail later, such a commitment to global justice could help solve the domestic economic problems of the U.S...
...A new administration should make the democratization of the work process one of the means of synthesizing productiveness and justice...
...We can't even start answering such pragmatic questions unless we place them in a larger context...
...One might say that this—in part unwitting—international act of Keynesianism was the immediate stimulus for the beginning of the Reagan "recovery" in January 1983...
...The new ideology was effective politics but disastrous economics...
...It may be, to use Alain Minc's phrase, that we are living through a "slow 1929...
...And in Robert Kuttner's "back of the envelope estimate," a modest but solid program for welfare reform, education and training, low-interest mortgages for young families, AIDS research, and a beginning of national health insurance would cost . . . $40 billion, i.e...
...A few ideas of how we should proceed in 1989 will make my generalities concrete...
...At the same time, the public conscience has salved itself by blithely assuming that these are people with serious mental and emotional problems...
...So Baker came up with a scheme for socializing private banks in extending further lines of credit to the debtor countries...
...In some cases, AFL-CIO unions did manage to get such monies invested in projects that created jobs for their members...
...If it is taken seriously—a dishonest legislative process suggests that no one intends to do so—the new president in 1989 will preside over Ronald Reagan's third term, no matter what his name...
...Or, more precisely, the radical transformation of the economy has compounded these difficulties...
...At the same time, it would be wrong to view education as the simple servant of a new economic system...
...How are we to deal with them...
...It was half-hearted, conservative, ineffective—and the admission of a critical principle: In the new and interdependent world economy, the poverty of the Third World acts as a brake upon the prosperity of the advanced economies...
...Since we well know that the jobless are disproportionately made up of minorities and women, and since the existence of such a "reserve army of the unemployed" will hold down the wages of everyone else, the acceptance of this proposition means to abandon any serious attack on the economics of 50 • DISSENT racism and sexism or on the downgrading of the wage structure that has occurred since 1973...
...But since the late 1970s, most of the new jobs accompanying economic expansion have been low-paid...
...It is not yet as spectacular and obvious as the Depression— and it may never become so...
...If one assumes, as I do, that there will be a recession of some magnitude in the not-too-distant future, the Northern effects of that Southern crisis will become even more severe...
...Moreover, in taking some first steps, we can create jobs in the construction industry and make a real contribution to full employment...
...For if one has the kind of global perspective outlined here, then that protectionism is a temporary device to buy the time to manage the transition in the interest of both North and South...
...But haven't I simply compounded the difficulties...
...It also abolished some outrageous tax deductions favoring the rich...
...and the top 20-percent share rose from 43.3 percent to 46.1 percent...
...and if federal funds once again were made available for affordable housing in the cities and rural America, that might even cure local politicians of their mania for subsidies to the upper middle class and the rich...
...First, it would increase the demand for labor—certainly WINTER • 1988 • 51 not by 20 percent but in a significant way—and thereby contribute to full employment...
...because those services require hands-on learning experience in manufacture...
...they assumed that the socially mean and utterly uneven "recovery" of 1983 would go on forever...
...He was also telling the truth, even if inadvertently...
...that of the wealthy too low...
...And as this fraud was under way, the real value of AFDC and food stamps declined, and the working poor were cut from a number of programs...
...Second, it is obvious that the tax, defense, investment and other policies already described all point in the direction of quality full employment...
...There have to be national initiatives and planning as well as local creativity...
...As New York City Council Member Ruth Messinger described New York's "single most acute problem" before the Senate Labor and Human Resources Committee in October 1987, half of the tenant population makes less than $15,000 a year—and 35 percent of them pay more than 40 percent of their income in rent...
...Work Worthy of the Workers There is a related goal: democratic, quality production...
...In that period the bottom quintile or fifth of the population dropped from 4.1 percent to 3.8 percent of the total income...
...Dealing with the Sacred Cow There is a second source of government saving, but it is one that has to be treated with a care not always granted it by the liberal wing of the Democratic party: Pentagon cuts...
...Democratic connivance in the revision of Gramm-RudmanHollings in 1987 was a disgraceful mortgaging of the future...
...In their present weakened condition, the markets in those countries have already been much less open to American goods...
...Pie in the sky...
...They left largely because the jobs open to them offered poverty, or near-poverty, pay...
...and there are unprecedented deficits...
...Just as tax policy should relate subsidies to social need, here too there should be subsidized rates of interest for the—public or private—housing of the poor and middle class, and market rates (or a limit on credit) for the high rollers in the Casino Society...
...In this context, some of the savings achieved through progressive taxation might be earmarked for debt reduction if there is no recession under way...
...The relative tax burden of working people and the middle class is too high...
...A Roof Over Every Head I have tried to avoid the "shopping list" approach, simply mentioning some desirable 52 • DISSENT ways of implementing basic ideas...
...The 1960s liberals had "thrown money at 44 • DISSENT problems" and "crowded out" productive investment by irresponsible social spending...
...If he does that, he should be applauded as much as Richard Nixon was for his recognition of China...
...These rates tell us the number of people on average who are unemployed or underemployed in a given week...
...Some of the mechanisms for doing this are obvious...
...Not incidentally, that figure had been the official target of both the Kennedy and Johnson administrations (and the jobless rate was in fact below 4 percent from 1966 through 1969...
...TVA is supported not by tax funds but by the sale of power...
...But most important, the Keynesian theory, as put into practice by Roosevelt and Truman, and articulated as well as practiced by Kennedy and Johnson, provided a real-world rationale for decency...
...The Tri-State people in Pittsburgh argue for community-worker buy-outs and production for rebuilding the canals, roads and bridges of Pennsylvania, Ohio, and West Virginia...
...It left an American economy booby-trapped by potential crises and a society with the highest measure of inequality since we began to compute such statistics in 1947...
...Where the affluent actually invest to create new jobs, particularly in areas of high unemployment, they should get subsidies for doing something useful...
...The American right—as well as the center and not a few neoliberals— has come to accept the notion that the system can function properly — i.e...
...The New Deal was not a theory put into practice...
...In earlier times, when the United States was a nationally contained mass production economy with important, but minimal, ties to the world market, growth in GNP meant an increase in manufacturing jobs, i.e...
...Now, where the New Deal had linked social justice to economic efficiency, the new conservatism linked social meanness to economic efficiency...
...Today, that notion is a shorthand way of saying that multinational corporations should have the right to move freely around the globe, pitting South Korean auto and steel workers against the Americans, and vice versa, without any responsibility to anyone or anything...
...Two thirds of this redistribution of household income, the Census figures show, was accomplished during the first six years of the Reagan administration...
...Keep the maximum tax at 38.5 percent on yearly incomes of $200,000 or more, rather than lowering it to 28% as is now mandated in the 1986 law...
...One of the reasons why the organized portion of the work force has increased in Canada while it has plummeted in the United States is that the laws actually facilitate democratic worker choices north of the border while frustrating them here...
...Two years ago, Baker publicly recognized, at the International Monetary Fund meetings in South Korea, that it would be a disaster for the United States if its mainly Latin American debtors would actually repay their loans...
...Discouraged workers, those who want a job but do not believe they can find one, number one million...
...How could the new administration carry out this policy...
...In 1986, it cost $302 million to house 29,000 homeless in "welfare hotels...
...That latter goal might seem to be utopian, but it is actually a pragmatic requirement...
...A new administration should therefore radically expand initiatives begun in this area under Jimmy Carter and seek to make a co-op sector a growth area of sophisticated high tech production...
...There should be a national investment bank...
...What should be done to turn the country toward a progressive direction...
...Three examples: 1. The current law on Employee Stock Ownership programs (ESOP) can be used to promote a measure of real workers' control if the workers have shrewd lawyers capable of playing games with an antagonistic statute...
...In the final draft of the letter, the concept of full employment was retained but the specific numbers were omitted...
...And the consumption of the majority of the American people should once again be presented as an engine of growth for all...
...In the private sector, any corporation that actually does generate jobs should be handsomely rewarded through tax benefits...
...Fourth, as most neoliberals have realized —this is one of the reasons why they are neoliberals and not neoconservatives —that the changing structure of the world economy requires the radical upgrading of the American labor force...
...it possessed a modern and skilled work force and technical infrastructure...
...While the creation of part-time jobs has some positive aspects, since part-time work can provide flexibility in accommodating activities such as school and child care, problems arise when people who want full-time work are forced to accept part-time jobs...
...The economic "summits" are ceremonial pseudoevents designed to conceal the real bargaining, which, in any case, is limited to the rich...
...But some frank admission of our own limitations: From the bold commitment of the Taft-Ellender-Wagner Housing Act of 1949 and of the Johnson program almost twenty years later, we have yet to discover how to create livable cities with vibrant neighborhoods...
...The Swedish is the appropriate mode for organizing people at a time when the newly industrializing countries are capable of turning out huge runs of standard products with single-purpose machines while the advanced economies must focus on a specialized, quickchanging and sophisticated output...
...It would also create the economic possibility of a national welfare minimum, indexed to median income, an idea considered by the Senate in 1987 and rejected on Gramm-Rudman-Hollings grounds...
...A quick transition to "thirty-two for forty," solely financed by a 20-percent increase in wages, is impossible and undesirable...
...3. Harking back to the example of rural electrification, there is considerable evidence that the new technology can often be best organized in small-scale, cooperative production...
...boycotted that meeting...
...And that means that the Democratic party must, under circumstances not at all similar to the 1930s, fashion new links between justice and efficiency in a computerized, robotized international economy with a new occupational and division-of-labor structure—and even clumsy intimations of a new civilization...
...Twenty-one million workers or one out of every six workers was unemployed at some time during the year 1985...
...This does not mean, as charged by the foes of an open industrial policy—who are always the proponents of covert industrial policy—that we are proposing the centralized control of investment in the United States...
...The result was a profound ideological change in American life...
...On the contrary...
...It is true that Reagan's escalation of defense outlays almost exclusively benefited the highly educated —laser technology researchers, for instance —and did not create jobs for unemployed auto or steel workers, much less the ghetto WINTER • 1988 • 47 unemployed...
...The model here is not the Reconstruction Finance Corporation (RFC), created by Herbert Hoover and brilliantly directed, often for reactionary purposes, by one of the most conservative men in the New Deal, Jesse Jones...
...should have been at the very beginning...
...The social engineers and liberal elitists had imposed their priorities on the market...
...Taylorism" was one of the innovations of American mass production at the turn of the century and it was widely admired and imitated...
...Their dismantling —like decommissioning nuclear energy plants—could be as expensive as their initial deployment...
...In the short run I believe we should militantly propose to protect workers from the disastrous effects of international "free markets" understood as multinational playthings...
...These problems will almost certainly take more dramatic form in a recession within the next two or three years...
...This is why in Massachusetts, with one of the lowest rates of unemployment in the nation, people have been leaving the labor force...
...This was done on the grounds that it would promote savings, create an investmentled solution to the problems of the 1970s, and pay for itself by increasing the volume of tax revenues on an exploding GNP even though the tax rates were down for everyone but the poor...
...The "Marshall Plan" analogy usually used to justify this approach is indeed relevant—it proves that concessional loans or grants can "make money" in the donor country if that is where much of the money is spent...
...Acting out of a long-established tradition of manipulative industrial psychology, American management wants to increase production by promoting the appearance of worker participation...
...That means something other than the usual series of clichés crafted by speechwriters and tested "scientifically" in media markets...
...I cite this because it shows how the conservative conventional wisdom of the 1970s and 1980s has undermined our very belief in the possibility of a full-employment economy...
...One of the first priorities of a new administration would be to put planners to work on such suggestions...
...There followed the 1986 tax act, widely hyped as a simplification of the system (which is doubtful...
...I think we should avoid setting target percentages for Pentagon cuts—in the meat-ax tradition of Gramm-Rudman-Hollings—and focus on specific, massive reductions based on an analysis of what promotes genuine national security...
...the United States has lost around 50 percent of the capital goods market...
...After Reaganism, there may be a short interval of inertia, shared by both parties—or, one hopes, a resurgence of popular energy, social concern, political imagination...
...Richard Nixon was cynically overheating the economy to guarantee his reelection when he said, in 1971, "We are all Keynesians now...
...But in one area, I want to be more specific...
...it is a precondition of democratic economics...
...Jimmy Carter was pictured as a representative of an outlived conventional wisdom...
...and so on...
...For instance, the Tri-State Conference on Steel—a coalition of trade unionists, churches, counties, and municipalities—has been arguing that a locally run public authority could reindustrialize the devastated steel areas of Pennsylvania, West Virginia, and Ohio...
...government programs dealing with people who are, and services that should be, outside of the market economy...
...Thus, Cohen and Zysman rightly conclude, reindustrialization — the establishment of a competitive manufacturing industry in the United States—is the precondition for the growth of sophisticated, high-tech services...
...And this last point is particularly important when addressing the perfectly legitimate fears and concerns of the trade unionists whose lives and communities are currently being sacrificed in an unmanaged, multinational-dominated transition...
...For him the first order of business would have to be major cuts in social as well as defense spending...
...We need, not just a "shopping list" of programs, but a new public philosophy...
...All I can promise is that in what follows each specific proposal is an attempt to grope toward a new whole...
...At the same time, this country cannot forever avoid a national discussion of broad investment priorities if it is going to adapt to the new world economy...
...But I do think we should see as productive those spending programs that upgrade the work force and lower the cost of the custodial care of misery by providing the wages, day care, and medical insurance that would allow people to work their way out of poverty...
...Fifth, and related to the last point, the new Democratic administration should put the thirty-two hour week at forty hours' pay on the national agenda...
...At the same time, in New York—and in the big cities of America generally—there are handsome subsidies, direct and indirect, for the condominiums of the upper middle class and the rich and for corporate offices...
...We are experiencing record high levels of underemployment disguised as part-time employment, a development fueled by job growth in the service sector...
...Some were simply not funded and when the economy —or specific industries—turned down, companies either walked out on their obligations or tried to transfer them to the Federal Pension Benefit Guarantee Corporation...
...Since such a bank would be able to raise funds more cheaply than the private sector, it could make innovative loans for the development of new technology and jobs in areas that other banks would not touch...
...In the 1930s — when 90 percent of the rural communities in France and Germany were wired for electricity, and only 10.9 percent in the United States—the private utilities saw no market in the countryside and refused to move...
...Rather, we should soak the wasteful rich...
...The law should be changed so that it becomes an unambiguous instrument of democratic economics...
...There are two compelling arguments for such a policy...
...If they fulfilled the conditions of a trade surplus with the United States in order to pay back the banks, they would be totally lost to our exports...
...Whatever the rights and wrongs of the past, we must understand that there can be no democratic economics without a strong labor movement...
...So it is not enough to reduce the unemployment rate quantitatively...
...When that theory and practice broke down in the early 1970s—when productivity began to decline, inflation soared, America's domination of the world market eroded, real incomes stagnated, and Humpty Dumpty could not be put together again by the now standard fiscal and monetary tactics—the event provoked an ideological crisis within the Democratic party...
...For many analysts, that good news was a danger signal...
...The law postpones serious cuts until 1989, i.e...
...From 1979 to 1985 nearly 28 percent of all new jobs were part-time...
...Finally, let me confess frankly that neither I nor anyone else has worked out the new public philosophy that will make social decency once again a practical imperative...
...The 20 percent to 25 percent of chronic cases account for the bulk of the costs...
...That was, at best, a half truth that concealed the fact that the best-organized progressive forces in the country were the unions...
...They assume that there is some cheap and easy way to move welfare mothers into the paid-labor market...
...I leave the dream of a free lunch to the supply-siders who assured us that the 1981 giveaway to the rich would quickly pay for itself...
...It pictured the trend of shares of aggregate household income, measured in constant (1986) dollars, between 1970 and 1986...
...Here I will refer the reader to the article by Rashi Fein, in nearby pages, which offers some valuable ideas on this topic...
...Third, what is required is the creation of quality jobs in both the public and the private sectors...
...The argument against destabilizing and wasteful military spending must be based primarily on considerations of peace and genuine national security, not economics...
...in work relatively well paid and organized by unions...
...One of the most successful, and least known, New Deal programs was financed in that way...
...But the discussion did lead to a drive in some unions for democratizing control of those huge sums of money...
...Therefore government now had to subsidize and favor investment—which is to say, the income and wealth of upper-class investors and major corporations—at the expense of welfare programs...
...In Massachusetts in 1987, the unemployment rate is well within that 3 percent-4 percent range...
...How can a United States unable to create a competitive microelectronics industry present itself as the design expert for microelectronic plants...
...WINTER • 1988 • 49 But desirable as the policies just outlined are, they do not add up to a coherent national response to a structural crisis, even if they can be an important part of it...
...Do we have anything coherent to offer as an alternative to what is, and will soon appear to be, a failure...
...How can we offer measures to improve the lives of those in need under conditions of unprecedented governmental and balance-of-trade deficits, of mountains of consumer and international debt, and all the other constraints...
...The proposals that follow are predicated upon the success of the fullemployment and investment policies I have outlined...
...It did take many of the poor off the tax rolls—what the accompanying hosannas did not mention was that this merely returned them to the "utopia" in which they were living under Jimmy Carter prior to the shamefully redistributionist 1981 law...
...The Democratic doves must not accept a counterposition in which it seems that they care only for social programs while the hawks want to protect the nation...
...America is in the midst of a wrenching historical transformation...
...But suppose a Democrat, any Democrat, wins...
...I believe that, along with the revitalization of a competitive manufacturing sector, the next Democratic administration should place a major priority on building affordable housing...
...Similar prophecies can be expected now...
...In those countries, there is paternalistically (Japan) or democratically (Sweden) organized participation of the workers in the production process...
...a sum equal to the extra share of aggregate income for the top 20 percent...
...It has to maximize its potential for a high "value-added" production carried out by sophisticated and trained workers and—what we have dramatically lacked in recent years—by competent managers who have actually seen a production floor...
...The event brings both a complexity and an opportunity...
...Following a model pioneered under the TVA, the Rural Electrification Administration (REA) helped farmers start consumer-owned electrical cooperatives by providing them with low-interest loans...
...In fact, the spending had been (a) exceedingly modest and (b) largely effective, as I documented in my book, The Next Left...
...Policies that increase the likelihood of blowing up the planet do not meet this criterion...
...and under those conditions, mere money could do wonders...
...There are ten thousand problems to be worked out in developing this strategy—many of them are brilliantly handled in Global Challenge, the Socialist International report prepared under the leadership of Michael Manley of Jamaica, with the aid of Jan Pronk and Stuart Holland—and there is no point in minimizing them...
...neoliberals have been confessing ruefully to sins they never committed and thereby have blinded themselves to the fact that insofar as the liberal wisdom had indeed become problematic, it was mainly because of deep shifts within the world and American economies...
...Now I am not suggesting that the Democrats "raise taxes," a la Mondale's acceptance speech in 1984...
...With one important exception—rural electrification—the RFC under Jones was an effort to subsidize banks, railroads, and other corporations so as to insulate them from serious democratic control at a time when many Americans were demanding precisely that...
...The greatest victims of this failure are the black poor, who, as William Julius Wilson shows in his fine book The Truly Disadvantaged, have become more and more socially isolated in areas of high poverty...
...We propose to move ahead...
...That was, as the London Economist said at the time, a "quarter truth" since in most cases the workers' money was invested for them by the corporation or its agents...
...Europe in 54 • DISSENT the post-World War II era simply needed capital...
...During the past two years, Defense has decided that the development of manufacturing technology in semiconductors, and particularly in integrated circuits, is of such strategic importance that we must have a research consortium of government and private producers to create a competitive industry...
...I do not want to suggest that we can turn a quick profit on minimal decency...
...It could open the way to all kinds of experiments: sabbaticals for nonacademics, leave programs for further study, etc...
...That has been recognized by the Reagan administration, in the person of Treasury Secretary Baker...
...One function for the investment bank would be to sponsor such grass-roots initiatives...
...If the Republicans win, the most we can expect is a backing-away from the more extreme versions of Reaganism...
...The rates of the latter should go up, but not those of most people...
...As I write, President Reagan is moving toward the first arms reduction agreement since the beginning of the Cold War...
...The current crisis is international—and the solution to it must be international as well...
...We now know that, as the Government Accounting Office summed up the research in the winter of 1987, between 75 percent and 80 percent of "welfare mothers" want to work (and 50 percent leave the welfare system within two years or less...
...but some must be channeled into effective social investment...
...There is no question that some of the best-designed buy-outs have already worked, and that they have almost always been accompanied by sharp productivity gains...
...My answer borrows from Robert Kuttner: • Cap the mortgage interest deduction granted the owner of a median-priced house (in October 1987, the Democrats on the House Ways and 46 • DISSENT Means Committee proposed to limit deductions on mortgages of more than $1 million, a fearless act of neo-neo-liberalism...
...And the legal mandate for the bank would be to put its funds at the disposal of only those projects that will develop technology, productivity, and jobs...
...But a phased transition, financed by annual productivity increments in wages, could do the job...
...Fair Taxes A new progressive administration would return to one of the most hallowed populist principles of American society, even if honored almost exclusively in the breach: progressive taxation...
...If we capped the deductibility of mortgage interest, that would make condominiums less desirable to the rich...
...At one of his infrequent press conferences, Ronald Reagan denounced the insanity of such expenditures by arguing that the money should be used to build housing for the poor...
...We should aim, not simply at more engineers, but also at more intellectually enriched citizens...
...And yet, we must admit, we don't know how to design the communities we need...
...as well, a new Democratic administration should reverse that Reagan policy forthwith...
...I end with a dimension of this program which, had I followed a strict economic logic, A new Democratic administration must commit itself to global reflation through global justice...
...Complex weapons systems are not simply trucked to a dump somewhere...
...There should not be an "across the board" increase, but a selective increase carefully targeted to those best able to pay...
...MARK LEVINSON & LARRY MISHEL in Democratic Left, Sept.-Oct...
...Poverty and unemployment are quite expensive to maintain...
...Should the billions saved in this way all be applied to debt reduction...
...with precise arguments showing that Star Wars is immediately destabilizing and ultimately a trillion or so dollars of chimera...
...Second, it would be a step toward reshaping the working life...
...Impose a capital gains tax on inherited stock and, more broadly, an inheritance tax on the very wealthy which could not easily be avoided...
...Nor should this be done with a "soak the rich" appeal...
...Of all part-time jobs created since 1979, nearly three out of four were filled by workers wanting full-time jobs...
...The hawks must be defeated on their own grounds, i.e...
...Somehow, all the jerry-built measures of the 1930s cohered into a structural whole after 1945 and put a floor under mass consumption that facilitated the greatest expansion of mass production in history...
...LTV Steel's broken promises to its workers is a recent case in point...
...Therefore, it may be wrong to expect some quick and huge "peace dividend...
...During the 1970s, many Democrats made it impossible even to begin to respond to these problems when they basically accepted the Nixon (William Simon and Arthur Laffer) thesis about all that wild and ineffective social spending of the 1960s as the cause of our downfall...
...Our colleges are filled with students taking courses they do not particularly like, preparing for lives they do not want, all in the name of being pragmatic...
...Still, we know that funds spent in the South can stimulate the North since that is precisely what happened in 1982...
...No matter...
...It should provide public funds for grass-roots participation in the policy determination process, e.g., a subsidy to the Tii-State Conference so that it can make its case for revitalizing its region as part of a commitment to reindustrialization...
...But it is not necessary to have blueprints for utopia to begin to deal with the scandal of housing...
...In those years Taylorism was one reason why America's was the most advanced economy...
...2. Once upon a time, all liberals were pro-union...
...First, by insisting on the goal of quality full employment...
...And even that derisory gain would be impossible with the 20 percent to 25 percent of the problem cases that are the bulk of the welfare cost...
...where, as was often the case in recent years, they are shooting craps in the Casino Society, they should pay maximum rates...
...But the central priority —quality full employment under economic conditions as unprecedented as those of the Great Depression—is a sine qua non for the difficult years ahead...
...Support for union organization and labor law reform is not simply a "good cause" of the left...
...WINTER • 1988 • 45 In August 1987, the Bureau of the Census included a shocking chart in its annual preliminary report on the American income structure...
...But if American business has learned part of this lesson, the old, Taylorite notions die hard...
...It was all a fairy tale—as David Stockman and others learned (and concealed) in the first months of the new administration...
...A public philosophy as I use the phrase here means a workable economic program linked to, and realized by means of, a vision of social justice...
...There is no point in being a reluctant protectionist, speaking through gritted teeth as Mondale did in 1984...
...One result— sure to be exacerbated by the current government policy of fighting the threat of inflation with high interest rates—is that the young middle class is being priced out of the housing market...
...The complexity is that the initial consequence of such an agreement would be to increase military spending on both sides...
...It was the inspired improvisation of a man of political genius and decent social instincts who usually ignored the obsolete economic principles in which he had believed (on the one occasion when FDR was true to his theories and tried to balance the budget in 1936, he set off a steep recession...
...Its basic principle was to concentrate all decisions in management and to make the individual worker a cog in a scientifically designed work process...
...Their plight is not as extreme as that of the homeless, of course...
...It all came to a massive attack on the living standard of the bottom quintile of the society...
...In the public sector, there are enormous infrastructural needs that could be met by regionally controlled projects, e.g...
...the middle 60 percent went from 52.7 percent to 50.2 percent...
...In the intervening years, however, we have learned about other aspects of pensions...
...And that gets to a central outrage of our time: that housing poverty is even more pervasive than poverty defined in terms of food...
...However, a National Bureau of Economic Research study in 1986, which made very conservative estimates of the homeless population, also showed that two thirds of those with no place to live are in families without mental or emotional disabilities...
...I did not follow that logic because this is, in some ways, the most radical of my proposals and it was important to define a context before presenting it...
...It would not be able to require pension funds to buy its paper, but it would be well situated to appeal to that huge pool of capital because of the federal guarantees...
...This is clearly not the case, particularly in the poorest of the poor nations, but even in relatively advanced areas like Latin America...
...The president seemed unaware that this is now forbidden by law...
...The U.S...
...That last act of virtue was, however, canceled out by a reduction in the tdp tax rates, which more than compensated the affluent for their lost deductions...
...Ironically, it was an overstated conservative theory that focused attention on the pension system...
...Or, more precisely, a qualitatively defined full employment...
...Involuntary part-time" workers, those who work part time but want full-time work, number 5.2 million...
...They do not cost as much as the conservatives claim, mainly because our welfare state has become meaner under Reagan (only a third of the jobless now get benefits, with Virginia helping only 15 percent of those out of work...
...Right now, what hampers programs to deal with this situation is that, as Larry Mishel calculates with the Bureau of Labor Statistics' own data, low-paying jobs have been increasing at a faster rate than the middle and top openings since 1973 and particularly since 1982...
...We are now in the midst of a change as profound as that of one hundred years ago when laissez-faire gave way to monopoly and state capitalism...
...The result, in the analysis of Richard Musgrave, the dean of publicfinance experts, was a system somewhat more regressive than the one it replaced...
...But to do that, as the Massachusetts experience proves, requires that there be jobs with medical benefits and day care, jobs that pay significantly more than AFDC and food stamps...
...Nothing I have said here is etched in granite, though I think these are among the progressive policies and programs that we need over the next several years...
...The initiative is called Sematech and it would require an investment of $600 million in federal funds...
...A new Democratic administration should, I believe, say this to the world: "Just as, in the 1930s, legislation demanded by trade unionists, liberals, and socialists imposed a modicum of responsibility upon national corporations and socialized a floor of consumption which then became the basis of the greatest boom in history, so now the task in the global economy is to subject multinational corporations to the rule of a new international law and to bring about justice for the people of the South, creating a great new engine of growth for the prosperity of the North and the South...
...56 • DISSENT...
...And for once, Congress imposed a social conscience on the RFC and required it to prefer nonprofits to profits...
...The Department of Defense, our premier source of open, and often disastrous, industrial policy, understands this point...
...Tax policy should be presented not as a way of punishing those on the top, but of promoting economic growth through greater equity...
...One way of doing tilt would be through democratic policies of social investment...
...In fact, Washington already bankrolls semiconductor R&D more generously than Tokyo, spending $400 to $500 million a year...
...To deal with the problem of joblessness today it is practically—as well as morally—necessary to seek a qualitative growth in work...
...That accomplishment also provided the Republicans with a public philosophy—the conservative variant of a basically liberal strategy...
...I emphasize this since it is likely that admirers of the RFC, like Felix Rohatyn, will play a significant role in a Democratic administration and I want to sharply differentiate my approach from their technocratic planning...
...Social Investment If the savings from progressive tax and rational defense policies were simply used to reduce the individual taxes of the majority of Americans now paying a disproportionate share of the tax cost, that would make us "more equal" and stimulate the economy but it would not necessarily—nor even be likely to—help the United States to fashion a structural response to the current transformation of the world economy...
...The scheme worked spectacularly well...
...Full employment would, however, make it relatively easy to deal with the 80 percent of the welfare mothers who are ready and able to work, and to finance the training of the 20 percent who are not...
...This year marks the fiftieth anniversary of the Forty-Hour Week, which, conservatives and businessmen confidently predicted in 1938, would wreck the economy...
...1987 WINTER • 1988 • 55 At the same time, it becomes clearer every day that the internationalization of the world economy requires, not simply North-South cooperation, but North-North planning as well...
...If some of those savings from progressive taxation were invested in education, training and job-generating programs, there would be a significant reduction in the public cost of misery...
...That may take more doing than some imagine, but it is the precondition of just about everything else: welfare reform, debt reduction, international competitiveness, etc...
...But either we come up with a program for a managed transition to a new world division of labor that creates justice for masses of people in both the South and the North, or we face a new round of "beggar thy neighbor" policies under the aegis of multinationals and their captive governments...
...That has tended to compound all of their problems: unemployment, crime, education, and the like...
...Jobs, Jobs, Jobs Everything that has been said before points to a central priority for the next Democratic administration: full employment...
...In The Unseen Revolution, Peter Drucker argued from the fact that pension funds owned 35 percent of corporate equity in 1976 to the conclusion that the workers, as nominal owners of the funds, were already in control of the commanding heights of the economy...
...All of these practices, and the overall question of how to formulate a retirement policy that integrates both Social Security and private plans, should be discussed in the near future...
...the creation of technologically advanced, democratically structured railroad authorities with an overall commitment to mass transportation...
...Current "workfare" proposals are, I believe, a delusion...
...Here, too, the first aim should be effective disarmament—moving toward eventual abolition of nuclear weapons and significant reduction in conventional arms...
...That changed after World War II when some on the left saw labor as a bastion of racism, sexism, and Cold War militarism...
...One usable example would be the New Deal and its successor liberalisms...
...But we should also continue the extremely WINTER • 1988 • 53 difficult search, not simply for a housing policy, but for the theory and practice of genuine human community under the conditions of the twenty-first century...
...This could be a source of jobs and a way of meeting a critical need...
...Such was the litany of "supply-side" economics...
...In short, progressive taxation and progressive social investments could promote equity and productivity...
...The Republicans had an explanation for the crisis of the 1970s, and to many Americans it seemed as plausible as the underconsumptionist theories of the Great Depression in their day...
...But there is, in the middle run, a real opportunity in the big-power peace negotiations, and the Reagan administration, even while acting with uncharacteristic sensitivity in this area, shamelessly rejected one of the best potential consequences of its own actions...
...In 1980, Ronald Reagan was the "radical" candidate, the man demanding fundamental new departures...
...Capitalism had created "socialism" while no one noticed...
...The United States would not even discuss the notion, explored at a special UN Conference in 1987, that eventual savings from disarmament be partly targeted for Third World development...
Vol. 35 • January 1988 • No. 1
