SCARED BY GHOSTS

Part 1: Krugman and Reich

The Great Depression of the ‘30’s and the social legislation of Roosevelt’s “New Deal” prompted union organizing. Labor priests such as John Ryan armed with the teaching of Quadragesimo Anno supported union organizing efforts which were bitterly contested by management. Out-of-work men were hired by business interests to take the place of striking workers. Replacement workers were labeled ‘scabs.’ Others called ‘goons’ were hired to brutalize and murder union men and women. An example is the ‘Brown Shirts’ called in by the Kohler Company in Sheboygan, Wisconsin with the result of several strikers murdered. Even the Klu Klux Klan was called in by textile mill operators to threaten and kill workers seeking recognition. Fascism was on the march, not only in Europe, but in the United States.(Sea Glass, Anita Shreve, Little Brown & Co. 2003.)

Fast forward to the nineties, Krugman and Reich supported the Bush and Clinton rush to free trade. Most notable was the North American Free Trade Agreement, NAFTA, of 1994. Why? The core of first economist Adam Smith’s ‘liberalism’ was free trade. Nineteenth Century Free Trade, although limited, toppled mercantilism and produced greater wealth. Instead of government aristocrats, independent business barons became super rich.

Haunted by the ghosts ‘Liberalism’ and ‘Middle Class Respectability,’ professional economists Reich and Krugman supported NAFTA. Who needs to fight with ‘goons’ and ‘scabs’ when you’ve got tenure? Like the classical economists Smith, Ricardo and Malthus, they left out the workers. Because of Free Trade the supply of workers exponentially increased and wages crashed. Tariffs were not the issue. Free trade allowed corporations to move manufacturing to where goods could be produced the cheapest. The sweatshops of the ‘30’s were in vogue once again all over the world. After the 1994 NAFTA agreement was in place, the race to the bottom became more intense – nation vs. nation, state vs. state. The ‘Comparative Advantage’ sought was, and is, low wages and low or non-existent taxes. Rerum Novarum, and Q.A. denounced ‘liberalism.’

Q.A. states: With regard to civil authority, Leo XIII, boldly breaking through the confines imposed by Liberalism fearlessly taught that government must not be thought a mere guardian of law and of good order, but rather must put forth every effort so that “through the entire scheme of laws and institutions …both public and individual well being may develop spontaneously out of the very structure and administration of the State.” (R.N. para. 19) Just freedom of action must, of course, be left both to individual citizens and to families, yet only on condition that the common good be preserved and wrong to any individual be abolished. The function of the rulers of the State, moreover, is to watch over the community and its parts; but in protecting private individuals in their rights, chief consideration ought to be given to the weak and the poor. “For the nation, as it were, of the rich is guarded by its own defenses and is in less need of governmental protection, whereas the suffering multitude, without the means to protect itself relies especially on the protection of the State. Wherefore, since wage workers are numbered among the great mass of the needy, the State must include them under its special care and foresight.” (R.N. para. 20)(Q.A. para.25)

U.S. Labor and independent Mexican Labor protested loudly, but to no avail. The Roman Catholic Church in the U.S. stood on the sideline, because some Mexican prelates favored the agreement. In protest, on New Year’s Day the first day NAFTA was to go into effect, the Zapatistas of Chiapas took over several municipalities, then retreated.

With Free Trade in force Labor has no voice. There is no leverage. Strikes are useless because the world wide supply of labor far exceeds any imaginable demand. The law of supply and demand is a basic tenant of ‘liberalism’ and the law includes the supply and demand of labor. Rerum Novarum and Q.A. reject this fundamental principle. Pius XI states in Q.A.:

“Labor, as our Predecessor explained well in his Encyclical, (Para. 48) is not a mere commodity. On the contrary, the worker’s human dignity in it must be recognized. It therefore cannot be bought and sold like a commodity. Nevertheless the situation now stands, hiring and offering to hire in the so called labor market separate men into two divisions, as into battle lines, and the contest between these divisions turns the labor market almost into a battlefield where, face to face, the opposing lines struggle bitterly. (Q.A. Para.83)

Robert Reich does not indicate that he is aware of the mistake of NAFTA. In his book, After Shock, Reich supports new trade agreements. (p. 117). Would they be written to support the rights of labor in the countries involved? Reich seems to be aware of the convergence of moral, political and economic analysis. Exploitation of foreign workers is just as immoral, or more so, than exploiting U.S. workers.

The former Secretary of Labor is still not ready to listen to the voice of working people. In After Shock, Part III Chapter 1, ‘What Should Be Done’…, Reich proposes to restore prosperity for the middle class. He does not include organized labor in the equation. There is no suggestion on what to do about chronic poverty – e.g. 20 - 50 % unemployment in Milwaukee’s central city for decades, or new labor law legislation such as E.F.C.A. (Employee Free Choice Act) or immigration reform with Union protection for migrant workers. Is Jeremy Rifkin’s book, The End of Work, going to be forgotten ‘til it’s too late? Speaking of globalization, what about world poverty?

The official title of Quadragesimo Anno is, “Reconstruction of the Social Order.” Using moral analysis, will Reich and Krugman ignore their ghosts and be inspired to suggest an economics that is for all the people?