Friday, March 04, 2011

1937 Is Not 2011

Once upon a time, Howard Dean was vying to represent "the Democratic wing of the Democratic Party." Clearly, it is a difficult role to play, which few if any Washington politicians are playing. Bernie Sanders of Vermont does a good imitation but, unsurprisingly, he's not actually a Democrat.

Surely, though, it is not a role Dean is now playing. Not only did the former Vermont governor turn cheerleader for the industry-friendly Affordable Care Act, but his performance since then has sometimes been lacking. A case in point was his response to the question boldly (no sarcasm) posed yesterday by Lawrence O'Donnell (transcript here), a question that needed to be asked- and needs to be answered. The transaction:

O`DONNELL: Governor, there hasn`t -- as you know, there hasn`t always been a partisan divide on the matter of public employee unions. I want to read to you something that Franklin Delano Roosevelt wrote in 1937 about government unions.

He said, "All government employees should realize that the process of collective bargaining, as usually understood, cannot be transplanted into the public service." He went on to say, "Particularly, I want to emphasize my conviction that militant tactics have no place in the function of any organization of government employees." And he added, "Such action, looking toward the paralysis of government by those who have sworn to support it, is unthinkable and intolerable."

The unthinkable and intolerable, he meant, of course, strikes by government workers. I think that`s still the general political agreement, that striking by government workers is intolerable.

But we`ve come a long distance from Franklin Roosevelt`s wariness -- to put it mildly -- about government employee unions to where we are now.

What has changed? And what did Franklin Roosevelt not foresee in the maturation of the American workforce?

DEAN: I think -- first of all, Franklin Roosevelt was coming at -- came in at the -- towards the end of the real battles over the right to unionize. And, you know, most states, including New York, which was pretty liberal, which he was the governor of before he became president, do still forbid many public employees from striking.

I don`t think people are wanting the unions to be so militant. I think they`re just wanting them to be treated as human beings here.

Look, the unions in Wisconsin have given back health insurance percentage that they have paid now -- a higher percentage in health insurance. They`ve given back wage increases. They`ve made concessions in their pension. Why strip them of their dignity?

This can`t be about dignity. This can be about money because we don`t have much in this country and we need -- everybody needs to make a sacrifice. But when you start attacking the other side because of their humanity, because of who they are and because of what their social status is, that`s when you get in trouble and that`s when the Republicans overreach.

In his response, Dean first stated that Franklin Roosevelt entered office "towards the end of the real battles over the right to unionize," which had little to do with the question. He then noted that many states "still forbid many employees from striking" which, given that the question pertained instead to the right to unionize, had even less to do with the topic. He then talked about Wisconsin, after which O'Donnell, perhaps to spare Dean any further discomfort, changed the subject. Which his guest already had done.

The governor could have provided a real service if he had come prepared. He might have mentioned that Franklin Roosevelt made the remark in 1937, when the top marginal tax rate (as the table below, from the Urban Institute indicates) was 79%. In 2011, it is 35%.

Governor Dean, alternatively, might have pointed out that President Roosevelt had no way of knowing that the growth of unions, in both the private and the public sectors, would mirror the growth of the middle class and that their decline would signal the increasing concentration of wealth in the wealthiest 1% of the American population. The graph (pardon the size) below, from,

covers the period from 1973 to the current recessionary period. It details the precipitous decline of union membership in the workforce (blue line), the steady decline of the middle class's share in the economic pie (green line), and the explosive growth of income in the wealthiest 1% of U. S. households (red line).

Nor would Franklin Roosevelt probably imagined that it would be reported three-quarters of a century later,

Rather than pouring their money into building plants or hiring workers, nonfinancial companies in the U.S. were sitting on $1.93 trillion in cash and other liquid assets at the end of September, up from $1.8 trillion at the end of June, the Federal Reserve said Thursday. Cash accounted for 7.4% of the companies' total assets—the largest share since 1959.

The cash buildup shows the deep caution many companies feel about investing in expansion while the economic recovery remains painfully slow and high unemployment and battered household finances continue to limit consumers' ability to spend.

While the productivity of the American worker and profits are up, taxes on the heads of the companies have declined, jobs have declined, and benefits and wages have declined. As the graph (from the Commerce Department Bureau of Economic Analysis by way of The Washington Independent) demonstrates, the number of jobs is 5.9% lower, and profits 5.7% higher, than the fourth quarter of 2007.

This is all happening concurrent with the decline of the labor movement and is not something President Roosevelt would have wanted, or expected.

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