The Green New Deal has become a rallying cry for activists seeking to build a mass movement capable of addressing our ever worsening, and increasingly interrelated, climate and social crises. Building such a movement is no simple task, but I believe that our organizing efforts can greatly benefit from a careful study of the rapid transformation of the US economy from civilian to military production during World War II.
In two recent publications, with links below, I describe and evaluate the planning process responsible for the wartime transformation and offer my thoughts on some of the key lessons to be learned. In what follows I highlight some of the reasons why I believe Green New Deal advocates would benefit from careful study of the wartime experience.
There appears to be growing consensus among economists and policy makers that inflation is now the main threat to the US economy and the Federal Reserve Board needs to start ratcheting up interest rates to slow down economic activity. While these so-called inflation-hawks are quick to highlight the cost of higher prices, they rarely, if ever, mention the costs associated with the higher interest rate policy they recommend, costs that include higher unemployment and lower wages for working people.
The call for tightening monetary policy is often buttressed by claims that labor markets have now tightened to such an extent that continued expansion could set off a wage-price spiral. However, the rapid decline in the unemployment rate to historically low levels, a development often cited in support of this call for austerity, is far from the best indicator of labor market conditions. In fact, even leaving aside issues of job quality, the US employment situation, as we see below, remains problematic. In short: the US economy continues to operate in ways that fall far short of what workers need.
Pretty much everyone accepts that inequality is a big problem in the US. But it is doubtful that most people truly grasp how successfully US elites have captured the benefits of economic growth and, as a result, how much the resulting inequality has cost them. Here is one estimate of that cost—according to Carter C. Price and Kathryn A. Edwards, authors of a Rand Education and Labor study on income trends:
[the] aggregate income for the population below the 90th percentile . . . would have been $2.5 trillion (67 percent) higher in 2018 had income growth since 1975 remained as equitable as it was in the first two post-War decades. From 1975 to 2018, the difference between the aggregate taxable income for those below the 90th percentile and the equitable growth counterfactual totals $47 trillion.
That $2.5 trillion was enough to give each and every worker in the bottom nine income deciles an additional $1144 a month, every month of the year. That is life changing money for tens of millions—and that is only a partial measure of the costs of inequality.
The news has recently highlighted labor’s growing activism, publishing numerous stories about high quit rates, threatened and actual strikes, and wage gains. While these stories do capture the anger and determination of workers who have suffered through the pandemic with limited compensation for dramatically increased workloads while watching profits soar, they also paint an overly optimistic picture of the gains being made. And now, the media seems mesmerized by the threat of inflation, with those advocating austerity increasingly given prominent play. The reality is that the labor movement has a long struggle ahead and it should not be distracted by unwarranted fears of inflation.
This is far from a “hot take”: financial wealth in the United States is highly concentrated, with most households, especially Black and Hispanic households, owning few financial assets. One consequence is that many Americans are likely to face a very challenging retirement. Sadly, if economic and social conditions remain as they are, we can expect to see an ever-growing number turn to for-profit crowdfunding platforms, like GoFundMe, for help in meeting expenses.
A recently published study by the National Institute on Retirement Security, a non-profit research and education organization, using data from the Federal Reserve’s Survey of Consumer Finances, paints a disturbing picture of the distribution of financial assets by generation, net worth and race.
Many are understandably alarmed about what the September 4th termination of several special federal pandemic unemployment insurance programs will mean for millions of workers. Twenty-five states ended their programs months earlier, with government and business leaders claiming that their termination would spur employment and economic activity. However, several studies have disproved their claims.
One study, based on the experience of 19 of these states, found that for every 8 workers that lost benefits, only one found a new job. Consumer spending in those states fell by $2 billion, with every lost $1 of benefits leading to a fall in spending of 52 cents. It is hard to see how anything good can come from the federal government’s willingness to allow these programs to expire nationwide.
According to an Economic Policy Institutereport, between 28 and 47 percent of U.S. private sector workers are subject to noncompete agreements. In brief, noncompete agreements (or noncompetes) are provisions in an employment contract that ban workers from leaving their job to work for a “competitor” that operates in the same geographic area, for a given period of time. In a way, it’s an attempt to recreate the power dynamics of the employer-dominated company towns of old—with workers unable to change employers if they want to continuing working in the same industry.
It is not just top executives that are forced to accept a noncompete agreement. Companies also use them to restrict the employment freedom of many low wage workers, including janitors, security guards, fast food workers, warehouse workers, personal care aids, and room cleaners. In fact, the Economic Policy Institute estimates that almost a third of all businesses require that all of their workers sign noncompetes, regardless of their job duties or pay.
We face many big challenges. And we will need strong, bold policies to meaningfully address them. Solving our child-care crisis is one of those challenges, and a study of World War II government efforts to ensure accessible and affordable high-quality child care points the way to the kind of bold action we need.
The child care crisis
A number of studies have established that high-quality early childhood programs provide significant community and individual benefits. One found that “per dollar invested, early childhood programs increase present value of state per capita earnings by $5 to $9.” Universal preschool programs have also been shown to offer significant benefits to all children, even producing better outcomes for the most disadvantaged children than means-tested programs. Yet, even before the pandemic, most families struggled with a lack of desirable child-care options.
Many activists in the United States support a Green New Deal transformation of the economy in order to tackle the escalating global climate crisis and the country’s worsening economic and social problems. At present, the Green New Deal remains a big tent idea, with advocates continuing to debate what it should include and even its ultimate aims. Although perhaps understandable given this lack of agreement, far too little attention has been paid to the process of transformation. That is concerning, because it will be far from easy.
One productive way for us to sharpen our thinking about the transformation is to study the World War II-era mobilization process. Then, the U.S. government, facing remarkably similar challenges to the ones we are likely to confront, successfully converted the U.S. economy from civilian to military production in a period of only three years.
A growing number of business and political leaders have found yet another argument to use against federal pandemic relief programs, especially those that provide income support for workers: they hurt the economic recovery by encouraging workers not to work.
In the words of Senate Minority Leader Mitch McConnell, as reported by BusinessInsider:
“We have flooded the zone with checks that I’m sure everybody loves to get, and also enhanced unemployment,” McConnell said from Kentucky. “And what I hear from businesspeople, hospitals, educators, everybody across the state all week is, regretfully, it’s actually more lucrative for many Kentuckians and Americans to not work than work.”
He went on: “So we have a workforce shortage and we have raising inflation, both directly related to this recent bill that just passed.”
In line with business claims that they can’t find willing workers despite their best efforts at recruitment, the governors of Montana, South Carolina, Alabama, Arkansas, and Mississippi have all announced that they will no longer allow the unemployed in their respective states to collect the $300-a-week federal supplemental unemployment benefit and will once again require that those receiving unemployment benefits demonstrate they are actively looking for work.