Reports from the Economic Front

a blog by Marty Hart-Landsberg

Ideological Struggle-Part II

The Obama administration is working hard to restore our economy to health.  But what does “restore to health” mean when the pre-crisis period of growth produced declining median household income, increasing job insecurity, declining health care coverage, decaying infrastructure—need I go on?

Right now there is a big fight brewing in Congress over the Employee Free Choice Act.  The fight poses the question of what kind of economy we want—will it be one supportive of the rights of working people or of business as usual?

Where does the administration stand on this question?  Larry Summers, who is the Director of President Obama’s National Economic Council, recently addressed it in a talk at the Brookings Institution.  Here is what the Washington Post says he said:

If we want to propel this economy forward [and] have a sound expansion, it has to be an expansion whose benefits are more broadly shared,” he said. That involves tax policy and education, he said, but also “goes to the question of having a healthy and well-functioning trade union movement. . . . It is hard to avoid the conclusion that the way in which our labor laws have functioned, and have been enforced and been acted on over many years, have not been constructive from the point of view of having a healthy trade union movement. And an attempt to redress that balance seems to me something that is appropriate at such a time.

Doesn’t sound too bad.  But here is the same Larry Summers writing on “unemployment” for the Library of Economics and Liberty:

Another cause of long-term unemployment is unionization. High union wages that exceed the competitive market rate are likely to cause job losses in the unionized sector of the economy. Also, those who lose high-wage union jobs are often reluctant to accept alternative low-wage employment. Between 1970 and 1985, for example, a state with a 20 percent unionization rate, approximately the average for the fifty states and the District of Columbia, experienced an unemployment rate that was 1.2 percentage points higher than that of a hypothetical state that had no unions. To put this in perspective, 1.2 percentage points is about 60 percent of the increase in normal unemployment between 1970 and 1985.  There is no question that some long-term unemployment is caused by government intervention and unions that interfere with the supply of labor.

The Brookings talk came after the posting on unemployment—so perhaps he has changed his mind.  But who knows?  Can we really count on people like this to fight our fights.

I think if we want a structurally different economy, then we are going to have to organize and fight for it ourselves.

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