Well well well — Wall Street goes into the dumper after years of “free market” worship and Congress and newspapers and all begin fumbling for advice, new sources. Someone to make sense of it. Suddenly others beyond Greenspan acolytes are invited into the conversation.
Seems the tectonic shift in the economy has re-aligned the terrain of the discussion. The ground heaves with daily aftershocks.
Nobel Prize winner Joseph Stiglitz equates Wall Street’s collapse to that of the Berlin Wall, as he told Nathan Gardels in a Huffington Post Q & A:
The fall of Wall Street is for market fundamentalism what the fall of the Berlin Wall was for communism — it tells the world that this way of economic organization turns out not to be sustainable.
In the end, everyone says, that model doesn’t work. This moment is a marker that the claims of financial market liberalization were bogus.
And many of us would say “about damn time someone said that.”
Maybe now there will be political openings to actually implement some change.
It’s not like so many of us haven’t been working hammer and tongs to do something to bridge the growing economic divide — within the US and between the US and the rest of the world.
Over here during last almost 30 years, unions dwindled — abundantly aided by retro public policy. Wealth flowed upward toward the already-wealthy, jobs shipped offshore — and even small local steps like living wage measures got pooh-poohed by the mainstream.
Economist Robert Pollin knows.
Pollin has a body of outstanding work that includes writing and collaborating on many books, including, with Stephanie Luce The Living Wage: Building a Fair Economy, and co-founding the Political Economy Research Institute at the University of Massachusetts Amherst.
He has also been the go-to guy for rigorous studies that project the local economic effects of living wage and local minimum wage measures — there are now at least 120 of them nationwide, plus at least half-dozen city minimum wages established.
Pollin’s research showed living wage initiatives would not cause the sky to fall for local businesses and that the extra cash from a raised wage-floor might actually benefit the community.
This notion met with gape-mouthed incredulity from many a mainstreamer. (I’m lookin’ at you, Paul Krugman.).
Madeline Janis, leader of LA’s living wage coalition in the mid-1990s (now the LA Alliance for a New Economy) asked Pollin to do a study to project possible economic outcomes of a living wage initiative.
Pollin said he couldn’t unless he could apply full academic rigor, and examine all possible outcomes, good and bad. He honestly initially thought that the argument cherished by opponents might be true, that higher wages might lead to fewer jobs and leave more people unemployed.
But the evidence went the other way — the living wage legislation proposed would indeed benefit a modest number of the working poor with a negligible cost to businesses.
Living wage opponents — the LA Central City Association and the Chamber of Commerce — seemed to think it was enough to repeat over and over that a city ordinance could be a “job killer” —as if repeating that made it true.
They eventually rolled out their own study. I won’t vouch for its rigor. The Los Angeles living wage won the day and finally cleared mayoral veto in March 1997.
That was a long time ago, but I dredge it up to make a point about the true-believer-ism that has characterized mainstream economic thinking: If they say it often enough, it’s true.
Until there’s a meltdown.
I called Pollin a few weeks ago when the bailout was still in the debate stage — my mission: to find out where the government suddenly finds $700 billion for a bailout
He was just finishing up his article for The Nation calling for a $300 billion stimulus package that would create jobs and fight global warming.
In today’s economy, an economic stimulus equivalent to the 1983 Reagan program would amount to about $300 billion in spending — roughly double the size of April’s stimulus program, though in line with the high-end figures being proposed in Congress.
A stimulus of this size could create nearly 6 million jobs, offsetting the job-shedding forces of the recession.
He also explains where the money would come from. Read it here:
The underpinning of the article: the parameters of a debate re-shaped by the economic earthquake could make public investment in infrastructure and green energy technology a way out of disaster.
The Wall has fallen.
These days Pollin and others like him, formerly considered fringe-y, find themselves sought-after to help make sense of the present economic disaster.
When we talked a few weeks ago, Pollin had been fielding a half dozen requests daily for speeches, op-eds and interviews. He was on his way to a fourth time testifying before Congress.
And that was before Barack Obama became the President-elect and the conversation shifted once again.
Cautious optimism this week that former senate majority leader Tom Daschle, Obama’s likely pick for Secretary of Health and Human Services, really could mean the President-elect is serious about health care reform that would cover every kid in the US.
That, by the way, could produce gobs of high-quality jobs that would fill a life-or-death need. IF public money went in that direction.
And we don’t only have Pollin and a few rest of us talking about public investment, we have the Los Angeles Times teeing it up for the lead story
More evidence the once-marginal may now be mainstream.
You always hear the Chinese character for “crisis” combines the words ‘danger’ and “opportunity.” (Eh, sorry — it doesn’t actually translate that way — Google it and see.)
Still, danger and opportunity are what’s on deck now. A big hideous meltdown that means lots of pain for lots of people who have already been just hanging on. I’ve noticed new people jostling for panhandling spots at my local Target and along the freeway off-ramps.
We can at least hope for openings to reverse what’s been going on for at least the last 30 years.
The living wage movement shows what’s possible. It moved along the outer edge allowed by a political set-up that had quashed union organizing and encouraged a race to the bottom on labor standards while it created structures for capital and production to move at will.
Local living wage ordinances were a pretty modest way to challenge that, but it was a strategy to create and push through political openings.
The past decade or so has seen the rise of sophisticated national networks that link local grassroots organizations pushing for equitable economic growth and civic participation. The Pushback Network has linked voter participation with issue-organizing campaigns in six strategic states.
The Partnership for Working Families links labor-community organizations around the country.
And you have certainly gotten the post-campaign e-mails from Obama manager David Plouffe asking your opinion as to what to do with that great big apparatus they built (and for more money.)
It remains to be seen what comes of that, and how much coordination with existing efforts would happen.
We maybe now there’s an opening to crawl from the economic wreckage left by free market gospel and create something new. Pollin points out that Obama will face pressure from the right, and it’s up to us to push back.
“Really it’s a question of mobilization — but now we have a chance,” he says.