Author: Evan Rose

The Silent Revolution In American Economics

There are three key areas where Biden is fundamentally reshaping our economy to make it better for working people.

I don’t think you’re expecting what I’m about to say, because I have never seen anything like this in fifty years in politics.

For decades I’ve been sounding an alarm about how our economy has become increasingly rigged for the rich. I’ve watched it get worse under both Republicans and Democrats, but what President Biden has done in his first term gives me hope I haven’t felt in years. It’s a complete sea change.

Here are three key areas where Biden is fundamentally reshaping our economy to make it better for working people.

 

 

#1 Trade and industrial policy

Biden is breaking with decades of reliance on free-trade deals and free-market philosophies. He’s instead focusing on domestic policies designed to revive American manufacturing and fortify our own supply chains.

Take three of his signature pieces of legislation so far — the Inflation Reduction Act, the CHIPS Act, and his infrastructure package. This flood of government investment has brought about a new wave in American manufacturing.

Unlike Trump, who just levied tariffs on Chinese imports and used it as a campaign slogan, Biden is actually investing in America’s manufacturing capacity so we don’t have to rely on China in the first place.

He’s turning the tide against deals made by previous administrations, both Democratic and Republican, that helped Wall Street but ended up costing American jobs and lowering American wages.

#2 Monopoly power

Biden is the first president in living memory to take on big monopolies.

Giant firms have come to dominate almost every industry. Four beef packers now control over 80 percent of the market, domestic air travel is dominated by four airlines, and most Americans have no real choice of internet providers.

In a monopolized economy, corporate profits rise, consumers pay higher prices, and workers’ wages shrink.

But under the Biden, the Federal Trade Commission and the Antitrust Division of the Justice Department have become the most aggressive monopoly fighters in more than a half century. They’re going after Amazon and Google, Ticketmaster and Live Nation, JetBlue and Spirit, and a wide range of other giant corporations.

#3 Labor

Biden is also the most pro-union president I’ve ever seen.

A big reason for the surge in workers organizing and striking for higher wages is the pro-labor course Biden is charting.

The Reagan years blew in a typhoon of union busting across America. Corporations routinely sunk unions and fired workers who attempted to form them. They offshored production or moved to so-called “right-to-work” states that enacted laws making it hard to form unions.

Even though Democratic presidents promised labor law reforms that would strengthen unions, they didn’t follow through. But under Joe Biden, organized labor has received a vital lifeboat. Unionizing has been protected and encouraged. Biden is even the first sitting president to walk a picket line.

Biden’s National Labor Relations Board is stemming the tide of unfair labor practices, requiring companies to bargain with their employees, speeding the period between union petitions and elections, and making it harder to fire workers for organizing.

Americans have every reason to be outraged at how decades of policies that prioritized corporations over people have thrown our economy off-keel.

But these three waves of change — a worker-centered trade and industrial policy, strong anti-monopoly enforcement, and moves to strengthen labor unions — are navigating towards a more equitable economy.

It’s a sea change that’s long overdue.

The Two Faces Of The Euro

Of all European politicians who never led their countries, Jacques Delors and Wolfgang Schäuble had the greatest impact on Europe. Between them, Delors and Schäuble, who died within a day of each other in December, shaped today’s European Union, warts and all.

Their tenures did not really overlap, but their bitter clashes over the future of Europe made history. And while the significance of both men is widely recognised, the strong causal link between their conflicting visions and the EU’s current slump is not well understood.

Judging by the various obituaries, the two men are remembered for their ostensible differences: Delors, the flamboyant French, Roman Catholic, social democrat whose dream of a Keynesian Europe was British Prime Minister Margaret Thatcher’s nightmare; and Schäuble, the austere German lawyer whose fiscal Calvinism terrified deficit-spending southern European, as well as French, finance ministers. While both have been acknowledged as noteworthy Europeans, and thus foes of Euroskeptics, Delors is portrayed as the more impatient centralizer, in sharp contrast to Schäuble, who was reluctant to cede the German parliament’s powers to Brussels.

None of this is false. But the portrayal of the two men’s motivations and deeds it leaves us with is incomplete — and possibly misleading.

Delors’ tactical U-turn

By the time then-West German chancellor Helmut Kohl gave Schäuble his first cabinet position, a junior ministry, in 1984, Delors had just ended a hellish tenure as French president François Mitterrand’s first finance minister. Mitterrand’s government, comprising the Socialists and Communists, had been elected in 1981 on an anti-austerity platform promising egalitarian growth. Almost immediately after that election, French capital fled en masse to Germany.

To stop it, Delors had either to devalue the franc substantially or increase interest rates to economy-busting levels.

Under the European Monetary System (EMS), which Germany and France had forged with great fanfare in 1978, the exchange rate was fixed, and any devaluation of the franc required Germany’s consent. To grant it, Germany demanded a hefty price: a real wage reduction (a wage freeze amid high inflation), which the Mitterrand government had been elected to avert.

Delors was left with two options: tear up the EMS treaty (and devalue the franc unilaterally) or raise interest rates to a whopping 25 per cent.

He chose the latter, but capital continued to flee, while French income per capita fell by more than 10 per cent in three years. By 1983, Delors had adopted full austerity (including the wage freeze demanded by Germany), leftist ministers had resigned, and France was on the road to embracing Germany’s strategy of competitive disinflation (reflected in the strong franc policies that became standard throughout the 1990s).

Was that the end of Mitterrand’s socialist agenda? No, said Delors: to fight austerity at a European level, France first had to embrace it.

Pro-labour policies within France, Delors argued, would always be defeated by the Anglosphere’s financial markets betting against the franc, driving up the French state’s borrowing costs, causing capital to flee to Germany, and forcing the devaluation of both the French currency and the French state.

The only way to implement their 1981 agenda, Delors told Mitterrand, was to convince financial markets that betting against the franc was futile because it was indivisibly linked to the mighty Deutsche Mark. Their agenda could still triumph, but only at a pan-European level — a massive project which required “capturing” the Bundesbank (essentially adopting the Deutsche Mark through a monetary union) and, somehow, pushing German elites to adopt the French socialists’ agenda at the European level.

Persuaded by this analysis, in 1985 Mitterrand used his influence to lobby successfully for Delors’ appointment to the presidency of the European Commission.

From Brussels, Delors pushed for the introduction of the euro, using as his vehicle the famous Delors Committee.

Unlike true federalists who sought a fully-fledged democratic political union, Mitterrand and Delors never planned to end Europe’s intergovernmental decision-making framework, which they believed was better suited to their aim of projecting French government priorities and methods onto Europe.

What they craved was a monetary union that would spawn, surreptitiously, a fiscal (but not a political) union, which France would dominate.

A Shield Called Schäuble

Unsurprisingly, the Bundesbank saw these moves coming. From 1983 onward, the Bundesbank made aggressive monetary moves intended to give the Delors stratagem a series of bloody noses. Among German politicians, it was Schäuble who embraced fully the Bundesbank’s project of fending off Delors’ bearhug.

Schäuble had recognised in Delors a master tactician envisioning a Europe in the image of a Greater France that deployed the Deutsche Mark to fund social democratic policies. To counter Delors, the Bundesbank-Schäuble strategy was to push for a much smaller monetary union that would include only states with a current-account surplus and ultra-low government deficits.

Schäuble understood the political and geostrategic importance of including France, but the French would have to accept the loss of sovereignty over their national budget — a prerequisite for any deficit country to remain sustainably within a currency union that lacks a fiscal union.

In September 1988, Delors gave a speech to Britain’s Trades Union Congress that coincided with TUC members’ darkest hour — the aftermath of Thatcher’s third general election victory.

Delors outlined his vision of a “Social Europe”, in contrast to the “capitalists’ club”, as he described the European Common Market. Judging by the standing ovation he received, Delors had won over the British workers’ representatives.

On that day, Britain’s Labour Party began its shift from Euroskepticism to Europhilia. On the same day, and for the same reason, alarm bells went off in Thatcher’s head.

Weeks later, she delivered her famous Bruges speech, arguably the moment Brexit was conceived, in which she warned of the approaching European “superstate”.

Thatcher made the same mistake as Mitterrand: she had underestimated Schäuble’s capacity to crush Delors’ project. It was an easy mistake to make. The fall of the Berlin Wall was about to give Delors’ ambitions a major boost. In view of Thatcher’s opposition to German reunification, Mitterrand suddenly had the leverage he needed to force Kohl to acquiesce to a larger eurozone, including not only France but other deficit countries like Spain, Portugal, and eventually Greece, too.

Battleground Europe

Accepting the establishment of a large and heterogenous eurozone in exchange for France’s endorsement of German reunification was a battle that Schäuble and the Bundesbank agreed to lose. But Schäuble had not given up the fight.

Mitterrand and Delors, but also Schäuble and the Bundesbank, always knew that the heterogenous monetary union’s lack of a fiscal union made it brittle — and its lack of a banking union even more so. They all foresaw how a serious financial crisis would force Europe’s political class either to create a federal treasury, break up the existing eurozone, or accept Europe’s permanent decline. But they were at an impasse because of the clash between Delors (with Mitterrand’s backing), who craved what Thatcher perceived as a dystopic superstate, and Schäuble’s vision (backed by the Bundesbank) of a smaller eurozone within a larger, multi-speed EU. So, they all waited for the next great battle, which the first serious financial crisis would trigger.

By the time it happened, two decades later, Delors had retired and Schäuble was Germany’s finance minister, whence he dominated the Eurogroup — the informal council of eurozone finance ministers.

As soon as Lehman Brothers’ collapse in 2008 sparked the sequential bankruptcy of German and French banks and the insolvency of the Greek state two years later, Schäuble knew it was “game on”.

Schäuble foresaw that the French, carrying Delors’ baton in this three-decade-long relay, would use the crisis to press for their long-standing goal of fiscal union, starting with debt mutualisation. His defense strategy was to propose that insolvent countries be encouraged and helped to leave the euro.

Suddenly, Grexit was an alternative to harsh austerity and inordinate internal devaluation.

As a practicing Protestant ordoliberal with a chosen disdain for macroeconomics, Schäuble believed in austerity. During Germany’s reunification, he had played a leading role in impoverishing and actively de-industrialising East Germany for precisely the same reason that, after 2010, he became the champion of austerity across Europe: to maintain the postwar, mercantilist, West German business model.

But even Schäuble understood that the level of austerity imposed on Greece between 2010 and 2015 was excessively destructive. How do I know? Because when I was Greece’s finance minister, we spent hours discussing these matters, and he told me as much on several occasions.

In one of those exchanges, he went so far as to confirm that, in his view, the eurozone was “constructed wrongly” and needed a political union, which the French resisted. “I know,” I said, to encourage him to continue. “They wanted to use your Deutsche Mark but without sharing sovereignty!” He nodded in agreement: “Yes, this is so.

And I won’t accept it,” he continued. “So, you see, the only way I can keep this thing together, the only way I can hold this thing together, is by greater discipline. Anyone who wants the euro must accept discipline. And it will be a much stronger eurozone if it is disciplined by Grexit.”

Schäuble was under no illusions. Pushing Greece out of the eurozone had little to do with Greece and everything to do with France and Delors’ vision. He wanted France to grasp that, if they wanted the euro (which in our conversations he twice referred to as the Deutsche Mark), they had to welcome the troika in Paris and drop Delors’ dream of a Greater France in an EU frock.

His insistence on Grexit was a not-so-subtle message to the French political caste: Like Greece, you can have a respite from austerity only outside the euro.

The logic behind Schäuble’s position was simple: Given the eurozone’s bad architecture, post-2008 Europe faced three options, which he ranked in the following order:

Best Option: A smaller homogenous eurozone requiring only moderate austerity and allowing debt write-offs for the heavily indebted countries, in exchange for exiting the euro.

Bad Option: Maintain the original heterogenous eurozone at the price of massive austerity and no therapeutic debt write-offs.

Unacceptable Option: Delors’ vision of a fiscal union without a democratic political union – what Thatcher had labeled a European “superstate”.

Schäuble’s preferred option was a Greek exit from the euro. This would lead Italy and other deficit countries to follow Greece out within a matter of days, finally realising the Bundesbank’s original plan for a small, mercantilist eurozone within a larger single market.

French elites, along with their counterparts in Italy, Spain, and Greece, opposed this option fiercely, because they wanted their domestic assets to remain denominated in the euro.

To hide their less-than-virtuous motive, they made noises that the time had come to implement Delors’ original plan for fiscal union. But their hypocrisy was evident in the fact that even France’s Socialists were unwilling to supplement fiscal union with political union, lest French national sovereignty be imperiled.

Schäuble felt obliged to lay down the law: The Delors plan was unacceptable, not least because it would be politically impossible to enact in various national parliaments.

If heavily indebted countries wanted to keep the euro, it was they (not Germany) that had to impose massive, suboptimal austerity on their people (the Bad Option). To his chagrin, they agreed to do that. Crucially, his chancellor, Angela Merkel, under the influence of Mario Draghi, the president of the European Central Bank at the time, sided with them and treated her finance minister with considerable contempt.

A broken Schäuble acquiesced to Merkel’s choice, knowing full well that relying on so much austerity and money printing was suboptimal and detrimental not only to the deficit countries but also to the EU as a whole. Almost immediately, he signaled his readiness to leave the finance ministry and retreat into semi-retirement.

Merkel denied him, and not for the first time, the honor of the Presidency of the Federal Republic and offered him the wooden spoon of the Bundestag Presidency.

Today, both Delors’ and Schäuble’s visions lay in ruins, as if in a Greek tragedy.

The way the euro crisis was managed put paid to Delors’ vision of a Europe in the image of a social-democratic Greater France, and it ruined Schäuble’s attempt to safeguard the postwar model at the heart of a fiscally sovereign Germany that continues to lose itself in a mercantilist Europe.

Back when the euro was still on the drawing board, neither Delors nor Schäuble could have imagined, or would condone, Europe’s inane response to the euro’s inevitable crisis.

The combination of massive austerity and monetary largesse that preserved the eurozone in its original format, which both Delors and Schäuble correctly deemed unviable, is the reason why Europe is now politically fragmented and in secular decline.

History, once more, proved a cruel master of noteworthy Europeans who refused to see that Europe’s interests are in direct opposition to the interests of its ruling classes.

Unlocking Creativity: Transforming Your Environment For Breakthrough Ideas

From personal anecdotes to practical tips, Simon shares his journey through dark times and how he rekindled his creative spark by altering his environment. Whether it’s relocating for inspiration, reorganizing your workspace, or collaborating across industries, this video is a must-watch for anyone looking to break free from stagnation and ignite their creative potential.

 

Call For Action Against Private Medicare Advantage Insurers That Waste Taxpayer Dollars And Unlawfully Deny Care

Centers for Medicare and Medicaid Services Has Authority to Curb Billions in Overpayments to Private Medicare Advantage Insurers

Washington, D.C.  – U.S. Representative Pramila Jayapal (D-Wash.) and U.S. Senator Elizabeth Warren (D-Mass.), a member of the Senate Finance Committee, sent a letter to the Centers for Medicare and Medicaid Services (CMS) urging the agency to take administrative action to curb billions in overpayments to Medicare Advantage (MA) insurers. The lawmakers called on CMS to (1) address perverse incentives in MA’s payment system, including favorable selection and risk code gaming, (2) reform the flawed Quality Bonus Program, and (3) crack down on private insurers that unlawfully deny care. The letter comes as CMS is expected to release its 2025 advance notice of methodological changes for MA payment rates and policies.

“I appreciate the important steps CMS has already taken to limit overpayments, such as increasing audit rates of MA insurers and finalizing necessary adjustments to MA’s risk adjustment model. Yet, despite your agency’s efforts to date, the Committee for a Responsible Federal Budget projects that CMS will overpay MA insurers by as much as $1.56 trillion over the next decade. As enrollment in MA continues to grow,  CMS must take more aggressive action to ensure Medicare’s sustainability, protect taxpayer dollars, and curb abusive practices in MA,” wrote the lawmakers. 

The MA program was founded on the premise that private insurance companies would administer Medicare coverage more cost-effectively, saving taxpayer dollars. However, the MA program has failed to deliver savings in any year since its inception. The Medicare Payment Advisory Commission estimates that CMS pays MA plans 6 percent more per enrollee than what it would cost to cover the same enrollee in Traditional Medicare (TM), even though MA plans spend up to 25 percent less on health care per enrollee.

“As a result of these factors, the MA program has jeopardized the solvency of Medicare’s Hospital Insurance Trust Fund, raised Part B premiums for all Medicare beneficiaries by as much as $140 billion over ten years, and created significant barriers to care for vulnerable enrollees. It is imperative for CMS to rein in these abuses and protect Medicare coverage for the seniors and people with disabilities who rely on it,” continued the lawmakers. 

As CMS prepares its 2025 advance notice of MA payment policies, the lawmakers urged the agency to pursue the following actions:

Reform base payments to offset favorable selection 

  • Modify benchmarks to offset favorable selection.
  • Modify calculation of United States Annual Per Capita Costs to account for favorable selection.

Risk adjustment 

  • Increase the coding intensity adjustment factor.
  • Increase recoupment of overpayments.
  • Restrict the use of chart reviews and health risk assessments.
  • Eliminate the use of provider incentives that contribute to increased coding.

Reform the Quality Bonus Program (QBP)

  • Raise the standard for QBP.
  • Apply a network quality measure to MA plans’ star rating.

Strengthen enforcement against MA insurers that illegally deny care 

  • Investigate abuse of AI models.
  • Terminate contracts that are in violation of Medicare coverage rules.

“To protect Medicare beneficiaries and curb billions in overpayments driven by for-profit insurers, I respectfully urge you to take the actions outlined in this letter. Doing so will save hundreds of billions of taxpayer dollars, ensure Medicare’s sustainability, and improve health outcomes for Medicare enrollees. I also request that you provide a staff-level briefing on CMS’s plan to limit overpayments and hold MA insurers accountable for widespread delays and denials by February 8, 2024,” concluded the lawmakers.

Sheet Cake As Ammunition

We live in a highly polarized society—the Washington Post reported this morning that “science is revealing why” we’ve become so sharply divided in our political life. They have one expert after another explaining that evolution set us up for this ugliness:

The tendency to form tightly knit groups has roots in evolution, according to experts in political psychology. Humans evolved in a challenging world of limited resources in which survival required cooperation — and identifying the rivals, the competitors for those resources.

“The evolution of cooperation required out-group hatred. Which is really sad,” said Nicholas Christakis, a Yale sociologist and author of “Blueprint: The Evolutionary Origins of a Good Society.”

I’m not a thousand percent convinced of this explanation—I grew up in a time of somewhat gentler political competition, and I live in a place (Vermont) where that old era still holds: we have a Republican governor whom I disagree with on some things but respect. It seems unlikely we’ve devolved in the course of a single generation, and so I doubt Darwin alone can explain our current travails. But there is no gainsaying the story’s basic point: “this country, though politically fractious since its founding, is more polarized than ever, the rhetoric more inflammatory, the rage more likely to curdle into hate. It’s ugly out there.”

So, a question is: can we sometimes conduct politics—even politics about life and death matters like climate change—in a way that doesn’t do further damage to our society? And are there cases where it might be more effective to do it that way?

I’m thinking about this right now because on Thursday my colleagues at Third Act, with other activists, launched a campaign designed to get Costco to pressure its bank—Citi—to stop funding fossil fuel expansion. It’s an interesting fight for several reasons:

Costco is the third largest retailer on our overheating planet, trailing just Walmart and Amazon.

Thirty seven percent of Americans shop at Costco.

And Citibank is the second largest funder of the fossil fuel industry.

So, a big deal, and a point that needs making.

But it’s also interesting because Costco is a basically good company. It treats its employees fairly by most accounts, paying wages well above the average, and providing decent benefits. I am a big advocate of local food, but so far my valley is not producing its own razor blades, and the one Costco in our state has, exclusively, my very favorite cheese (Mad River Reserve, from the Cabot Cooperative, which is a blend of cheddar and parmesan, and just writing about it means that I’m stopping to go slice off a little hunk). (Actually, it turned out to be a large-ish hunk).

Costco’s problem is not that it is bad—it’s that it’s fallen in with a bad crowd, that bad crowd being the amoral money-center banks that have ignored the world’s climate scientists and continued to pump money into pipelines and LNG export terminals and all the other things that damage both communities and planets. Because of their size, Costco pressuring Citi would have enormous benefits; it might actually convince the bank to shift, because losing Costco’s business would be as painful as losing Big Oil’s. And it’s not an impossible ask: Costco’s main competitor, the much-less-socially-conscious Sam’s Club, offers their credit card through a supplier called Synchrony which is…not the second-biggest funder of fossil fuels on planet earth.

Furthermore, Costco’s customers, surely, mostly fall into that huge demographic of normal suburbanites who polls show care about climate change. So they’re open to the notion that Costco should change—that’s why 40,000 of them have already signed a petition asking for it to happen. But they also like the store—by a wide margin it’s the most loved of the big box stores, and only Trader Joe’s approaches it for general affection. It therefore wouldn’t work to mount a frontal attack, insisting that it’s an evil company. Because it isn’t.

So, the sheet cake. And the party hats. We launched this fight on the month that Costco’s new CEO, Ron Vachris (who started at the store as a forklift driver, which should tell you something right there) took over. We billed it as a celebration, and said we were counting on his openness to new ideas.

And Friday, at the annual shareholder’s meeting, Vachris said: “Citi is indeed a key partner for Costco Wholesale, and we are aware of those petitions that were signed. We are going to continue moving forward with our climate action plan, and have been in discussions with Citi about their carbon reduction plans in the future. We’re going to focus on our efforts, and we’ll stay close to Citi and their efforts as well.”

That’s not a win, but it’s a start—something we can hold them to. And we understand it’s not easy—if Costco did the right thing, no doubt they’d face pressure from the oil-saturated far right, who would gin up something about them going “woke.” I don’t think it would damage them, but businesses are always wary. So, the process is begun, and I have no doubt it will continue. The magazine Progressive Grocer (and it was worth starting this campaign just to find out there was a magazine called Progressive Grocer) reported on the launch, noting new data that showed Costco’s money in Citibank produced far more carbon emissions than its warehouses or its trucks. Over time—hopefully not too much time—that will weigh on any serious executive.

There are other shades of this, places where activists need to choose not just what to fight but how to fight. At the moment, for instance, we’re pressing the Biden administration to stop granting export licenses for new LNG facilities. It’s crucial—the biggest fossil fuel expansion project on the planet. And we’re doing civil disobedience next month outside the Department of Energy—because we have to stop this. But it’s going to be very civil civil disobedience, because the DOE is only partly an adversary—half the people in the building we’ll be picketing are busy doing some of the most cutting-edge work in the world, figuring out how to get as much renewable energy as possible to the communities that need it the most.

And, of course, we don’t want to damage Joe Biden, who is going to have to beat Donald Trump in November, or else we will lose all these fights immediateluy and comprehensively.

Trump, of course, is the wild card here—and I’d argue that he, more than “evolution,” has changed the flavor of our political life. There is no way to take him on without absolute clarity: he is an adjudged rapist who put his own interest above the country’s in a way none of his predecessors ever imagined when he egged on the January 6 rioters; he is eager to use the saddest strains of the American past and present—racism above all—to his own advantage; I would not leave my child in his company for five minutes while I went to the corner store to buy some milk.

I find it hard not to extend my disgust with him to his supporters (and with know-better lickspittles like Elise Stefanik I routinely fail), but on a wider scale that’s almost certainly a bad strategic move. (I’ve heard plenty of people defend Hilary Clinton’s ‘deplorables’ remark as correct, but none as politically savvy). Still, there’s no way to take on Trump without being…divisive. It is a division, and one we must come out on the right side of, or lose our country and our world.

But we don’t want to lose our society in the process, if that’s still possible. We need to cling to the idea that we can rebuild a working country—a job that I think Joe Biden has in certain important ways begun.

Or at least I need to cling to this belief, which may in some ways explains my thinking about Costco. You’ve probably noted that its house brand products are called Kirkland, for the Washington town where it had its first headquarters. As it happens, my beloved grandfather was the town doctor in Kirkland for fifty years, when it was a small ship-building town, and on occasion he served as mayor; my beloved father grew up there, playing baseball and hiking the Cascades. I think of them every time I unscrew the cap on my bottle of olive oil, and I’d love to be able to do it without thinking of Citibank as well.

What’s The ‘Chevron Doctrine,’ And Why Should You Want To Preserve It?

The Supreme Court hears a pair of cases that could upend federal regulations designed to protect us.

At risk is the Biden administration’s entire climate agenda. Also, the power of the government to approve and regulate drugs. Its power to stop employers from threatening the health and safety of workers. The safety and quality of the food we eat, the water we drink, and the air we breathe.

The Supreme Court seems to have no problem regulating women’s bodies. But when it comes to regulating big business, it may be ready to end 40 years of established law.

Let me explain.

The Supreme Court will hear a challenge to something known as the “Chevron doctrine,” established by the court’s ruling in the 1984 case Chevron v. Natural Resources Defense Council.

The Chevron case held that whenever a law is unclear, the federal agencies charged with implementing it should be able to interpret it — not the federal courts.

This makes sense, because unlike courts, federal agencies are staffed with scientists, researchers, and engineers — actual experts in the fields they’re regulating.

I spent five years at the Federal Trade Commission, supervising a team of economists and policy analysts who advised commissioners on how best to protect consumers and attack monopolies.

But now, a pair of Supreme Court cases challenging the Chevron doctrine could strip federal agencies of this key role of interpreting and implementing our nation’s laws — and shift this power to the courts.

But here’s the problem, and it’s a huge one. If judges become the sole interpreters of the nation’s laws, a single right-wing judge, carefully selected by corporate plaintiffs, could invalidate all the regulations of a federal agency charged with protecting the public.

No wonder big banks, fossil fuel companies, and pharmaceutical giants, who hate the power of federal agencies to limit their profits, have been trying for years to end the Chevron doctrine. And no wonder the two cases the Supreme Court will hear tomorrow have been selected and bankrolled by the Koch network to accomplish just this.

They think they have the votes on the Supreme Court to do it.

If agencies are stripped of their power to regulate, the big losers will be the American public. We need real experts tackling today’s complicated problems, not right-wing judges selected by corporate plaintiffs.

It’s important to see the potential fall of the Chevron doctrine for what it is: a power grab by corporate interests, allowing them to shop for judges who will strip agencies of their power to protect the public.

The right-wing strategy underlying tomorrow’s oral arguments is also consistent with the so-called “unitary executive theory,” which conservatives have been pushing since Reagan.

That theory aims to centralize control over implementing all laws in the president, rather than independent agencies. Under this theory, even Congress cannot vest the power to make certain decisions in an agency rather than the president. Subscribe

Trump and his lackeys want to consolidate all power in a president who will be able to do whatever he pleases. That’s part of their plan to give all power to Trump.

Shortly before the 2020 election, then-President Trump issued an executive order that sought to strip civil service protections from tens of thousands of career federal employees by reclassifying them as “Schedule F,” which would allow a president to fire or reassign them at will. President Biden rescinded this order before it was legally tested.

In his current campaign for the presidency, Trump promises to issue this order and substitute political appointees for the civil service.

When he was president, Trump also considered issuing an executive order requiring independent agencies that Congress insulated from presidential supervision — such as the Federal Trade Commission, the Securities and Exchange Commission, and even the Federal Reserve — to submit any new regulations to the White House for approval before issuing them.

Were he to become president again, you can bet he’ll do this.

Since Franklin D. Roosevelt’s administration, regulatory agencies have protected the public from corporate harms. The only reason to end these protections is to give corporate America even higher profits by shifting the risks of harms to individual people.

Watch your wallets.

Biden Administration Reportedly Pauses Approval Of ‘Carbon Mega Bomb’ Gas Export Hub

The Biden administration will reportedly pause a decision on approving what would be one of the world’s largest gas export hubs, amid concern from climate experts that greenlighting the project would create a “carbon mega bomb”.

The project, Calcasieu Pass 2, or CP2, would be positioned near the rapidly eroding Louisiana shoreline and be the biggest such export terminal in the US and part of a huge expansion of new gas infrastructure along the Gulf of Mexico.

The New York Times, citing three unnamed sources, reported Wednesday that the administration was pausing the decision in a delay that could stretch past the November election.

The move, the sources said, could spell trouble for the project and 16 other proposed terminals, as the energy department had been asked to expand its evaluation of CP2 to assess its impact on climate change, as well as on the economy and national security, the Times said.

The report comes as Joe Biden, who passed landmark climate legislation in August 2022 with the Inflation Reduction Act, and whose White House has been pushing funding boosts for electric vehicles in recent weeks, has disappointed climate activists who have been alarmed by US oil and gas production breaking records.

The report that the administration had paused CP2 was cautiously celebrated by environmental advocates. “It shows that the government recognizes the need to protect the rights and well-being of these communities,” said Roishetta Ozane, director of the Vessel Project, a Louisiana environmental justice group. “This decision would send a strong message that we can no longer allow fossil fuel industries to operate without considering the health and safety of the people living in these areas.”

Bill McKibben, the author and climate campaigner who has led opposition to CP2, praised the administration. “With this decision, President Biden – who already can claim to have done more to bolster clean energy than any of his predecessors – has also done more to check dirty energy, halting the largest fossil fuel expansion in history,” he said.

Some, however, cautioned that a pause would only be good news if it ultimately did not end up with approvals after the election. Wenonah Hauter, executive director of Food & Water Watch, said: “We don’t need new criteria if they only serve to arrive at the original conclusion, and increased exports are eventually approved. President Biden should permanently halt new and existing oil and gas exports, and aggressively ramp down the fossil fuel industry once and for all.”

One expert previously calculated that the CP2 project could create emissions that were 20 times greater than the controversial Willow oil project in Alaska, which was approved by the Biden administration despite a huge outcry from Democrats, Indigenous tribes and climate campaigners last year.

“This is a carbon mega bomb,” said Jeremy Symons, a former Environmental Protection Agency official, of CP2, speaking to the Guardian last October. “The scale of the project is almost unfathomable and it locks us into a fossil fuel dependency for the next 30 years. If all we do is shift from coal to gas, we are cooked.”

CP2 would ship up to 24m tons of liquified natural gas (LNG) each year once built.

Since Russia’s invasion of Ukraine in 2022, Biden has talked up plans to send LNG to Europe to help allies who had been reliant on Russian exports.

Environmental advocates have said that increasing US exports will undermine the country’s plans to transition away from fossil fuels. Advocates worry that the CP2 expansion will also exacerbate local environmental degradation and air pollution.

Emissions of carbon monoxide, sulfur dioxide and volatile organic compounds from LNG plants can exacerbate asthma and other respiratory conditions, cause headaches and skin irritation.

The project’s infrastructure could also contribute to Louisiana’s coastline crisis; the state’s low-lying coast has been subsiding due to sea level rise, caused by global heating, but also because of oil and gas development atop protective wetlands.

Venture Global, the company behind CP2, has said it plans a 30ft wall around CP2 to protect it from the rising seas, but experts have questioned the long-term viability of such infrastructure.

The company had hoped to start building by 2026, and is requesting a permit to operate until 2050, a point when Biden aims for the US to have zeroed out its emissions.

The firm has previously rejected criticism from climate experts. “The well-funded environmental activists opposing CP2 and all US LNG projects are completely out of touch with reality,” a spokesperson for Venture Global told the Guardian last year, adding that opposing utilities of its kind would “only result in continued and increased coal use and prevent the reduction of global emissions”.

Ireland Will Not Have Any Political Peace Until We Fix Housing

We all know that Ireland’s demographic history is one of the most unusual and tragic in Europe. The collapse of the population from the early 19th century is unprecedented in European history.

In 1821, for example, the island of Ireland had a population of 6.8 million. England – a far larger land mass – hosted a population of 10.4 million. Today there are closer to 7 million in Ireland, whereas there are 56 million people in England. Had Ireland’s population risen at the same rate, there would now be around 35 million people on the island.

It’s difficult to get our heads around these numbers, and obviously things didn’t turn out that way, but in economic terms Ireland until very recently was dealing with the problems of population decline. We are now dealing with the problems of population expansion, and we don’t know what to do. For generations we grappled with the problems of economic failure, emigration, high unemployment and falling incomes. Now we must deal with the problems of success, full employment and soaring incomes.

Our State’s collective economic and managerial competence was not prepared for the mental shift that such population growth demands. That mental shift involves major infrastructure, new towns and transport frameworks, as well as a vastly different approach to land use, land ownership and land rights.

We must consign to history our mental map of Ireland with all roads leading to Dublin and plan for an entirely new city or new cities, not just adjacent to old ones, but possibly entirely greenfield cities and towns. At the core of this transformation is the democratic reality that with a growing population Ireland will not have any political peace until we fix housing. It’s that simple, no housing, no stability.

Accommodating a rapidly rising population requires emergency or crisis thinking. It is easy if you have a home to be inured to the severity of this national challenge. Without a concentrated effort by the State and the citizens, Ireland’s inability – and, so far, unwillingness – to build homes will undermine political, social and, therefore, economic solidarity for decades to come.

The political slogan for the next three decades should be houses, houses, houses – nothing else matters. To paraphrase Bill Clinton’s adviser James Carville, in political terms, “it’s the housing market, stupid”. Everything else comes second. All policy initiatives, from planning to transport, education and – maybe most critically – inward investment must answer the question “where will they live?” before the State moves ahead on any decision.

Housing demand depends on the following four factors: natural increase in the population (births minus deaths); immigration; the size of the household (how many people live in each house); and obsolescence (how much of the housing stock is uninhabitable). Based on these trends, my back-of-the envelope calculation points to a need to build at least 55,000 homes a year.

That’s a city the size of Waterford every year. That is every year, not every decade.

The facts are stark. Ireland has one of the highest rates of natural population growth in Europe. CSO figures point to around 20,000 last year – 55,500 births minus 35,500 deaths. Based on 2022 figures from Eurostat, Ireland saw a +4.4 natural population change (ie births minus deaths) per 1,000 inhabitants – well above the next highest in Sweden & Norway (+1) and way above the EU average (-2.8). According to estimates from the Central Bank (2019) the natural increase in the population is expected to be the main driver of housing demand over the coming decades, with an estimated 18,000 new dwellings needed each year from 2020-2030 to account for the natural increase alone.

By far the major factor driving population now is inward migration. In the 12 months to the end of April 2023, the Irish population rose by 97,600 people, which was the largest 12-month increase since 2008. There were 141,600 immigrants – a 16-year high, and this was the second successive year that over 100,000 people moved to Ireland. Some 29,600 were returning Irish citizens, 26,100 were EU citizens, and 4,800 were UK citizens. The remaining 81,100 immigrants were from other countries including almost 42,000 Ukrainians. [CSO]. Half of all immigrants are between the 25-44-year-old age group – the most likely age group to be having families.

The Government’s National Planning Framework assumes immigration of only 12,500 per annum, which is obviously a long way from reality. Every 10,000 people roughly equates to 4,000 homes. At present rates of inward migration, Ireland will need to build, 40,000 homes a year just to deal with immigration. The Government’s own figures of 12,000 homes for immigrants is far from what is needed. Assuming all the Ukrainians go back, which isn’t realistic, we are still talking about 60,000 immigrants per year implying the need for around 26,000 additional new homes.

We also must factor in the change in Irish household size. We have one of the largest household sizes in western Europe (2.5 people per household), but this has fallen steadily over the past five decades. We are still relatively un-urbanised and don’t live in apartments. This is changing. As household size falls we will need more houses per head of population. The number of Irish households rose by roughly 50 per cent from 1.1 million in 1996 to 1.84 million by 2022. Two-thirds of this growth over the past 20 years has been in one- to two-person households.

This inability of our housing stock to respond and accommodate this shift has contributed to severe overcrowding and shared accommodation, especially in Dublin. Many young couples live in rooms in shared houses with other young couples.

Household size will have a significant impact on our housing need. If Ireland’s population rises to 6.2 million by 2051, for example, we’ll need about 2.5 million dwellings with an average household size of 2.5. On the basis of present trends lower household size translates to around 10,000 new homes per year. If we end up with what looks like a small change in household size, let’s say 2.3 people per home, we will need to build 270,000 extra homes above that 2.5 million.

Finally, 150,000 Irish households currently live in buildings that are more than 100 years old, predominantly in rural areas. These buildings need to be updated or replaced. There are 2.1 million homes in the country, therefore, at an obsolescence rate of 0.5 per cent. So we may be talking somewhere in the 5,000–10,000 new homes range just to replace these old homes every year.

Taken together the rising population requires us to build between 55,000 and 60,000 new homes per year, twice the amount that is being built right now. The longer it takes us to get to the 55,000-60,000 figure, the greater the housing crisis. That is the challenge.

Problems like this are the problems of economic success. Eventually Ireland figured out how to solve the problem of economic failure. Could the problem of success overwhelm us?

Oregon And California On Similar Paths To Universal Unified Financing Healthcare

The implementation of California’s Unified Healthcare Financing Act (SB 770) begins this year as Oregon ramps up its Universal Health Plan Governance Board (SB 1089) to create a universal healthcare system based on single payer financing.

Call it the West Coast Way.

In California, SB 770 mandates discussions between the State and the federal government to explore and define waivers to permit unified financing / single payer. There is some more detail in Health Justice Monitor.

In Oregon, SB 1089 creates the Universal Health Plan Governance Board. The Board will develop an implementation plan, and then administer it. The process will create a detailed, publicly funded, single payer universal health plan.  It will do in-depth research and analysis to design program details.  The Board will include members with a variety of expertise and backgrounds. It will present the plan to the state legislature, so implementation could start as soon as 2027 (though note need for ballot referenda below.[1]

In both states, there is a clear requirement for a single source of payment for all healthcare services. This follows the recommendation of the Healthy California for All Commission, and Oregon’s Universal Healthcare Task Force. SB 770 (CA)[2] and SB 1089 (OR) prohibit risk-bearing contracts and financial incentives to deny care. A key issue for both plans is the role, if any, of integrated delivery systems, benefit funds, and third party administrators.

The detailed policy development beginning this year by the UHP Governance Board in Oregon and the California Department of Health Services will lead to discussions with the federal government, specifically the Center for Medicare and Medicaid Services, over the terms of federal financial support and approval of the universal healthcare system in each state. This “Waiver” of existing federal rules will then form the basis of final approval by the respective state legislatures likely in 2026. In both states, voters will have the final say on how the programs will be financed, as early as 2028.

These efforts are the most advanced and strategic approaches to determining what it actually takes and implementing a plan to achieve guaranteed healthcare through single-payer financing. Major questions to address include: the role of Medicare in relation to state universal health care programs, how employee benefit funds relate to the new programs, and how the federal ERISA law governing employer provided benefits impacts these state programs. These and other issues must be resolved in order to redirect federal funds currently used to support healthcare in the state into the new universal healthcare programs.

Both states decided to lay out the principles that govern the design of a universal healthcare system, and to finalize the details based upon discussions with the federal government before asking the legislature to approve a full-blown program and financing. That is different from prior efforts to pass the program and then talk to the federal government.

After decades of unsuccessful legislative and ballot initiatives in Oregon and California, advocates are optimistic about this new strategy. Answering political, technical, and legal questions up front can preempt any excuse avowed supporters of universal healthcare may cite to oppose single payer.

Will it succeed? We are some years away from knowing, but the political impact is encouraging.   Building a coalition that includes the full range of health reformers from single payer advocates to those working for coverage and access expansion, along with unions and policymakers, has enabled the progress so far. This strategic approach to policy creates a political momentum that could be the missing piece to finally winning guaranteed, efficient, and equitable healthcare. The West Coast can lead the way.

[1] HCAO website: https://www.hcao.org/uhp-governance-board

[2] Enrolled Senate Bill 770 Section 1 Part 4 1001 (q)

Oregon SB 1089 (now enacted law):

(5) “Single payer health care financing system” means a universal system used by the state for paying the cost of healthcare services or goods in which:

(a) Institutional providers are paid directly for health care services or goods by the state or are paid by an administrator that does not bear risk in its contracts with the state;

(b) Group practices are paid directly for health care services or goods by the state or are paid by an administrator that does not bear risk in its contracts with the state, by the employer of the group practice or by an institutional provider; and

(c) Individual providers are paid directly for health care services or goods by the state, by their employers, by an administrator that does not bear risk in its contracts with the state, by an institutional provider or by a group practice.

How Oligarchs Shrank America’s Middle Class

Despite an economy that’s far larger and more productive than it was 40 or 50 years ago, the typical American worker has gone nowhere.

When I was a boy, my father sold dresses and blouses to the wives of factory workers. As the wages of those workers rose through the 1950s, my father earned enough to expand his business to a second shop in another factory town not far away. We were by no means rich, but he earned enough to put us in the middle class.

For three decades after World War II, the average hourly compensation of American workers rose in lockstep with the nation’s productivity gains. In other words, as workers produced more value, they got more pay.

It was a virtuous cycle, from which our family and tens of millions of others benefited: The economy grew, and the middle class expanded. Its purchasing power rose, causing the economy to grow faster. This fueled new investments and innovations that further enriched and enlarged the middle class.

But then, beginning in the late 1970s, the virtuous cycle came to a halt.

While productivity gains continued much as before and the economy continued to grow, wages began to flatten. Starting in the early 1980s, the median household’s income stopped growing altogether, when adjusted for inflation.

Today, the median household is earning just a bit more than it did in 1979, 45 years ago (adjusted for inflation).

If you’re a non-supervisory worker who relies on an hourly wage — still the vast majority of workers — you’re earning no more than you earned in 1969. Job security also declined.

So, despite an economy that’s far larger and more productive than it was 40 or 50 years ago, the typical American worker has gone nowhere.

The standard explanation attributes this to neutral “market forces,” especially globalization and technological innovations that have made many working Americans less competitive.

While surely important, the standard explanation can’t account for much of what’s happened. It doesn’t explain why the transformation occurred so suddenly, over a relatively small number of years. Nor why other advanced economies facing similar forces didn’t succumb to them. Nor why so much of the nation’s income and wealth have gone to the top.

America’s middle class has shrunk because of its declining bargaining power — orchestrated and directed by America’s oligarchy. The economic gains that would otherwise have gone to the middle class went instead to the moneyed interests at the top. Let me explain.

1. The financialization of the economy

Before the 1980s (as I noted in our discussion about the decline of the common good), large corporations were in effect owned by all their stakeholders, who were assumed to have legitimate claims on them.

As early as 1914, the popular columnist and public philosopher Walter Lippmann called on America’s corporate executives to be stewards of America. “The men connected with [the large corporation] cannot escape the fact that they are expected to act increasingly like public officials …. Big businessmen who are at all intelligent recognize this. They are talking more and more about their ‘responsibilities,’ and their ‘stewardship.’”

This vision of corporate governance came to be widely accepted by the end of World War II. Frank Abrams, chairman of Standard Oil of New Jersey, declared in a 1951 address that typified what other chief executives were saying at the time:

“The job of management is to maintain an equitable and working balance among the claims of the various directly affected interest groups … stockholders, employees, customers, and the public at large. Business managers are gaining professional status partly because they see in their work the basic responsibilities [to the public] that other professional men have long recognized as theirs.”

Pulp and paper executive J.D. Zellerbach told Time magazine that “[t]he majority of Americans support private enterprise, not as a God-given right but as the best practical means of conducting business in a free society … . They regard business management as a stewardship, and they expect it to operate the economy as a public trust for the benefit of all the people.”

But a radically different vision of corporate ownership emerged in the late 1970s and early 1980s. It came from corporate “raiders” who mounted hostile takeovers with high-yield junk bonds.

The raiders used leveraged buyouts and undertook proxy fights against the “industrial statesmen” who, in their view, were depriving shareholders of the wealth that properly belonged to them.

The raiders assumed shareholders were the only legitimate owners of the corporation and that the only valid purpose of the corporation was to maximize shareholder returns.

This transformation did not happen by accident. It was a product of changes in laws governing corporations and of financial markets — changes that were promoted by the monied interests, America’s oligarchs.

In 1974, at the urging of pension funds, insurance companies, and Wall Street, Congress enacted the Employee Retirement Income Security Act. Before then, the giant portfolios of pension funds and insurance companies could be invested in only high-grade corporate and government bonds. Legally, it was their fiduciary obligation.

The 1974 Act changed that, allowing pension funds and insurance companies to invest in the stock market — thereby making a huge pool of capital available to Wall Street.

In 1982, another large pool of capital became available when Congress allowed savings and loan banks — the bedrocks of local home mortgage markets — to invest their deposits in a wide range of financial products, including junk bonds and other risky ventures promising high returns.

The convenient fact that the government insured savings and loan deposits against losses made these investments all the more tempting (and ultimately cost taxpayers some $124 billion when many of the banks went bust).

Meanwhile, the Reagan administration loosened other banking and financial regulations and simultaneously cut the enforcement staff at the Securities and Exchange Commission.

All this made it possible for corporate raiders to get the capital and the regulatory approvals they needed to mount unfriendly takeovers.

During the whole of the 1970s, there had been only 13 hostile takeovers of companies valued at $1 billion or more. During the 1980s, there were 150.

Even where raids did not occur, CEOs felt pressured to maximize shareholder returns for fear their firms might otherwise be targeted. Hence, they began to see their primary role as driving up share prices.

The easiest and most direct way for CEOs to accomplish this feat was to cut costs — especially payrolls, which constitute most firms’ largest single expense.

Accordingly, the corporate statesmen of the 1950s and 1960s were replaced by the corporate butchers of the 1980s and 1990s, whose nearly exclusive focus was to “cut out the fat” and “cut to the bone.”

When Jack Welch took the helm of GE in 1981, the company was valued by the stock market at less than $14 billion. When he retired in 2001, it was worth about $400 billion. Welch accomplished this largely by cutting payrolls.

Before his tenure, most GE employees had spent their entire careers with the company. But between 1981 and 1985, a quarter of them — 100,000 in all — lost their jobs, earning Welsh the moniker “neutron Jack.” Even when times were good, Welch encouraged his senior managers to replace 10 percent of their subordinates every year in order to keep GE competitive.

Other CEOs tried to outdo even Welch. As CEO of Scott Paper, “Chainsaw” Al Dunlap laid off 11,000 workers, including 71 percent of headquarters staff. Wall Street was impressed, and the company’s stock soared.

When Dunlap moved to Sunbeam in 1997, he promptly laid off half of Sunbeam’s 12,000 employees. (Unfortunately for Chainsaw Al, he was caught cooking Sunbeam’s books; the SEC sued him for fraud, and he settled for $500,000, agreeing never again to serve as an officer or director of any publicly held company.)

In consequence of this change in the purpose of the American corporation, share prices soared, as did the compensation packages of CEOs. The results have been touted as “efficient” because resources theoretically have been shifted to “higher and better uses.”

But the human costs of this transformation have been huge. Millions of workers have lost jobs and wages. Many communities have been abandoned.

Nor have the efficiency benefits been widely shared.

As corporations have steadily weakened their workers’ bargaining power, the link between productivity and workers’ income has been severed.

Almost all the gains from growth have gone to the top. As noted, the average worker today is no better off than his or her equivalent 40 years ago, adjusted for inflation. Most are less economically secure.

Not incidentally, few own any shares of stock.

The richest 1 percent of Americans now own 52 percent of all the shares of stock owned by Americans. The richest 10 percent, 93 percent. The nation’s economic gains, once distributed broadly to the working and middle class — have been siphoned to the top.

2. Globaloney

Wages have also been suppressed because workers who are worried about keeping their jobs have accepted lower pay, relative to the economy’s productivity gains, than they did 40 years ago.

Here again, political decisions steered by the nation’s oligarchy have played a significant role. Some of the prevailing job insecurity is the result of trade agreements that invited American companies to outsource jobs abroad.

The conventional view equating “free trade” with the “free market” — in contrast to government “protectionism” — is wrong.

Just as all nations’ markets reflect political decisions about how they should be organized, so-called “free trade” agreements entail complex negotiations about how different market systems are integrated.

Within these negotiations, the interests of large corporations and Wall Street, to fully protect the value of their intellectual property and financial assets, have repeatedly trumped the interests of average working Americans to protect the value of their labor.

When the Federal Reserve raises interest rates and Congress opts for austerity to reduce federal budget deficits — two policies favored by the oligarchy — the resulting unemployment also undermines the bargaining power of average workers.

3. The Fed and inflation

When the Federal Reserve raises interest rates and Congress opts for austerity to reduce federal budget deficits — two policies favored by the oligarchy — the resulting unemployment also undermines the bargaining power of average workers.

Higher unemployment keeps wages low. This means higher corporate profits, leading to higher returns for shareholders.

The high inflation after the pandemic was driven in part by supply shortages and a major government stimulus. But it was also driven by monopolistic corporations using the excuse of inflation to raise their prices.

The Fed, however, believed that a root cause of inflation was wage growth, and it set out to slow the economy and loosen the labor market by raising interest rates. Here, too, the strategy was consistent with the views of the moneyed interests and was pushed by them.

4. The risk-shift to workers

Public policies that emerged during the New Deal and World War II placed most of the risks of economic change on large corporations rather than workers — through Social Security, worker’s compensation, 40-hour workweeks with time-and-a-half for overtime, and employer-provided health benefits (wartime price controls encouraged such tax-free benefits as substitutes for wage increases).

By the 1950s and 1960s, a majority of the employees of large companies remained with the companies for life. Their paychecks rose steadily with seniority, productivity, the cost of living, and corporate profits. When they retired, they received generous corporate pensions.

But after the junk-bond and takeover mania of the 1980s, that relationship broke down.

Even full-time workers who have put in decades with a company can now find themselves without a job overnight — with no severance pay, no help finding another job, no health insurance, and little or no pension.

Nearly one out of every five working Americans is now in a part-time job. Many are temporary workers, freelancers, independent contractors, or consultants, whose incomes and work schedules vary from week to week or even day to day. Two-thirds of American workers are living paycheck to paycheck.

The risk of getting old without a pension is rising.

In 1980, more than 80 percent of large and medium-sized firms gave their workers “defined-benefit” pensions that guaranteed them a fixed amount of money every month after they retired.

Now, fewer than 10 percent of companies provide their workers defined-benefit pensions. Instead, they offer “defined contribution” plans whose risks have been shifted to the workers. When the stock market tanks, as it did in 2008 and then again in 2020, their 401(k) plans tank along with it.

A quarter of all workers with so-called “matching” defined-benefit plans get no match because they don’t earn enough to contribute to them.

Meanwhile, the risk of a sudden loss of income continues to rise. Even before the crash of 2008, the Panel Study of Income Dynamics at the University of Michigan found that over any given two-year stretch, about half of all families experienced some decline in income.

Those downturns have become progressively larger. In the 1970s, the typical drop was about 25 percent. By late 1990s, it was 40 percent. By the mid-2000s, family incomes rose and fell twice as much as they did in the mid-1970s, on average.

Workers who are economically insecure are not in a position to demand higher wages. They are driven more by fear than by opportunity.

This is another central reality of American capitalism as organized by those with the political power to make it so.

 

 

5. The demise of labor unions

Fifty years ago, when General Motors was the largest employer in America, the typical GM worker earned $35 an hour in today’s dollars.

Today, America’s largest employer is Walmart, and the typical entry-level Walmart worker earns about $11 an hour.

This doesn’t mean the typical GM employee a half-century ago was “worth” four times what the typical Walmart employee today is worth. The GM worker was not better educated or motivated than today’s Walmart worker.

The real difference is that GM workers a half-century ago had a strong union behind them that summoned the collective bargaining power of all autoworkers to get a substantial share of company revenues for its members.

Because more than a third of workers across America then belonged to a labor union, the bargains those unions struck with employers raised the wages and benefits of non-unionized workers as well. Non-union firms knew they would be unionized if they did not come close to matching the union contracts.

Today’s Walmart workers do not have a union to negotiate a better deal. They are on their own. Because only 6 percent of today’s private-sector workers are unionized, most employers across America have no incentive to match union contracts. This puts unionized firms at a competitive disadvantage.

The result has been a race to the bottom.

Some argue that the decline of American unions is simply the result of “market forces.” But other nations have been subject to many of the same “market forces” and continue to have strong unions. In Sweden, 90 percent of workers in the private sector are unionized. These unions continue to provide their middle classes sufficient bargaining power to command a significant share of economic growth — a much larger share than that received by the middle class in the United States.

Why the difference? Look to politics and the allocation of power.

The National Labor Relations Act of 1935 guaranteed American workers the right to organize into unions and imposed on employers the legal responsibility to bargain with them.

As unions gained economic power in the late 1930s and 1940s, they gained greater. political power and wielded it to further enlarge the bargaining clout of American workers. After the legendary Treaty of Detroit in 1950, when Big Business and Big Labor agreed to share productivity gains in exchange for labor peace, the rate of unionization increased dramatically, as did wages and benefits.

Which is why, by the mid-1950s, almost a third of all American employees in the private sector of the economy belonged to a union, and why the median wage increased in tandem with productivity growth.

But starting in the late 1970s, the process went into reverse. Union membership began to decline, as did the economic and political power of unions, along with the bargaining clout of most workers.

The reasons for the decline involved the changes I’ve already noted — globalization, labor-replacing technologies, and a shift in the purpose of the corporation to maximizing shareholder returns.

But the decline of labor unions was also the consequence of political and legal decisions demanded by the monied interests.

When the Taft-Hartley Act of 1947 allowed states to enact “right-to-work” laws, workers who did not pay dues got a free ride off of those who did, thereby undermining the incentive for anyone to join a union in the first place.

Until the 1980s, such laws had minimal effect because they were enacted in southern and western states. Most industries remained in the north.

But as corporations came under increasing pressure to show high returns and cut labor costs, many CEOs found “right-to-work” states more alluring. Even the old heartland industrial states of Indiana and Michigan have enacted “right-to-work” laws.

CEOs whose corporations had high percentages of unionized workers moved, or threatened to move, to “right-to-work” states.

Additionally, Reagan’s notorious firing of the nation’s air traffic controllers for going on strike (which he had a right to do because they had no right to strike) signaled to the nation’s large employers that America had embarked on a different era of labor relations.

Workers who inhabited the local service economy — retail, restaurants, custodial, hotels, elder and child care, hospitals, transportation — faced a different challenge. Their jobs were in less danger of disappearing, because they couldn’t be outsourced abroad and most would not be automated. In fact, the number of local service jobs in America has continued to grow.

But because so many workers expelled from the older industrialized economy had no choice but to seek local service jobs, service-sector employers easily found people willing to work for low wages, few benefits, and little chance of advancement.

Walmart and major fast-food chains, such as Starbucks, have been aggressively anti-union. They’ve blocked union votes, fired workers who tried to organize, refused to enter into contract negotiations, and intimidated others into rejecting the union — all in violation of the National Labor Relations Act.

A succession of Democratic presidents have promised legislation streamlining the process for forming unions and increasing penalties on employers who violate the law, but nothing has come of these promises. (President Biden has been the first to strengthen the National Labor Relations Board and encourage it to enforce the law.)

The result of all this has been a steady decline in the percentage of private-sector workers who are unionized. Despite the jolt of labor activism in 2023, that percentage continues to drop.

The decline parallels the declining share of total income going to the middle class.

Take a look:

 

 

6. Summary

The underlying problem is that average working Americans have steadily lost the bargaining power to receive as large a portion of the economy’s gains as they received in the first three decades after World War II. As a result, instead of the middle class growing, it has shrunk.

To attribute this to the impersonal workings of the “free market” is to ignore how the market has been reorganized since the 1980s. America’s oligarchs — the moneyed interests — have spearheaded this reorganization in order to receive a steadily larger share of the nation’s economic gains. As those gains have risen, so has the oligarchy’s power to accumulate even more.

But it doesn’t have to be this way. Next week we’ll look at whether — and how — countervailing power can be restored so that more of America’s poor and working class can ascend into the middle class once again.