Six Rebuttals to the Argument that Congress or Fannie and Freddie Caused the Crisis

Nov 3, 2011Mike Konczal

Here are some counter arguments the next time someone claims the government caused the crash.

Sigh. Mayor Bloomberg:

Here are some counter arguments the next time someone claims the government caused the crash.

Sigh. Mayor Bloomberg:

It was not the banks that created the mortgage crisis. It was, plain and simple, Congress, who forced everybody to go and give mortgages to people who were on the cusp... But they were the ones who pushed Fannie and Freddie to make a bunch of loans that were imprudent, if you will. They were the ones that pushed the banks to loan to everybody.

It seems there are people who can't accept that some markets, particularly financial ones, are disastrous when completely unregulated -- and thus find any far-fetched excuse to blame the government instead. Since this line of argument continues to pop up, how should one respond to the idea that Congress and Fannie Mae/Freddie Mac caused the housing crisis? Here are six facts to back you up:

1. Private markets caused the shady mortgage boom: The first thing to point out is that the both the subprime mortgage boom and the subsequent crash are very much concentrated in the private market, especially the private label securitization channel (PLS) market. The Government-Sponsored Entities (GSEs, or Fannie and Freddie) were not behind them. The fly-by-night lending boom, slicing and dicing mortgage bonds, derivatives and CDOs, and all the other shadiness of the mortgage market in the 2000s were Wall Street creations, and they drove all those risky mortgages.

Here's some data to back that up: "More than 84 percent of the subprime mortgages in 2006 were issued by private lending institutions... Private firms made nearly 83 percent of the subprime loans to low- and moderate-income borrowers that year."

As Center For American Progress's David Min pointed out to me, the timing doesn't work at all: "But from 2002-2005, [GSEs] saw a fairly precipitous drop in market share, going from about 50% to just under 30% of all mortgage originations. Conversely, private label securitization [PLS] shot up from about 10% to about 40% over the same period. This is, to state the obvious, a very radical shift in mortgage originations that overlapped neatly with the origination of the most toxic home loans."

2. The government's affordability mission didn't cause the crisis: The next thing to mention is that the "affordability goals" of the GSEs, as well as the Community Reinvestment Act (CRA), didn't cause the problems. Randy Krozner summarized one of the better studies on this so far, finding that "the very small share of all higher-priced loan originations that can reasonably be attributed to the CRA makes it hard to imagine how this law could have contributed in any meaningful way to the current subprime crisis." The CRA wasn't nearly big enough to cause these problems.

I'd recommend checking out "A Closer Look at Fannie Mae and Freddie Mac: What We Know, What We Think We Know and What We Don't Know" by Jason Thomas and Robert Van Order for more on the GSEs' goals, which, in addition to explaining how their affordability mission is a distraction, argues that subprime loans were only 5 percent of the GSEs' losses. The GSEs also bought the highly rated tranches of mortgage bonds, for which there was already a ton of demand.

3. There is a lot of research to back this up and little against it: This is not exactly an obscure corner of the wonk world -- it is one of the most studied capital markets in the world. What has other research found on this matter? From Min:

Did Fannie and Freddie buy high-risk mortgage-backed securities? Yes. But they did not buy enough of them to be blamed for the mortgage crisis. Highly respected analysts who have looked at these data in much greater detail than Wallison, Pinto, or myself, including the nonpartisan Government Accountability Office, the Harvard Joint Center for Housing Studies, the Financial Crisis Inquiry Commission majority, the Federal Housing Finance Agency, and virtually all academics, including the University of North Carolina, Glaeser et al at Harvard, and the St. Louis Federal Reserve, have all rejected the Wallison/Pinto argument that federal affordable housing policies were responsible for the proliferation of actual high-risk mortgages over the past decade.

The other side has virtually no research conducted that explains their argument, with one exception that I'll cover below.

4. Conservatives sang a different tune before the crash: Conservative think tanks spent the 2000s saying the exact opposite of what they are saying now and the opposite of what Bloomberg said above. They argued that the CRA and the GSEs were getting in the way of getting risky subprime mortgages to risky subprime borrowers.

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My personal favorite is Cato's "Should CRA Stand for 'Community Redundancy Act?'" from 2000 (here's a write-up by James Kwak), which argues a position amplified in its 2003 Handbook for Congress financial deregulation chapter: "by increasing the costs to banks of doing business in distressed communities, the CRA makes banks likely to deny credit to marginal borrowers that would qualify for credit if costs were not so high." Replace "marginal" with Bloomberg's "on the cusp" and you get the same idea.

Bill Black went through what AEI said about the GSEs during the 2000s and it is the same thing -- that they were blocking subprime loans from being made. In the words of Peter Wallison in 2004: "In recent years, study after study has shown that Fannie Mae and Freddie Mac are failing to do even as much as banks and S&Ls in providing financing for affordable housing, including minority and low income housing."

5. Expanding the subprime loan category to say GSEs had more exposure makes no sense: Some argue that the GSEs had huge subprime exposure if you create a new category that supposedly represents the risks of subprime more accurately. This new "high-risk" category is associated with a consultant to AEI named Ed Pinto, and his analysis deliberately blurs the wording on "high-risk" and subprime in much of his writings. David Min broke down the numbers, and I wrote about it here. Here's a graphic from Min's follow-up work, addressing criticism:

min_updated

Even this "high risk" category isn't risky compared to subprime and it looks like the national average. When you divide it by private label, the numbers are even worse. Private label loans "have defaulted at over 6x the rate of GSE loans, as well as the fact that private label securitization is responsible for 42% of all delinquencies despite accounting for only 13% of all outstanding loans (as compared to the GSEs being responsible for 22% of all delinquencies despite accounting for 57% of all outstanding loans)." The issue isn't this fake "high risk" category, it is subprime and private label origination.

The Financial Crisis Inquiry Commission (FCIC) panel looked carefully at this argument and also ended up shredding it. So even those who blame the GSEs can't get the numbers to work when they make up categories.

6. Even some Republicans don't agree with this argument: The three Republicans on the FCIC panel rejected the "blame the GSEs/Congress" approach to explaining the crisis in their minority report. Indeed, they, and most conservatives who know this is a dead end, tend to take a "it's a whole lot of things, hoocoodanode?" approach.

Peter Wallison blamed the GSEs when he served as the fourth Republican on the FCIC panel. What did the other three Republicans make of his argument? Check out these released FCIC emails from the GOP members. They are really fun, because you can see the other Republicans doing damage control and debating whether Wallison and Pinto were on the take for making this argument -- because the argument makes no sense when looking at the data.

There are lots of great quotes: "Re: peter, it seems that if you get pinto on your side, peter can't complain. But is peter thinking idependently [sic] or is he just a parrot for pinto?", "I can't tell re: who is the leader and who is the follower," "Maybe this email is reaching you too late but I think wmt [William M. Thomas] is going to push to find out if pinto is being paid by anyone." And then there's the infamous event where Wallison emailed his fellow GOP member: "It's very important, I think, that what we say in our separate statements not undermine the ability of the new House GOP to modify or repeal Dodd-Frank."

The GSEs had a serious corruption problem and were flawed in design -- Jeff Madrick and Frank Partnoy had a good column about the GSEs in the NYRB recently that you should check out about all this -- but they were not the culprits of the bubble.

Mike Konczal is a Fellow at the Roosevelt Institute.

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How Banks Take a Big Bite Out of Government Benefits

Nov 2, 2011Bryce Covert

What might look like a win-win for state governments and beneficiaries only serves to harm them -- and send profits to some of the largest banks.

What might look like a win-win for state governments and beneficiaries only serves to harm them -- and send profits to some of the largest banks.

Consumers witnessed a victory this week when Bank of America backed off its threat to institute a $5 fee for using a debit card, following a public outcry that led most of the other big banks to foreswear similar moves. But not everyone has been spared debit card fees. As Janell Ross pointed out at The Huffington Post yesterday, banks are making nice profits from doling out government benefits through prepaid debit cards.

It's obvious that in a sour economy like ours, usage of programs like unemployment benefits, food stamps, and cash assistance will skyrocket. It used to be that most of these programs distributed actual money to beneficiaries. Food stamps were quite literally stamps. These days, however, things have been 'modernized' so that many benefits come through prepaid debit cards administered by banks like JP Morgan, Bank of America, and other behemoths.

So what's the problem? Doesn't this just make it more convenient for users? Isn't plastic easier than cash?

The first problem is that users, who are clearly already strapped for cash if they're turning to government benefits, are finding themselves hit with fees for using the cards. As an example, Ross points to one analysis that California families will pay over $16 million in surcharges to access benefits this year. While there has been a lot of action around limiting swipe fees and much outrage at charging customers to use regular debit cards, prepaid debit cards are a whole other animal. Even consumers using them to access their privately earned money may be charged for buying the cards, swiping the cards, and withdrawing money. And people getting benefits through them aren't any exception: they face charges for withdrawing money too many times, using an out-of-network ATM, drawing more money than is in the account, leaving the card inactive for a certain period of time, and some even charge per purchase.

Secondly, big banks are making a tidy profit by acting as middlemen for what should be publicly provided services. In just three months, from July and September, Ross reports that U.S. Bancorp, which provides unemployment benefit debit cards, made $357 million in revenue in the division that handles the cards. That amount is more than one-fourth of its total revenue. I previously reported that JP Morgan made $5.47 billion in net revenue for most of last year in the division that handles food stamp cards, and it was up two percent is the last three months of the year. The head of the division himself has said, "Volumes have gone through the roof in the last couple of years... This business is a very important business to JPMorgan in terms of its size and scale."

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And while banks only make money off of unemployment benefits by charging fees to use cards, they are paid directly by state governments to administer food stamps. Florida, for example, paid JP Morgan $50 million over the last three years to administer the program. The bank is paid for each case it handles, meaning its profits rise as the rolls of those using food stamps rise (and numbers are really rising -- they were up to 43.6 million Americans in February).

And there is a third, larger problem: it's another iteration of what Suzanne Mettler has nicely termed the "submerged state." The submerged state encompasses government policies that have become more and more skewed toward hidden delivery mechanisms: from student loans subsidized by the government but offered by private banks, to tax incentives and tax breaks to aid people and encourage shared values, to benefits and services that are contracted out to private players. The direct role of the government in all three of these is obscured or completely invisible to the average American.

This is problematic in two ways. The first is that, as pointed out above, hefty profits accrue to the private sector when it can exploit the gap between the government and its beneficiaries. This isn't equally shared across the entire economy, however; most of the profits go to the FIRE sector, which Mettler points out have "outpaced growth in other sectors of the American economy... not from 'market forces' alone but rather from their interplay with the hidden policies that promoted their growth and heaped extra benefits on them." More profits mean more money to spend on lobbying to protect the very policies that allow them to profit off of these services. Rinse, wash, repeat.

It also affects political engagement. Mettler is famous among a certain subset of the blogosphere for a chart showing that majorities of people surveyed who had in fact benefitted from government programs -- many of them belonging to the submerged state -- said they had never "used a government social program." This is the larger danger of allowing the private sector to carry out government programs: "polices of the submerged state obscure the role of the government and exaggerate that of the market, leaving citizens unaware of how power operates, unable to form meaningful opinions, and incapable, therefore, of voicing their views accordingly," Mettler writes. It will only lead to a less engaged, and therefore less democratic, electorate.

Contracting banks out to provide benefits through plastic cards may at first glance seem like a win -- governments are spared the hassle of delivery, beneficiaries are spared the hassle of paying with cash -- but in the end it only benefits the banks.

Bryce Covert is Editor of New Deal 2.0.

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Police are the 99%. Will They Ever Join the Protests?

Oct 25, 2011Bryce Covert

They may never jump the barricades, but after their pay, benefits, and job security has been put on the line, they may say 'enough is enough.'

They may never jump the barricades, but after their pay, benefits, and job security has been put on the line, they may say 'enough is enough.'

You could make an argument that clashes with police turned the media narrative about Occupy Wall Street from a rabble of confused hippies to a force to be reckoned with. Nate Silver at the New York Times ran the numbers and saw significant spikes in coverage after every run-in, most significantly when innocent protesters were hit with pepper spray and when police were said to lead protesters onto the Brooklyn Bridge only to arrest them in droves. Tension between the NYPD -- and police departments in other cities as the protests have spread -- and protesters continues to run high.

Which is why news that police in Albany refused to arrest protesters, even as the mayor urged them to do so, was so extraordinary. This is the first time that the police haven't simply obeyed orders to round up, pen in, and otherwise intimidate peaceful protesters.

Some (admittedly including myself) have been hoping that the police will cross the barricades and join the protests as soldiers in Tahrir Square did. The idea doesn't always seem so far-fetched. After all, policemen are solidly in the 99%. The median annual wage for a police officer is $55,620; the Wall Street Journal's percentage calculator (which, it should be noted, gives a very limited picture, not taking into account geography, family size, etc.) puts that salary in the 59th percentile. Even the 1% of the police force (okay, the top 10 percent, as the Bureau of Labor Statistics doesn't break it down into that much detail) only falls into the 74th percentile at $83,510 a year.

They're also on the frontlines of post-recession state and city budget cuts. A bunch of states, including New York, are pushing their budget crunches onto cities, who in turn are scrambling to find places to slim down. And many have turned to benefits, pay, and jobs for public workers who had nothing to do with causing the budget holes. After New York Governor Andrew Cuomo decided not to restore $302 million in aid to New York City, Mayor Bloomberg has asked city agencies to find $2 billion in cuts. And he's warned before that the NYPD may have to shrink because of the tight budget. "We cannot afford the size [of the] police force, fire department, of any of these agencies if we have a $400 million deficit," he said in April.

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The police force knows that lawmakers have set their sights on it. In fact, when the police in Albany refused to arrest protesters, an official brought this very subject up. "We don't have those resources, and these people were not causing trouble," he said.

This sentiment, of being slimmed down, stretched thin, and now asked to do even more in dealing with the protests, came through when Josh Harkinson of Mother Jones talked to some officers in New York. One officer, Harkinson reports, has

been posted to Occupy Wall Street since Day One, and all the mandatory overtime is wearing him down. "I'm really working hard for this," he says. "I'm getting yelled at, I'm getting cursed out; I'd rather be at home with my family right now." ... [He] has seen his retirement fund cut in half by a declining stock market, from $40,000 to $20,000. He worries that his kids won't be able to afford college or find jobs. And he's frustrated about not being able to talk about it openly.

While policemen are being asked to work harder to curb the protests, their benefits, pay, and even job security are all being put at risk.

This fantasy that I harbor that the police will jump over their own lines and join the Occupiers may never actually come to pass. Allison Kilkenny is very doubtful. "I've just seen cops violently collide with protesters too many times to imagine a world where the folks in blue and activists join hands in a circle and together skip under a rainbow," she writes. And she may very well be right. As she points out, there will always be a cop, like Anthony Bologna, who is unnecessarily vicious, and there will always be a protester who yells slurs at police. But maybe what happened in Albany is the compromise. Given their decreased resources and upped hours, police may simply refuse to enforce unnecessary crackdowns. They were already stretched to the limit because of tight budgets, and now they're being asked to do even more to curb the protests. No wonder the police in Albany felt enough was enough.

Bryce Covert is Editor of New Deal 2.0.

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Occupy Wall Street Puts a Focus on the Need for Political Empowerment

Oct 25, 2011Bryce Covert

sabeel-rahmanI got a chance to speak with Sabeel Rahman, a Fellow at the Roosevelt Institute who is working on a project outlining progressive values and goals.

sabeel-rahmanI got a chance to speak with Sabeel Rahman, a Fellow at the Roosevelt Institute who is working on a project outlining progressive values and goals. We talked about how the Occupy Wall Street protests represent some important forms of political engagement, how progressives can best interact with the movement, and what its lasting impact on our political discourse may be.

Bryce Covert: Now that Occupy Wall Street has been building for a few weeks, what are your initial thoughts on the movement?

Sabeel Rahman: I think that it's potentially an important event in terms of the political discourse. Initially there was a lot of concern about whether they had specific demands, but that isn't really a concern of mine. I think that the value of a movement like this is to put issues on the table and to get people thinking and talking about them. They've raised issues such as inequality, political accountability, and what it means to be a meaningful part of the political process. They are creating a sense that ordinary citizens need to become bigger drivers of public policy and that our predicament is not just an economic one. It's also about political disempowerment.

Whether or not these individuals at the protest are thinking about these exact issues or whether they have a nuanced view of public policy or politics doesn't matter. The real value is that you and I are talking about it and everywhere I go people are talking about it. They are changing the popular discourse about where we are as a country.

The specific policy proposals might come later. They may or may not come from Occupy Wall Street protesters themselves; they might come from sympathetic groups, unions, or advocacy groups. That takes time, but for now there has already been a significant impact.

BC: You've been doing work on the progressive movement and the need for it to become more decentralized and less electorally focused, as it used to be. How does this movement fit in? Is it a manifestation of this?

SR: Occupy Wall Street is interesting in its implications for what politics should look like or what democracy actually is. On the one hand, I think it's a valuable reminder that social change comes from a lot of different sectors. Elections are a big part of how we change real things in our society, but before we can do that effectively we need to change people's ideas and the distribution of political power. Physically occupying space in the city is itself an expression of another form of political power aside from electoral mobilization that instead harnesses the power of protest and engagement with public spaces.

In that sense it's encouraging. But on the other hand, Occupy Wall Street is also a sign of how ineffective our current forms of democratic engagement actually are. If you're worried about all the things that the "We Are The 99%" Tumblr is expressing, but for whatever reason you are hesitant to join a march or a protest, how do you as a citizen express concerns or be a part of changing the conversation? And how can ordinary citizens continue to have a meaningful political voice on an ongoing basis, even after these particular protests dissipate? If we are to be an effective democracy, we need a lot more than elections and protest politics. We need institutions that can engage regular people who are activated by the Occupy movement. We need institutions where they can be participants in the project of governance. That means something that is less institutionalized than elections but more institutionalized than protest politics -- something that can maintain political participation between elections and between moments of protest. Traditionally, political parties or unions played a major role in engaging citizens in this way, but the decline of unions and the shifts in internal party politics make them less effective as channels for ordinary citizens' meaningful participation. We need something more than that, other institutions where people can have an impact. For example, how might we tap some of this energy to reengage with state and local governments? If we had participatory budgeting, which some New York and Chicago city council districts are experimenting with, that would be the kind of institution where more ordinary people could engage regularly and express their views. We don't have those systems yet, but we could really easily and if we did the prospect for progressive social change would be much stronger.

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BC: How do Occupy Wall Street's organizing methods specifically fit into your call for a new form of progressive organizing?

SR: I've been watching coverage from afar and haven't experienced it firsthand. But on paper, from what I've seen it does seem like there is a really compelling form of internal, democratic governance within the movement itself. It has a daily general assembly where people can put items on the agenda with open attendance and rules of procedure.

The call and response method for guest speakers at the assemblies is also very interesting. It underscores for me that one of the core beliefs of the movement is this conviction that people ought to be directly involved in politics. The difference between a speaker talking at an audience through a megaphone as opposed to having the other people in the assembly be part of the conversation by relaying messages back and forth and engaging in it in a more direct way is the difference between being a spectator and an active participant in a conversation. This is exactly what I think at its best this movement could provoke us to think about: the difference between us being passive spectator citizens, watching everything play out as the economy collapses around us, compared with being active participants in trying to change the direction of the country.

BC: How do you think progressive activists and politicians should best engage with the movement?

SR: I think that's a really, really good question. It's hard to know, but it is a question that progressives must think about seriously. It is important for progressives who agree with the general thrust of the protest -- themes of inequality, accountability, and self-rule -- to actually engage with them, whether or not they join. Before progressives start talking about ways that they should do things better or ways to tap or co-opt their energy, before playing savior, progressives should at least engage with them, get a sense of what's going on, who are they as individuals, and what is really happening.

One approach would be for established progressive groups to bring some kind of organizational muscle to some of these ideas. For example, state, local, and congressional lawmakers can be generally unresponsive, but as a whole they may respond if constituents start calling them and knocking on their doors. If you are an established progressive and you know who the key policymakers are on certain issues and how to get a hold of them, maybe that's the next step, to channel some ideas and energy into forms that would put pressure on specific policymakers and link it with specific policy proposals. This shouldn't supplant the protests at all. The goal is to find some way in good faith to link up with the protests and to make the most of the division of labor. It's not to say they're amateurs who should be supplanted by professionals. The protesters bring something to the table, as do the professional advocacy groups.

BC: How might this shape future progressive organizing and the movement itself? Or not?

SR: It may not have a lasting impact. I think a lot depends now on what more mainstream or established progressives, activists, and groups do next, as well as what happens among the citizens who aren't part of protests but are sympathetic. One possible outcome is for established progressive advocacy groups, policymakers, and politicians to engage with the issues and languages raised by the protests.  They could start running with concerns about inequality, unaccountability, and unemployment. Lots of progressives have been doing this to varying degrees already, but the protests could help catalyze a broader shift in discourse and agenda-setting.

Another possible outcome is citizens not involved with the protests engaging with the ideas raised by the protesters and starting to think differently about their own role as political actors or how they should approach the upcoming elections. And if these two mechanisms for impact -- progressive groups and other sympathetic citizens -- link up with one another, then there could be a genuinely powerful shift in the political landscape. The biggest imperative for progressives is to engage seriously with this event and these ideas. That means either experiencing it directly or at least using this as an opportunity for introspection about what progressivism is and what it ought to be.

BC: What would be the best long-term change to come out of this movement?

SR: First: a shift in the broader political conversation. If the protest changes the discourse so that it engages more directly with issues of inequality, political accountability, unemployment, and the economic crisis, then a lot of important policy changes become more possible.

Second: a longer-term focus on building channels for participation and political engagement. If the protests inspire us to think seriously about institutional reforms along with the substantive issues of economic policy, then that might open up another form of lasting change.  Democracy is not just an abstract notion of wanting to participate or be involved; often when we talk about improving democracy we view it as a separate concern independent of other substantive policy issues. But what is really compelling about the protest and what progressives should pick up on is that the substantive issues -- inequality, the economy, post-Dodd-Frank financial regulation -- are intimately bound up in questions of political power and empowerment. And combining the two dimensions makes for a very powerful political argument: that current policies are on the merits flawed, but that the way to change things isn't simply by replacing one set of elites with others. Rather, it's about shifting political power in a way that makes government more accountable and pushes it to respond to the kinds of things people are really worried about.

At its best that's what Obama's 2008 campaign rhetoric was really about. He argued that we have these problems in our country, and they are bound up with the idea that ordinary people need to be empowered and engaged in politics. That's what made his campaign so compelling, but it was a promise as yet unrealized. Democratic empowerment is part and parcel with having a more just economy; the two go together. And that is the best argument progressives can make for social change.

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David Rothkopf: Today's Capitalism is the "Great American Inequality Machine"

Oct 24, 2011

In the latest installment of the Next American Economy, Senior Fellow Bo Cutter's guest David Rothkopf seems to channel Occupy Wall Street's frustration. Pointing out many of the grievances of the 99%, he asks the tough questions of our economic system: "Why do we have a society, what is it we're trying to do? Do we want to have the biggest economy? Do we want to have the best place to live? Do we think equality matters?" The answers that our current structure would offer are disheartening. "We've lost sight of the purpose of organizing ourselves into a society," he says. "It's not about the abstract creation of wealth." Watch an excerpt of his talk:

In the latest installment of the Next American Economy, Senior Fellow Bo Cutter's guest David Rothkopf seems to channel Occupy Wall Street's frustration. Pointing out many of the grievances of the 99%, he asks the tough questions of our economic system: "Why do we have a society, what is it we're trying to do? Do we want to have the biggest economy? Do we want to have the best place to live? Do we think equality matters?" The answers that our current structure would offer are disheartening. "We've lost sight of the purpose of organizing ourselves into a society," he says. "It's not about the abstract creation of wealth." Watch an excerpt of his talk:

We tend to pride ourselves on our system, but the knee-jerk worship of capitalism can lose sight of our values. "I think it says something about American society that the biggest insult you can offer to somebody in political life is to accuse them of being a socialist, which is a system of belief organized around society as the central element," Rothkopf points out, "and the biggest compliment you can offer somebody is to be a capitalist, which implies a system of belief organized around money."

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In a later one-on-one interview with Bo Cutter, he goes further. "I would define myself as a capitalist, but I don't think the underlying principle that society ought to be the central focus of the way that we order ourselves is one that we ought to cast aside," he says. And as he points out, "We're an outlier among the five or six different forms of competing capitalism" in the world by lacking this focus on society. Watch the interview:

So if we're not good at building infrastructure or taking care of the vulnerable, what is the output of the American capitalist system? "If you look at the results, if you look at what we're producing, you would come to the conclusion that we've created what you might call the great American inequality machine," he says. It is high time for a robust debate about what we really want our economy to produce without throwing 'socialist' around as a dirty word.

Watch his full lecture:

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The Kids Camping on Wall Street Are The Capitalists, Not the People in the Buildings

Oct 21, 2011Bruce Judson

occupy-journalWhich group is still abiding by the important capitalist principles of accountability, competitiveness, and equal justice?

occupy-journalWhich group is still abiding by the important capitalist principles of accountability, competitiveness, and equal justice?

Today, some of the leading capitalists in the nation are located on Wall Street. Sadly, it is the protesters outside who are literally on the street who embody the ideal rewards and responsibilities of capitalism, not the financiers who occupy the buildings.

This is the first in a short series of articles that explores the nature of a well-functioning capitalist system and how this system is now applied to the occupants of the buildings on Wall Street and those who are, quite literally, on The Street.

Capitalism is not an abstract ideal. It is as real as any market or currency. And it is the organizing principle that has, for over two centuries, powered the strength and resilience of America.

As we think about capitalism, it's also useful to make an important distinction: It's not what you say, it's what you do. You may espouse capitalist ideals, but if you oppose responsibility, dishonor contracts, oppose competition, and embrace government subsidies, you are not a practicing capitalist.

For capitalism to work, there are several fundamental requirements: accountability, equal justice under the law, a clearly articulated purpose (and accompanying cost) for government subsidies of a specialized class of citizens, competition, and a relationship between the creation of profits and the creation of real wealth for the larger society.

Many of the protestors in New York City and around the country are jobless college graduates. The majority in all likelihood financed their education through federally subsidized student loans. A central characteristic of today's generation of student loans is that, unlike most debts, they cannot automatically be discharged in bankruptcy. As a consequence, they are one of the few expenses in our society for which an individual is likely to be accountable throughout his life. As a nation, we teach our most promising youth, from the age of 18 on, the importance of accountability. We use the federal government to subsidize an investment in human capital. In return, the beneficiaries enter into a lifetime of responsibility and accountability. It is a sacred contract. It is arguably one of the best, and potentially harshest, lessons of accountability associated with capitalism in our society today.

Now, let's contrast this high accountability with the behavior that occurred in our financial sector. When our largest financial firms created havoc in the U.S. economy through undisputed greed, mismanagement, and extreme risk, some important things happened. First, the government bailed the companies out without demanding any substantial change in behavior, and then the individuals responsible were not held accountable through civil or criminal law. As a result, the people who brought the nation close to the brink of economic collapse and caused untold pain and suffering -- which continues to this day -- returned after a brief hiatus to record levels of compensation. Individuals who earned tens of millions of dollars continue to earn these extraordinary sums. They have never been called to account for their deeds.

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Can this be right? What about the many civil settlements negotiated by the federal government and the SEC? I would argue that, in light of the extraordinary profits these firms and individuals generate, such settlements are now viewed as a "cost of doing business." They appear to have almost no impact on the behavior or attitude of the nation's financiers.

Now let's contrast the kids on the street with the employees of The Street. The kids are accountable for their debts. They know it, and they simply want jobs so they can fulfill their civic responsibilities. In contrast, the occupants of the building on Wall Street act as if the rules of accountability -- which are central to a viable system of capitalism -- apply to everyone except them. Instead, many of the Wall Street elite have developed a dangerous sense of entitlement.

I would argue that in a true, competitive capitalist society, the idea of entitlement is anathema to all participants. It suggests that rewards are disbursed because of who people are, as opposed to the tangible wealth they create for the nation.

It's worth noting that old timers on Wall Street may still remember that until 1970 the New York Stock exchange mandated that investment banks be organized as some of the most accountable businesses in existence. Prior to going public, in the late 20th century Wall Street firms were organized as old-fashioned partnerships. The central idea of these partnerships was that every partner was fully liable for all of the debts incurred by the firm. If the partnership could not meet its obligations, the partners were required to meet these obligations with their own funds until they were personally bankrupt as well. It was a self-policing system that provided high incentives for investment banks to manage the risks they undertook. When every partner is liable, each has the highest possible incentive to ensure that the firm is not exposed to potential default. If they fail in this responsibility, both the firm and the individual partners can be wiped out. This rule was meant to avoid precisely what happened in the financial crisis.

Now these same publicly held financial institutions have been bailed out by the government and the high-paid executives are apparently immune -- both with respect to their pay, their sources of employment, and their personal funds -- from any day of reckoning.

The philosopher John Rawls is widely recognized for his theories of justice. In one exercise, his "veil of ignorance," he suggests that if you are faced with a decision you should pretend you don't know what kind of participant in the process you will be, so that "everyone is impartially situated as equals." Since you are blind to your own interests, you are likely to develop the fairest answer. (I have found this to be the perfect exercise for sharing desserts. I cut the cake and then let each individual choose a piece. Since I don't know what piece I will end up with, my cutting is far more likely to divide the pieces equally.)

Now let's apply a variant of Rawls's ideas to the situation on Wall Street today. You are a visitor from a foreign country or an alien world with no knowledge of Wall Street or capitalism. Then the principles of capitalism are explained to you and you are asked to identify the capitalists in this confrontation: the people in the buildings or the people congregating on the street. Which would you choose?

Bruce Judson is Entrepreneur-in-Residence at the Yale Entrepreneurial Institute and a former Senior Faculty Fellow at the Yale School of Management.

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Super Committee Can Reclaim Farm Bill as a Good Food Bill

Oct 21, 2011Rajiv Narayan

vegetables-150Why should a multibillion dollar bill work against good nutrition for Americans?

vegetables-150Why should a multibillion dollar bill work against good nutrition for Americans?

Every five to seven years, the most important cluster of legislation concerning food in this country is debated and reauthorized in Congress. For the past three decades, this omnibus package has been referred to as the Farm Bill. Containing 12 titles ranging from funding and regulation for conservation programs to commodity futures markets, the Farm Bill was last reauthorized in 2008 at the cost of $283.9 billion. Slated for reauthorization in 2012, the Farm Bill is now fast tracked due to the mounting pressure of the debt talks and the Super Committee. Most recently, agriculture appropriation committee members have been working on compiling recommendations for submission to the Super Committee by the October 14th deadline.

In August, Senator Chuck Grassley warned of the "possibility [of] people who don't know anything about agricultural policy being on this 'super-committee.'" House Agriculture Committee Chair Frank Lucas similarly calls on the Super Committee to "remember the farm bill is comprehensive and intertwined." Let's take a step back for a moment to consider the contents of the Farm Bill that committee members are vying to keep intact through the appropriation process. Of the $289.3 billion appropriated in 2008, $188.3 billion went to just one of the 12 titles, Nutrition. This title, which accounted then for two-thirds of the bill and is now estimated to occupy a 70 percent share, consists largely of funding for the Supplemental Nutrition Assistance Program (formerly known as Food Stamps), food and nutrition guidelines under the purview of the FDA and USDA, and school meal programs.

For all its focus on establishing a food safety net, this bill is hardly as "comprehensive and intertwined" as Rep. Lucas would have us believe. For example, the USDA's golden rule for personal nutrition, MyPlate, suggests a relatively balanced share of fruits, vegetables, grains, proteins and dairy. But the commodities title of the Farm Bill, which provides direct payments in the form of subsidies to farmers, draws 15 percent of the bill's funds. There are many problems with direct payments, but the most paradoxical issue is that these payments actively thwart the nutritional goals set forth by the USDA. That's because the eligibility criteria for receiving these payments includes a provision to support staple crops, which include "wheat, corn, grain sorghum, barley, oats, upland cotton, rice, soybeans, other oilseeds, and peanuts." Further, this criteria places express "limitations on planting fruits, vegetables, and wild rice."

On Oct. 23, the FDR Library presents a free forum on FDR’s foreign policy advisers. Click here to find out how you can join the conversation!

Staple crops are not inherently unhealthy; they begin as healthy vegetables grown from the ground. But the overproduction of staple crops encourages their unhealthy use. Food policy critic Michael Pollan noted in The Omnivore's Dilemma that corn can be found in a quarter of all products at the grocery store and soybeans are found in 60 percent of all processed food. In these foods, corn and soybeans are reincarnated into their less healthier forms of high-fructose corn syrup and partially hydrogenated soybean oil, respectively.

Not only are these crops used frequently to buffer unhealthy products, those products cost less than their healthier alternatives. In a frequently cited study done by Adam Drewnowski of the University of  Washington, energy-dense foods (what you and I would call junk foods) composed of sugars, added fats, and refined grains were found to be cheaper than healthier foods. This study confirms our intuition about purchasing foods -- it's too expensive to eat well. If you need to consume a certain amount of calories to live, of course you'll prefer to buy the calorie-laden bag of chips for less than half the cost of a calorically-barren head of cabbage or salad mix.

While the farm bill allocates resources to funding food stamps on the one hand, it also incentivizes the purchase of unhealthy foods on the other. It now appears as though the back room appropriations are moving in the favor of subsidies. While both direct payment programs and nutrition programs are looking at cuts, a mechanism for replacing subsidy cuts with a new funding regime has already surfaced. Unfortunately for the food side of the farm bill, it's become increasingly difficult to advocate for change. In the past, the bill has been traditionally held to industry interests. Now the Super Committee process may shut out democratic input altogether if the bill is written in the coming weeks by a handful of legislators for the purpose of bypassing floor debate.

Because the farm bill is so rarely written, it's important to reclaim its status as a food bill. Even if parts of the package are at odds with the part of the bill that works to create a healthy food system, the latter still comprises 70 percent of the legislation. It remains to be seen whether the Super Committee process will allow some food for thought.

Rajiv Narayan is the Senior Fellow for Health Care Policy at the Roosevelt Institute | Campus Network and a graduating senior at the University of California, Davis.

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FDR, Obama, and Occupy Wall Street: Time for Another New Deal?

Oct 20, 2011David B. Woolner

FDR didn't just extend his sympathies to protesters. He listened to their demands and worked to implement real solutions to their problems.

As the Occupy Wall Street protests that originated in lower Manhattan gain momentum, a good deal of speculation has arisen in the press. Will the protesters coalesce around a set of demands? Will President Obama and the Democratic Party embrace the movement? What impact will the protests, which have now spread to other parts of the country, have on the 2012 presidential election?

FDR didn't just extend his sympathies to protesters. He listened to their demands and worked to implement real solutions to their problems.

As the Occupy Wall Street protests that originated in lower Manhattan gain momentum, a good deal of speculation has arisen in the press. Will the protesters coalesce around a set of demands? Will President Obama and the Democratic Party embrace the movement? What impact will the protests, which have now spread to other parts of the country, have on the 2012 presidential election?

Although there has been some resistance to the idea of the movement adopting a formal agenda for reform, many of the demands and some of the rhetoric generated by the protesters echo similar calls for reform that emanated during the New Deal. Last Sunday evening, for example, it was reported that Occupy Wall Street's Demands Working Group had endorsed the idea of a New Deal-style public works program that would put millions of Americans on the government payroll rebuilding the nation's crumbling infrastructure. Another idea that has surfaced within the movement is the restoration of the Glass-Steagall Act.

What is most significant, however, is the possibility that the Occupy Wall Street movement might spur the Obama administration and Congress to embrace reform and take stronger government action to combat the current economic crisis. In this respect, it has the potential to mirror the powerful social justice movements that emerged during the 1930s -- movements that not only drew national attention to the great disparities in wealth between the rich and the poor in the United States, but also pushed the Roosevelt administration and Congress to adopt some of the most significant pieces of reform legislation in U.S. history. The passage of the all-important Wagner Act, which established a permanent National Labor Relations Board and enshrined the right of private sector workers to form unions, was inspired in large part by the more than 1,800 strikes that broke out in 1934. The Social Security Act, which provided an old-age pension and established unemployment insurance, was spurred on in part by the 2 million-member Townsend movement that put forward a tax and pension scheme that made it clear that the government had to do something to provide basic economic security for the elderly. For the millions of unemployed, who often took to the streets in frustration, Roosevelt created the Works Progress Administration, which put over 8.5 million Americans to work building the roads, bridges, airports, and schools that still make up a significant portion of our nation's economic infrastructure.

On Oct. 23, the FDR Library presents a free forum on FDR’s foreign policy advisers. Click here to find out how you can join the conversation!

President Obama has recently indicated that he sympathizes with the concerns of the Occupy Wall Street movement, but he has yet to embrace it. FDR was not nearly so circumspect. It is true that during his initial year in office, FDR -- much like President Obama -- adopted what can best be called national unity politics. This, coupled with his innate political caution and abhorrence for ideology, made him reluctant to join ranks with those who were in the streets demanding reform.

But as early as mid-1934, the president -- who in his heart of hearts agreed with the calls for more progressive government -- began to change his tune. In one of his famous Fireside Chats, delivered near the end of June 1934, FDR took note of the fact that in spite of the great progress that had been made stabilizing the economy and meeting the immediate crisis, it was time to look to the future -- time for the country "to find a way once more to well-known, long established but to some degree forgotten ideals and values," and time for the Government and Congress to "seek the security of the men, women and children of the nation." He continued:

That security involves added means of providing better homes for the people of the Nation. That is the first principle of our future program.

The second is to plan the use of land and water resources of this country to the end that the means of livelihood of our citizens may be more adequate to meet their daily needs.

And, finally, the third principle is to use the agencies of government to assist in the establishment of means to provide sound and adequate protection against the vicissitudes of modern life -- in other words, social insurance...

A few timid people, who fear progress, will try to give you new and strange names for what we are doing. Sometimes they will call it "Fascism," sometimes "Communism," sometimes "Regimentation," sometimes "Socialism." But, in so doing, they are trying to make very complex and theoretical something that is really very simple and very practical.

I believe in practical explanations and in practical policies. I believe that what we are doing today is a necessary fulfillment of what Americans have always been doing -- a fulfillment of old and tested American ideals.

In the coming 18 months, FDR -- inspired and motivated by the determination of the millions of Americans who embraced a number of mass movements demanding social and economic justice -- would launch his famous Second New Deal. It was a wave of legislation that, through such programs as Social Security and the Wagner Act, is still very much with us to this day.

As the Occupy Wall Street movement continues to grow, perhaps the president and our leaders in Washington should do more than merely extend their sympathy. Perhaps they should take a lesson from the New Deal and act to address the concerns of a new generation -- a generation that may not yet have articulated a specific set of demands, but one that is crying out for a government animated by the same spirit that stood at the heart of the New Deal, driven by the desire to provide social and economic justice for all.

David Woolner is a Senior Fellow and Hyde Park Resident Historian for the Roosevelt Institute. He is currently writing a book on U.S.-UK economic relations in the 1930s, entitled Cordell Hull, Anthony Eden and the Search for Anglo-American Cooperation, 1933-1938.

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The Lesson the Left Can Learn on Inequality from Occupy Wall Street

Oct 17, 2011Mike Konczal

The protesters' particular focus on inequality is a perfect starting place for a progressive movement revival.

The protesters' particular focus on inequality is a perfect starting place for a progressive movement revival.

Right now Occupy Wall Street has favorable polling. So did the Tea Party at its beginning. As Seth Ackerman pointed out to me, once people saw that the Tea Party wasn't a new thing but this old, arch-conservative thing, one that wants to take our global historical moment and wage total war against public sector workers and uteri, they turned against it. One symptom that it was an old thing was the books that it circulated: from Hayek's underwhelming Road to Serfdom to Bircher Cold War tracts from the types who thought Eisenhower was a member of the communist conspiracy.

Ackerman noted that it isn't clear what will happen with Occupy Wall Street ideologically, if only because at this point the left-liberal project and progressivism more generally is chaotic and up for grabs. This makes for a fun, fascinating, and scary moment for a potentially insurgent left.

This movement is very focused on inequality. But why? A lot of different ideas have already surfaced. With so much of the debate about the 99% and the 1% framed in the context of extreme inequality, it might be worthwhile to step back and examine the liberal arguments against inequality and discuss what I see of them in Occupy Wall Street.

This is a great cheat-sheet -- a list of objections to inequality resulting from the high liberalism tradition from TM Scanlon's "The Diversity of Objections to Inequality" (article not free online, here's a summary). Liberals, in general, have five objections to inequality:

A sixth point will hopefully be added in the future: A more equal distribution creates a better economy. There's an assumption that the market, instead of creating concentrations of wealth and power that slow growth, assigns resources to where they are best used in both the short and long term. However, it is hotly contested whether income inequality causes crashes; researchers at the IMF found models where it can. And a whole other strain of research finds that equality causes growth to be more sustained (see summaries by Georgia Levenson Keohane and Brad Plumer).

As Scanlon is quick to note, only a few of these are necessarily egalitarian -- you can be concerned with relieving the suffering of the poorest without actually caring about disparity of incomes. And there is usually a huge emphasis on how the power referred to in number three is primarily a problem of electoral politics and policy instead of a problem of dominating, controlling power relations between individuals.

So where does Occupy Wall Street stand on these? What I find fascinating is that there is much more of a focus on forms of power and domination as opposed to the more general concerns of egalitarian liberalism, those focused on stigmatization and fairness. This is a healthy move for the debate.

On Oct. 23, the FDR Library presents a free forum on FDR’s foreign policy advisers. Click here to find out how you can join the conversation!

One of the major concerns you hear from people in occupations is that the political process has become fundamentally corrupted. This gets right at number three: Money has become so concentrated and such an overwhelming presence in our politics that we need some ways of reforming it at a structural level. The stakes are higher in Occupy Wall Street. The government blurs into the private sector, wealth is no longer a measure of contribution but instead rent extraction, and no party or individual can be trusted to work within the system. There needs to be a reboot. How did we get here? Hacker and Pierson's Winner Take All Politics is a good place to start when looking for the answer.

Another argument is that Wall Street itself is out of control. Having failed quite profitably in its sole responsibility -- allocating capital responsibly, not towards Pets.com, junk mortgage debt, strip-mining companies for short-term gains, and worthless housing stock nobody wants -- and then getting bailed out when it all collapsed, the sheer presence of the financial sector among the top 1% feels like a crime. This power is more ruthless than than that in the normal discussion. It drives the entire economy, and it appears to have just driven it off a cliff. For more, 13 BankersEconnedAge of Greed, and Wall Street from the 1990s all walk readers through this story.

What about the 99%? I've previously looked through the We Are the 99% Tumblr and found that the biggest emphasis was on debt, ranging from student loans to medical debt, and a lack of enough employment to get by month-to-month. Here inequality is less a problem related to the more traditional liberal concerns of fairness or the idea that a few are left behind, and more a problem in which inequality is making indentured peasants of a huge part of the population. Risks are shifted to individuals who are already struggling, opportunities and possibilities are ruthlessly revoked, employment is nonexistent, and month-to-month survival is a battle for more than the just the very bottom. Books such as Graeber's Debt: The First 5,000 Years approach this from an anthropological point of view. Other works include Elizabeth Warren's book on how fixed costs of the middle class drive even two-income families into poverty, as opposed to more general discretionary spending (read: "frivolous" spending), or Tamara Draut's Strapped.

This ties into traditional liberal concerns. Liberals want institutions that allow people to develop their talents and also ones that insure them against the bad luck of health and unemployment. These institutions have been unraveled, and their public nature has been replaced with debt. And when people involved in Occupy Wall Street talk about this phenomenon, they connect how debt functions as a new safety net with the experience of servitude and suffering. Not in a relative sense of inferiority and shame (although that's there too), but in actual deprivation and the feeling of powerlessness against creditors, bosses, and the top of the elite.

Indeed, these concerns are reflected in the format of the general assembly and other current, institutional characteristics of Occupy Wall Street. Without permanent, clear leaders, there is no one to arrest, corrupt, or otherwise take over. That address their concerns about political domination from sources internal and external. The focus on mass participation and consensus derives, in part, from inequality in political access. Resources and responsibilities are distributed in the most egalitarian manner because physical deprivation is just one bad month away for many in the occupations (indeed, in the country). Collective enterprises offer a potential solution to giving workers real power in the workplace, power that can be put into action across the country and isn't dependent on Obama and the Senate.

This strikes me as firmer ground on which to try and build up a resurgent left. What's your take?

Mike Konczal is a Fellow at the Roosevelt Institute.

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Why We Need the Government to Create Not Just Jobs, but Good Jobs

Oct 17, 2011Richard Kirsch

A new book exhausts all the private sector possibilities, ultimately showing why the government has to ensure decent wages for all.

A new book exhausts all the private sector possibilities, ultimately showing why the government has to ensure decent wages for all.

The millions of underemployed Americans today, working part-time or in jobs significantly beneath their skill level, underline a persistent feature of our workforce, starting long before the Great Recession: one out of four jobs pay sub-standard wages. Good Jobs America, a new book written by Paul Osterman and conceived with co-author Beth Shulman before her death, tackles this other half of the jobs crisis: the need to create more good jobs, with wages that can support a family.

A great strength of the book is the authors' creation of new data on low-wage jobs, bringing to light how little so many of us bring home from our work. The authors are exquisitely cognizant of the current policy and political climate that looks skeptically on the ability of government to intervene in the "power and correctness of the market." As a result, much of the book carefully examines the arguments and strategies that rely on non-government interventions in the labor market to increase job quality, as well as a refutation of conservative arguments against public policies to increase wage levels. In thoroughly exploring other avenues of change, and doing their best but ultimately failing to identify promising paths that don't rely principally on government, Osterman and Shulman make it clear why they conclude "what is needed is a broader political, social, and economic environment that supports progressive employment strategies." By exhausting the limits of other avenues, the book ultimately ends up making the case that we must have government action to ensure decent jobs for all.

The authors refute the "myth" that education is the solution to the problem by pointing out the obvious: "There will always be hotel room cleaners and food servers and medical assistants and the myriad of other low-wage jobs." Education may help an individual, but it won't solve the large societal problem. Furthermore, they review research that finds "most adults holding these jobs will not escape them." They describe numerous programs developed in industries like health care and hospitality to create career ladders for low-wage employees and -- while doing everything they can to accentuate the positive -- find that few of the programs are sustainable or result in many employees moving into better jobs.

The persistence of the problem is underlined in their discussion of another common bugaboo: immigration. Data they assembled show that from 1994 to 2010, while the proportion of immigrants in the workforce increased by 70 percent, the percentage of jobs that were low-wage stayed the same, 24 percent. Their data also reveal that while immigrants held more low-wage jobs in 2010, the percentage of immigrants who took jobs that were below the low-wage standard remained at just below 40 percent.

As the authors deeply believe that employers need to be part of the solution, they look closely at the problems that employers face in raising wages and promoting career training. But they find that "high-road" employers are few and far between, motivated by the rare business with a mission or CEO that is committed to decent wages and benefits. They find no evidence that a Costco has any impact on a retail job market dominated by WalMart, which when it comes into a market suppresses wages in its competitors. The history of labor partnerships also is not promising. Levi-Strauss' attempt at paying good wages collapsed under the pressure of foreign competition and when an agreement between the hotel employee union HERE and San Francisco hotels to trade employer flexibility for more training and wage increases melted in the face of non-union competition.

On Oct. 23, the FDR Library presents a free forum on FDR’s foreign policy advisers. Click here to find out how you can join the conversation!

The authors also highlight community and non-union worker organizing that has led to the passage of local ordinances and agreements with large employers. But they admit that these are few and far between, with the biggest benefit being a change in the political relationships of power rather than the creation of many new good jobs.

Their exploration of what could be the most promising new labor market for good jobs, green jobs, is very telling. They do a marvelous job of detailing the competing forces in Boston when the city government tried to balance the trade-off between weatherizing more homes or paying higher wages. It negotiated with multiple actors: community action agencies, environmental groups, unions, big and small contractors. The results were not promising. On the other hand, Portland, OR provided a model of success due to the rare cooperation between community and environmental groups and unions, bolstered by strong political leadership.

Which gets us back to government. The 2009 economic stimulus legislation required that prevailing wages, following the Davis-Bacon law, be paid for weatherization jobs. But the Obama administration interpreted that as prevailing wages in the already low-wage weatherization industry. That was a lost opportunity to use a major investment in green jobs to set a foundation for good jobs.

So what will work? Looking at the history of what has worked in our past -- legislation and regulations promoting wage standards, job safety, and unionization -- they conclude simply, "The government made bad jobs into good." There's plenty of ammo in the book showing that minimum wage laws do work and that unionization leads to better jobs.

The authors say that creating a climate for good jobs requires a shock to the system that will come from "public policy or employee voice." Actually, they recommend both: laws that raise wages and protect union organizing, accompanied by cooperation between community groups, more internally democratic unions, and small business associations.

On the next to last page, the authors finally reach for a broader strategy that meets the political challenge of our times. Ending where they began -- "the gap between the low-and-middle-class is collapsing" -- they conclude that "the reality is that strengthening job quality is a middle-class issue" and making the concerns of low-wage workers compelling "requires a broader political base than is currently at hand."

Building that political base will require making more than a rhetorical link between the concerns of the shrinking middle class and the working poor. We will need to build a movement that unites "the 99%" to those pushing for a broader jobs agenda, that demands that we not only create more jobs, but that every job pays enough to support a family with security and dignity. The agenda must look beyond the workplace to broader systems of opportunity and social insurance: education, health care, retirement, and leave policies. Organizing that movement must link across communities, exemplified by efforts like the Caring Across Generations campaign that is uniting unions and community groups to create two million good jobs for those who care for seniors and people with disabilities. We need to build a political movement through campaigns at the local, state, and federal level that demand good jobs for everyone in America.

Richard Kirsch is a Senior Fellow at the Roosevelt Institute and a Senior Adviser to USAction, whose book on the campaign to win reform will be published in 2012. He was National Campaign Manager of Health Care for America Now during the legislative battle to pass reform.

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