Tough times: the social contract

I count myself lucky to have lived and worked in what, in retrospect, was a golden age for the United States.  When I came of age in the 1950s, I took it for granted that each decade would be better than the more before – that progress toward higher wages and more leisure was a law of nature.  There was an implied “social contract” – that if I was loyal to my employer, and did a good job, my employer would do his best to keep me employed at a decent wage.

I didn’t need to read Steven Greenhouse’s 2008 book, The Big Squeeze: Tough Times for the American Worker, to understand that this belief was an illusion.  Automatic progress is like getting something for nothing.  Things don’t get better unless people are doing things to make them better.

The golden age rested partly on the unique position that the United States enjoyed in the quarter century following World War Two, as the world’s only intact industry economy.  In college, we were taught about the problem of the world “dollar shortage.”  The problem was that the U.S. economy was so rich and productive that the rest of the world had almost nothing to sell that we Americans wanted to buy, and therefore had no dollars with which to buy products of American industry.  In this age of globalization, that seems like another world.

The United States in the earlier era was not only a wealthy nation, but the wealth was spread around.  It was said in wonderment by visiting Europeans that you couldn’t tell an American’s social class by looking at him or her.  Prosperity was spread so widely that working people were well-fed and well-dressed.  This, too, was not a law of nature.  It rested on a balance of power between big business, organized labor and the government.

 

Industrial labor unions, whose right to bargain collectively was guaranteed by the government, negotiated improvements in pay, benefits and hours with big manufacturing companies.  Because of their position in the marketplace, they could afford to raise prices to pass along the costs.  The union wage tended to push wages up generally.  Few of us newspaper reporters were represented by strong unions, but it would have looked bad if our pay had been much below the members of the International Typographers Union.  Because of high wages, Americans could afford to buy the products of American industry.  It was a benign spiral upward, not a vicious spiral downward.

All this started to come apart in the 1970s.  That was when foreign cars and other products started making inroads into the U.S. market.  It was also when American business decided to once again treat labor unions as the enemy rather than as a combination of junior partner and loyal opposition.  President Ronald Reagan, by breaking the air traffic controllers’ strike, became the first anti-union President since before President Franklin Roosevelt.  All this is described very well in Thomas B. Edsall’s The New Politics of Inequality – a book written more than 25 years ago, but still worth reading because the trends Edsall described are still in motion.

In my experience, American working people, including union leaders, are much less class conscious than business executives.  Labor leaders always act as if they need to justify and explain themselves.  Business executives are confident that they rule by divine right, and they don’t want to share their authority with either their employees or the government.

 

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The social teaching of the Roman Catholic Church and mainstream Protestant churches is that a corporation is responsible to all “stakeholders” – not just managers and stockholders, but customers, employees, suppliers and the community and nation which makes it possible for the corporation to exist.  Since passive stockholders (people who buy shares on the stock market without otherwise involving themselves in the company) contribute the least, they should get in line and take what’s left when all the rest are compensated fairly.  The reward is that the stockholders’ reward is potentially unlimited, when they can’t lose more than they put in.

One objection to this is that such obligations are not quantifiable, and therefore easy to dismiss as sentimental mush.  The stronger objection is that such obligations are not enforceable, unless government sets rules and enforces them, and unless labor and consumer organizations are strong enough to hold business and government accountable.

Click on The Big Squeeze for an interview with Steven Greenhouse.

Click on Steven Greenhouse for a recent and archived New York Times articles.

Click on Laborem exercens for Pope John Paul II’s 1981 encyclical on labor.

Click on The Real Lesson of Labor Day for an analysis by Robert Reich, former U.S. Secretary of Labor, of the position of workers and unions in the United States today.

 

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2 Responses to “Tough times: the social contract”

  1. Joyce Ireland Says:

    I miss the 1950’s and 60’s. People were kind and courteous back then.

    Like

  2. Capitalism, socialism and democracy « Phil Ebersole's Blog Says:

    […] United States in the past 30 or so year.  Steven Greenhouse’s The Big Squeeze: Tough Times for the American Worker and Jacob Hacker’s and Paul Pierson’s Winner-Take-All Politics: How Washington Made the […]

    Like

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