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The battle of the economists, by Kurt Staudter

Kurt Staudter lives in Vermont and is a member of the International Brotherhood of Electrical Workers. He took part in the Harvard Trade Union Program as a union member and journalist. He writes a weekly column, While We Were Sleeping, which appears in both the Springfield Reporter and the Vermont Standard. He wrote several columns about his experience at HTUP. Here is one about some of the economic theory covered in the program.


After weather forecasting there is perhaps only one other job where you can be as wrong as often and still remain employed – the economist. Elaine Bernard of the Harvard Trade Union Program has made sure that we’ve had a steady stream of economists to help us understand the realities we face in the changing world. We’ve heard from Richard Freeman and David Cutler of Harvard, Tom Kochan from MIT, and for the last few weeks we’ve had presentations from Barry Bluestone of Northeastern.

Barry has written a book along the late Bennett Harrison titled “Growing Prosperity: The Battle for Growth with Equity in the 21
st Century.” Now I don’t profess any real understanding of economics, and even though I slog through book after book on the subject I still haven’t a clue as to why some things happen in the free market free-for-all. I was mystified, that is until Barry made it all very clear. I guess I just needed someone to explain it, and at the same time discredit all I’d learned up until now.

Bluestone has a very user-friendly way of presenting the subject. He took us from the turn of the last century to the present identifying trends and significant milestones along the way. The explanation he gave of the stock market crash and the depression demystified this period of time for me, and gave me an understanding of how the New Deal was able to restore prosperity to our nation. Barry then took us through to the present showing us along the way how the economy moved from the laissez faire, hands-off free market of the late-1800s, to the tightly regulated and controlled market of the New Deal of FDR and Great Society of LBJ, and now back to the “get government out of the way” domination of the global marketplace by lawless transnational corporate goliaths.

After he got done explaining the very basic principle of how the Gross Domestic Product (GDP) is calculated, we then used this yardstick to measure what has happened in the economy over the years, and then looked at a controversial approach to restoring prosperity. A quick review: GDP equals consumption plus investment plus government spending plus exports minus imports, or Y=C+I+G+X-M. By changing any one or combination of these variables you can create growth in the economy. I can just imagine your eyes are beginning to glaze over so I don’t want to dwell on this, but let’s just look at how FDR was able to reverse the downward slide of the Depression.

In the beginning, no one had any money so they weren’t consuming. Businesses were on the skids, so they weren’t making any investments, government was small and not putting a whole lot into the economy, and both imports and exports were virtually non-existent because of the collapse of the world economy along with ours. This left our GDP in the dumps. Incidentally, the two world economies that weathered the depression better were Germany and Japan, and we’ll find out why next. Roosevelt was able to turn our economy around by priming the pump with government spending. Just as the government spending used in the run up to WWII by Germany and Japan were keeping their economies afloat, FDR used federal funds to put people to work. This in turn gave them the ability to consume, which restored the confidence in the marketplace for investors, which led to greater exports to other European countries looking to arm for war, and on and on… all because of deficit spending during the New Deal that gave workers a needed raise. Now add to that our amazing surge in production during the war and the retooling towards consumer good afterwards, the government investment in the interstate system, the Apollo program, the Cold War, the GI Bill, and housing, our export of consumer goods when things were made here, and it all adds up to growing our economy at an unprecedented clip.

So the question on our minds right now should be – What Happened? Why has the growth stopped and why is there a rising divide between the haves and have-nots. This brings us to the clash of two economic models – The Wall Street vs. The Main Street models. Right now the dominant model is the Wall St. model. It calls for a balanced federal budget with surpluses, encouraging unlimited free trade, keeping wages low and employment insecurity high, deregulation of domestic and international markets, and the imposition of conservative Federal Reserve policy. Looking at the GDP formula, we see that with wages suppressed consumption is reduced, investment is largely made off-shore, government spending is sharply reduced on all but the military, we’ve run huge trade deficits and cheap imports flood in. When you run the numbers the answer is obvious as to why the middle class has been reduced to being the working poor.

The solution to creating prosperity that is more equally shared all across the economy, and not just enjoyed by the top 5%, is the common sense Main Street economic model. Barry Bluestone explained that by “investment in R&D, infrastructure, and human capital, establishing fair trade based on labor rights and standards, fostering rising wages, improving employment security, creating incentives for corporate best practice policies, expansionary Federal Reserve policy, and the regulation of global speculation,” we restore an economy that works for all of us. Hey, doesn’t that sound like the New Deal? It worked before, and isn’t it high time that working people got a raise again?

Apollo Alliance: High road to prosperity, by Kurt Staudter

Kurt Staudter lives in Vermont and is a member of the International Brotherhood of Electrical Workers. He took part in the Harvard Trade Union Program as a union member and journalist. He writes a weekly column, While We Were Sleeping, which appears in both the Springfield Reporter and the Vermont Standard. He wrote several columns about his experience at HTUP. Here is one about a U.S. environmental alliance.

“The Apollo Alliance provides a message of optimism and hope, framed around rejuvenating our nation’s economy by creating the next generation of American industrial jobs and treating clean energy as an economic and security mandate to rebuild America.  America needs to hope again, to dream again, to think big, and to be called to the best of our potential by tapping the optimism and can-do spirit that is embedded in our nation’s history.” From
www.apolloalliance.org

Cambridge, MA

Week two of the Harvard Trade Union Program was packed with all sorts of wonderful speakers: Each bringing either new ground breaking information or just a new twist on old ideas and strategies. From now until the end of the program a forum is held each week. These forums address issues that are important to working people, and give both the public and the class the opportunity to confront the movers and shakers on the cutting edge. The forum this week introduced us to Joel Rogers, a University of Wisconsin Professor of Law, Political Science and Sociology, and one of the founders of the Apollo Alliance.

The Apollo Alliance has only been around for a few years, but we were lucky enough in Vermont to have heard about it right from the beginning through people like former State Labor Council President Dan Brush, and Traven Leyshon from the Washington County Central Labor Council. In a nutshell, the aim of this diverse collection of businesses, environmental groups, labor unions and members of the academic community, is to change the discourse of our nation on the issues of energy and economic development. They believe, and it really is common sense when you think about it, that we can do the right thing by becoming more energy independent, revitalizing our urban/downtown areas, and restoring prosperity to working people if we become the leaders in the emerging green energy economy. All this makes perfect sense, but as Joel Roger said, “in all these areas you need to build coalitions and that isn’t going to be easy.” The truth is that there are some very powerful folks that like the status quo – The oil companies.

On the web site there is a ten point plan that outlines the goals of the alliance. Now if any of you political junkies out there were bored earlier this month and listened to Governor Douglas give his State of the State address, you will find that many of his goals in “The Vermont Way Forward,” are also those of the alliance. However, at the end of the column I’ll ask if you see what Jim has seems to have left out of his plan. It’s not a big thing to the likes of our governor, but it is the reason we would want to get behind this.

OK, first off, they want to “promote advanced technology and hybrid cars.” This would do two things – It would revitalize the American auto industry and put more environmentally friendly cars on the road. Cars are one of the biggest sources of pollution, and our auto industry has some of the best jobs.

Next, they want to “invest in more efficient factories.” Imagine for a moment if we used our tax code and economic development money to retrofit our aging manufacturing spaces to become more energy efficient, and the business people will love this, more profitable! We should be proactive about bringing a program like this to every manufacturer in Vermont now.

So, that takes care of the existing buildings, their next point is to “encourage high performance building.” Here is the concept of the so called “green building.” Through building code changes and tax incentives, all new construction in the state should meet high environmental standards. Check this out: According to Rogers, “students in green schools do better than students in non-green buildings.”

We need to “increase the use of energy efficient appliances.” I know they cost more, but they end up costing less. By creating a demand for high efficiency appliances we would revitalize the manufacturing sector, and reduce our energy consumption significantly.

Modernize the electrical infrastructure to make it easier to share renewable energy. This in of itself would be worth the public investment just to get out from under the heel of the electric companies.

“Expand renewable energy development” and promote sources like solar, wind, biomass, and vegetable based fuels. We need to make a deep commitment to reducing our use of oil. Now!

“Improve transportation options” that will move beyond our love affair with cars, and promote local bus, rail and use of bicycles, as well as a revitalization of our high speed passenger rail network.
“Reinvest in smart urban growth.” Rogers pointed out that “80% of our economy comes from 10% of our cities.” In Vermont we need to revitalize our downtown jobs base and work where most of us live.

“Plan for a hydrogen economy,” by investing heavily in this emerging energy source. Let’s face facts: Just what happens to those countries that rely on oil when it’s all gone? Will the new superpowers be the hydrogen based economies? Wake up.

Finally, to “preserve regulatory protections,” because as we all know that the business community will only take the high road if the low road to quick profits is not available to them. We as a people need to decide there is a better way, or as Governor Douglas says, The Vermont Way.

Now before I head back to the Widener Library to get some studying done, besides the fact that the governor didn’t once acknowledge the Apollo Alliance in his speech, what part of his plan lacks a major part of Apollo? Here’s a hint, Joel Rogers warned, “there’s one way to look at this, we’ve all become peasants.” Yes, Jim Douglas neglected to acknowledge labor as a major contributor to our future prosperity. So much for revitalizing the middle class or helping the working poor – Thanks Jim!

The shoulders of giants, by Kurt Staudter

Kurt Staudter lives in Vermont and is a member of the International Brotherhood of Electrical Workers. He took part in the Harvard Trade Union Program as a union member and journalist. He writes a weekly column, While We Were Sleeping, which appears in both the Springfield Reporter and the Vermont Standard. He wrote several columns about his experience at HTUP. Here is one about Noam Chomsky and Howard Zinn.

“History which keeps alive the memory of people’s resistance suggests new definitions of power. By traditional definitions, whoever possesses military strength, wealth, command of official ideology, cultural control, has power. Measured by these standards, popular rebellion never looks strong enough to survive. However, the unexpected victories – even temporary ones – of insurgents show the vulnerability of the supposedly powerful.” Howard Zinn

“Look, part of the whole technique of disempowering people is to make sure that the real agents of change fall out of history, and are never recognized in the culture for what they are.” Noam Chomsky

Cambridge, MA

As I sit here at the end of week five of the Harvard Trade Union Program there is a growing sense of both helplessness and empowerment. Executive Director Elaine Bernard has created this wonderful parade of educators, critical thinkers, labor leaders, and just people who are making a difference, to address the class and lend to our discourse more depth and meaning. Sometimes the message is one that paints such a gloomy picture of the current conditions that you might expect that the struggle for economic justice is doomed. Other presenters make such a compelling case that the next big social movement is just one successful fight away. Now, I’m so overwhelmed by this flood of compelling information that it’s too early to tell which camp I fall into, but I will say that one can’t help but be inspired by the people we’ve met.

Long before I became involved in the labor movement, and as my personal politics were being developed, two writers loom large in the shaping of my young and impressionable mind – Howard Zinn and Noam Chomsky. While both of these gentlemen are not necessarily household names, one is a retired history professor and the other a linguist, there is no doubt of the contribution they have made to those of us fighting for social and economic justice. The quotes above are from two books that are well worth your time and have helped make me who I am: Howard Zinn’s “A People’s History of the United States,” and Noam Chomsky’s “Understanding Power: The Indispensable Chomsky.” Both of these writers have given the progressive community a firm foundation from which we will build a sustainable and just society.
Now I’m not one to give in to hero worship, or to become star struck, but I will tell you that it was such a thrill to meet these guys. If for nothing else, it was wonderful just to get the chance to thank them for their contribution in helping us understand the world. For so long these two voices have spoken truth to power, and for those of us who have been raised in their shadows, through their example we’ve been taught how to carry on this tradition of critical examination of those in power and how to forcefully raise the alarm when those in control abuse our trust. For as long as I can remember, Zinn and Chomsky have been the vanguard for positive change and vigorous dissent, and yet they now seem almost grateful to step aside and let the next generation take up the “good fight.”

Chomsky started off his lecture with some comments about current events in the news. He has from the beginning been very critical of the Bush administration and the Iraq War. He came to national attention as one of the leading voices against the Vietnam War in the 1960s, and his comparison of that war with today was illustrative of how much we’ve given up, or lost, control of our government. His point is that unless we hold our leaders accountable they will operate with impunity. Noam also spent some time talking about healthcare reform and the forces aligned to protect the status quo. He said the current rhetoric from the White House about an entitlement crisis was “pure crud,” but went on to say that we do have a “major medical care crisis.” His solution: Extend Medicare to everyone and create a National Health Plan.

Howard Zinn talked about some of the events in our history that led to the consolidation of power in the hands of the rich. “The history of the United States is a history of class struggle, but that’s not the way it’s presented, American culture denies that,” he began. Zinn told us of Shays Rebellion in Western Massachusetts and how our founding fathers used that event to make a government that crushed dissent – “There is a quota for revolutions; You only want one.” Perhaps the thing he said that I will always remember is this: “You never know how much power you have until you exert it, and you don’t know how powerful your opposition is until you confront it… You don’t make the people in power understand things by educating them, you need to show them your power and that tells them something they understand.”

Looking around the room at my fellow students I saw an understanding that the struggle was now in our hands, and that the sage wisdom of these teachers becomes our inspiration for a fight that will outlive us all. I also saw in Zinn’s eyes an acknowledgement that we were worthy to carry on this age old fight.