With the country facing the biggest financial crisis in 100 years, which threatens the homes, livelihoods and bank accounts of millions of working Americans, where is the labor movement? This moment fits the classic observation by community organizer Saul Alinksy that the Chinese character for "crisis" means both "danger" and "opportunity". The "danger" part is obvious. The "opportunity" is perhaps less obvious: beyond press releases and public statements, labor has a huge role to play in mobilizing mass protest to the Paulson bailout for the bankers and forcing a long-term revamping of a system, a role that would cement labor’s leadership in the minds of millions of potential members.
In talking to some labor insiders and leaders, I get two general reactions. First, labor is so preoccupied with the elections that there is too little focused organizational and intellectual firepower to bring to bear on the financial crisis. Second, people are frustrated by the first problem and also are not sure whether there is a consensus on what to do and what the solutions are.
Here are one person’s thoughts and suggestions.
First, GET OVER THE ELECTION OBSESSION (yes, I’m shouting). Not that the election isn’t important. It is. But, we are talking about something that transcends the election: this is perhaps a once-in-a-lifetime chance to entirely reshape big, big financial power relationships in the economy.
It’s a once-in-a-lifetime chance to have a serious debate about the "free market" and, possibly, obliterate market fundamentalism as the idiotic, bankrupt (literally and figuratively), dangerous philosophy that has gripped our society for too long. Doing so is, respectfully, more important than the Employee Free Choice Act because EFCA, while useful, can never mean much in a world where market fundamentalism holds sway.
Second, John Sweeney, president of the AFL-CIO, and Anna Burger, chair of Change To Win, need to jointly call for an emergency, immediate summit of every labor leader in the country. Put aside turf—it doesn’t count right now. Call the press in and show mass unity.
Third, come out of the summit with a very clear plan and back it up with a promise to work with organizations everywhere to put 100,000 people in the streets in each of 25 major cities. Yes, 2.5 million people. You think that’s too many? Someone should get out there and gauge the anger coursing cross America.
Fourth, as for the ideas and solutions, let me start with three points:
One: Demand repeal of the Bush tax cuts to help finance any bailout. Let the Administration and others try to argue that we should keep emptying the Treasury for the richest Americans AND bail out the banks with the wages of hard-working Americans. A significant amount of the tax revenue that got showered on the richest Americans came from the very asset bubble some of the richest Americans helped create. They created it, fanned it and, now that it has burst, let them take on the burden of cleaning it up.
Two: Give Us Freddie Mac and Fannie Mae. As I suggested recently, we should demand that the public regain control over Freddie Mac and Fannie Mae. We bought it. We should run it.
Third point: Investigate How This Happened. John McCain was right—-we do need to dig into how this happened. But, not in the way he would want. Labor should help set up, with other organizations, a serious public, independent investigation. It needs to look at how the political system, with the assent of both parties, let the financial crisis happen.
My friend and colleague, Dean Baker, co-director of the Center for Economic and Policy Research sent along the following, which I reprint with his permission (I note briefly that had the talking heads and politicians and financial speculators listened to Dean two years ago, we potentially wouldn’t be in this mess):
Principles to Guide the Bailout
- Financial institutions should be forced to endure the bulk of the losses with taxpayer funds only used where absolutely necessary to sustain the orderly operation of the financial system.
- The bailout must be designed to minimize the opportunity for gaming.
- The bailout should be designed to minimize moral hazard.
- In the case of delinquent mortgages that come into the government’s possession, there should be an effort to work out an arrangement that allows the homeowner to remain in her house as owner. If this proves impossible, then former homeowners should be allowed to remain in their homes as renters paying the market rent. This should be done even if it leads to losses to the government.
- There should be serious efforts to severely restrict executive compensation at any companies that directly benefit from the bailout.
As Dean points out, the next step is to redo the financial system so this can’t happen again:
Principles for Restructuring the Financial System
- Combating asset bubbles must be one of the Fed’s key responsibilities.
- The government should impose a modest financial transactions tax, comparable to the one in the United Kingdom. This can both restrain excessive trading and raise more than $100 billion a year in revenue.
- Regulatory agencies should require that potentially tradable assets (e.g. credit default swaps) actually be traded on exchanges.
- There should be strict limits on leverage for all regulated financial institutions.
- Fannie and Freddie should remain fully public institutions, returning them to a status comparable to Fannie’s prior to its privatization in 1968.
- The Fed should be restructured so that all the key decision makers (e.g. the open market committee) are appointed by democratically elected officials. Its responsibility is to manage the economy in the interest of the general public, not the financial sector.
The emergency is now. The OPPORTUNITY is now.
Labor needs to lead. The people need labor to lead.
Call John Sweeney now: 202-637-5000
Call Anna Burger now: 202-721-0660
