Labor unions and small business, unite!

The strongest and most dependable supporter of the Democratic Party is the AFL-CIO.   The strongest and most dependable supporter of the Republican Party is the National Federation of Independent Business.  Yet the top elected leaders of both political parties are serve the interests of monopolistic corporations which are driving down the incomes of working people and small business owners alike.

Barry C. Lynn, in an interesting article in The Washington Monthly, wrote that the time has come for a political alliance of labor unions and small business owners against the big corporations that are squeezing them both.

Last August, on a blazing-hot Nebraska evening, I sat in a cool hotel bar in downtown Omaha and listened as a team of Dockers-clad union organizers joked, drank, and argued their way into an alliance with a group of southern and western ranchers.  The organizers, from the United Food and Commercial Workers (UFCW), made a simple argument: Meat-packing houses like JBS and Smithfield— their already immense power swelled from years of mergers—are using their dominance of cattle markets to hammer down what they pay for beef and for in-house unionized meatcutters.  So rather than “scrap over nickels,” perhaps the ranchers and workers should lock arms and fight for bigger stakes.

Cowboys and labor? Plotting together? Polo shirt and bolo tie? …  Half a year on, it’s evident that the alliance was no momentary fling, no mere “enemy of my enemy” excuse to clink a few beer bottles before stumbling back to opposite ends of the political corral. When the Justice Department held a series of hearings last year on concentration in agriculture markets, including cattle, the UFCW helped to pack the room for the cattlemen’s testimony, one of the only times in recent decades that an American labor union has promoted stronger enforcement of anti-monopoly law.

And in exchange? While in that room, the UFCW got a chance to make the case that the trustbusters should take on Walmart.  The union views the retailing goliath as the main force smashing down the wages and benefits of the retail workers the union represents.  More to the point, the union has also come to view Walmart as the real power driving the big meatpackers’ assault on both cattlemen and packinghouse workers. 

The basic thinking here is that Walmart now controls such a giant swath of the U.S. marketplace that it can dictate prices even to the biggest of suppliers, which leaves less money in the system for the people who actually produce goods and provide labor.

via The Real Enemy of Unions.

Most small business owners regard labor unions as the enemy and big businesses such as Walmart as larger versions of themselves.  Labor unions historically have favored big business because they think it is easier to organize workers in one giant corporation than many small businesses.  But Walmart shows the falsity of both ideas.  Walmart’s monopoly power enables it to dictate low prices to suppliers and low wages to workers.

There is an inherent conflict between the interests of employers and employees, no matter whether the employer is a large business, a small business, a non-profit organization or a government.  But in the United States in the present era, workers and small-business owners have in common that their fates are tied to the future of the United States and to the localities in which they live.  The largest corporations and banks can operate anywhere in the world.  They don’t need the United States.  Workers and small business owners do.

Clyde Prestowitz, who was U.S. trade negotiator in the Reagan administration, once illustrated this point with a story of how his son invited him to invest in a snow removal company.  Why a snow removal company? he asked.   “Dad,” the son said, “they can’t move the snow to India.”

Historically we Americans have had two approaches to the problem of monopoly.  One was Theodore Roosevelt’s Square Deal – to establish regulations to force big businesses to operate in the public interest.  The other was Woodrow Wilson’s New Freedom – to break up big businesses and give the small business owner a chance.  There was a great deal of overlap between TR and Wilson in practice, but these were the two theories.

Barry C. Lynn in his article said that Franklin Roosevelt’s New Deal, after initial mistakes and false starts, essentially implemented both the Square Deal and New Freedom simultaneously.

By the late 1930s, the Justice Department had developed an entirely new approach to managing competition in the industrial sphere.  This second generation of New Dealers did not seek to impose government directors atop corporate giants, nor did they seek to break giant industry into little pieces. Rather their goal was to ensure at least some competition among a few large “oligopolies” manufacturing more or less the same basic product. 

Outside the industrial sphere, meanwhile, in sectors such as farming, retail, and services, Congress often took the lead.  Here the aim was, often, nothing less than to restore the “Jeffersonian” yeoman to his property, and then to protect the open markets of these citizens from enclosure within the fences of private corporations.

The basic thinking was expressed by Wright Patman, the populist congressman from Texas.  In a book he wrote to explain the workings of his 1936 Robinson-Patman Antitrust Act, often called the Anti-Chain Store Act, Patman said the purpose of the bill was “to protect the independent merchant, the public whom he serves, and the manufacturer from whom he buys” from the use of predatory tactics by overcapitalized traders.  And in the event, the act, along with a wide-ranging set of other anti-monopoly laws, largely reversed the growth of retail chains and agricultural combines that had emerged as a major force in the economy during the plutocratic era.

By the early 1970s, the American economy had settled into a balance.  Roughly half the economy was controlled by 1,000 industrial giants.  The other half was divided among some 12 million small enterprises, competing in open market systems.

Which means that the great middle class of twentieth-century America stood atop two foundations.  One was freedom to organize the industrial workplace, to erect a “countervailing power” within a necessarily hierarchical governance structure.  The other was freedom from organization, the freedom to be one’s own boss, the freedom to build up a business that—thanks to anti-monopoly law—was largely safe from predation.  Every American could choose the path that fit best.   A citizen who wanted to be her own boss, or run his own family business, could count on robust anti-monopoly law to protect farm, factory, or store from predators wielding massed capital.  Citizens who wanted the security of a weekly wage could hire themselves out to an industrial giant or government monopoly, confident that they were protected against economic exploitation and arbitrary rule by open market systems and robust labor law.

via The Real Enemy of Unions.

In the 1970s, this system came under attack by an alliance of left and right, consumer advocates and free-market economists.  In order to protect consumes, they advocated economic policy based not on competition, but on economic efficiency.  Walmart is an example of precisely what they were advocating.

Walmart is very good for consumers.  It provides excellent products and services at a low price.  Partly this is achieved by Walmart’s innovations in inventory management and just-in-time delivery.  These are good things, of course.  But Walmart also uses its market power to drive down wages and squeeze the incomes of suppliers.  These are not good things.

Click to enlarge

So the question is:  Do we Americans think of ourselves primarily as producers or as consumers?  Is our priority a decent income for workers or cheap goods for consumers?  I believe we should think of ourselves as a producer economy, not a consumer economy.   If the mass of the people can’t earn decent incomes, nobody will be make money selling to working people—only to the so-called Plutonomy, the high net worth individuals.

Click on The Real Enemy of Unions to read Barry C. Lynn’s full article.

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