Globalization and its Discontents

A Financial Times/Harris poll released last week registers broad popular discontent with globalization and the direction of the economies in the rich countries of the world. Among the findings of the survey taken in six countries—the US, France, Germany, Spain, Italy, and the UK are:

• Less than 20% of people in the UK, France, Spain, and the US think globalization is having a positive effect; in Italy and Germany less than 40% think it’s a positive force.
• More than 75% of people in every country, except Spain, think inequality between the rich and the poor is growing.
• In no country, except Italy, do people admire the heads of the largest corporations. Admiration is lowest in the UK and US.
• Large majorities in every country support higher taxes for the rich.
• Majorities in all European countries support pay caps for top corporate officials, but support for caps in the US is around 30%.

According to the FT:

A popular backlash against globalization and the leaders of the world’s largest companies is sweeping all the rich countries….

Large majorities of people in the US and Europe want higher taxation for the rich and even pay caps for corporate executives to counter what they believe are unjustified rewards and the negative effects of globalization.

Viewing globalization as an overwhelmingly negative force, citizens of the rich countries are looking for governments to cushion the blows they perceive have come from liberalization of their economies to trade with emerging countries….`

As if to confirm the public’s increasingly negative feelings about globalization, KPMG, the accounting firm, released a survey of 92 countries that shows a global drop in corporate tax rates last year, continuing a decade long trend. KPMG cites “competition for investment” as the reason for the decline. As a result, value-added taxes and other indirect levies paid by ordinary tax payers have risen to make up for revenue shortfalls. The cuts in corporate taxes are one measure of the way that globalization puts public services into competition.

An opening for labor?

To state the obvious: the depth and breadth of popular opposition to corporate globalization should be a call for labor to step forward as a voice for popular discontent and to find common cause with labor movements in other countries in that effort. Speaking up and linking up could help revitalize moribund labor movements by making them more relevant for today’s economy.

Why doesn’t this happen? Because there are enormous obstacles to overcome. Today’s trade unions are a product of a particular historical period when markets and the nation state inextricably bound together. Now globalized capital easily outflanks national labor movements. As products of a century of struggle, constantly under attack by employers and fighting for their very survival, and highly restricted by law and the state in the actions they can take, unions tend to be relatively rigid institutions. Change comes hard. Finding a strategy to transition from era of national economies to the era of globalization has so far eluded labor.

In the US the challenges are even greater than they are in the rest of the world. We list three steps labor could take.

Focus on the broad effects of globalization, not just trade policy. Labor has focused most of efforts to address the effects of corporate globalization on policies governing trade between nations, often with good results. But trade between nations is of decreasing importance in a world of global corporations, global supply chains, and global finance. Instead, labor should promote a broad agenda that makes the connections between corporate globalization, job loss, declining wages, migration, distorted tax policies, and diminished public services, the lack of adequate labor and employment rights, and environmental degradation.

End special interest politics. The US labor movement has particular structural problems that make it difficult to confront broad social issues.

On the one hand, since the 19th century, U.S. unions have represented particular groups of workers – first workers in the same craft, then increasingly workers in the same industry.  On the other hand, the federation of unions – the AFL, the CIO, and more recently Change to Win – have in principle represented the interests of workers as a whole.  But the reality is that this dual function produces a tension at times that has blocked action on key social issues. Indeed, history is replete with examples of the immediate needs of member unions trumping broader class interests. An example we’ve recently written about is labor’s failure to develop a coherent position on global warming because of opposition from some unions worried about their short-term interests.

But if labor is to remain a vital social and political force, tackling the tension between the specific sectoral interests of unions and their more general class and social interest is the essential first step in this process. A forthright discussion within the labor movement is urgently needed.

Recognize the limits of organizing. The impulse to try and recruit new members as a way to reverse the decline of US labor is understandable. Under the current system in the US, the ability to raise wages in competitive markets has been dependent, to a great degree, on union density. Generally, if high wage union firms must compete with lower wage non-union firms, wages will fall and/or the work will go elsewhere. But it has become increasingly clear to many inside and outside the labor movement that the current system—where specific bargaining units bargain with specific employers—is hopelessly out of step with the needs of workers in a global economy in which employers can move operations, outsource work, automate jobs, or hire contingent workers to weaken or avoid unions. Workers are reluctant to risk joining unions, and when they do join they are often unable to make significant gains against intransigent and highly mobile employers.

But there are practical reasons why organizing will not save labor. Look at the numbers. There are nearly one hundred fifty million workers in the US workforce, the vast majority in the private sector. To increase union density 1 per cent, labor must organize well over a million new members each year. Since private sector union density in 2006 was 7.4% it would take decades to reach a density of 35%, the high water mark of US union membership, achieved in the mid-1950’s. That is if labor could hold on to its existing membership, which it has been unable to do for 50 years—union membership fell by 226,000 between 2005 and 2006 alone. In addition the workforce continues to expand, requiring even more organizing to gain ground. And even if it were possible, you must also ask: what would a density of 35% actually mean in today’s global economy? Ask the auto workers—in industry where union density is still over 50%—as they begin contract talks with GM.

This is not to say that unions should stop organizing. Of course they should continue to do so, seizing on the many opportunities in both the public and the private sector. And they should find new and better ways to represent their existing members at the workplace. Each organizing campaign and each contract campaign should be framed as emblematic in a broad fight for worker rights and decent jobs. But it’s also time for labor to chart a new course, one that emphasizes broad based campaigns on critical issues such as extending basic worker rights to all workers whether or not they belong to unions (as is the case in most of the rest of the industrialized world); campaigns that address critical issues like global warming and real immigration reform; and on finding new ways to forge solid links with labor movements around the world.

Without a change of course labor’s downward spiral will continue. Unions will be forced into a few last redoubts in the public sector and perhaps in a few private sector industries dependent on the public policies like health care and construction in the big cities. But people are ready for change; they want action to address their concerns about globalization and about the direction of the economy. Is it pie in the sky to imagine that the existing labor movement can be transformed into a broad based movement that gives voice to the deep insecurity and discontent that most people feel about corporate globalization? Or will a new labor movement, more attuned to today’s realities, be needed? That’s the big question.

M.O. (T.C.)

Comments

[Richard Holodak]

I just sent the following to Neil Cavuto of Fox news. It nets out to a question of "where do our politicans (specifically, '08 prsidential candidates" stand on the subject of globalization, and are they aware of the increasing number of US citizens who have been negatively impacted.?".

Dear Fox News,

Following 29 years of loyal service as an employee of a large (Fortune 100) IT corporation, I recently became the victim of globalization when my job was sent to India. Despite my track record for consistent superior performance in the company, my experiences over the years have left me so disgusted with the IT industry that I am (and, for the past 15 months, have been) seeking employment in some other industry as I am not of retirement age (I'm 55) and continue to help my second child get through 3 more years of college. Needless to say, I am bitter and depressed about the situation and place much of the blame on the trend for US companies to seek workers outside of the US to replace (or, in my case, supplant) many in their US workforce.

I have not been following the events surrounding the '08 Presidential election other than to note the tremendous amount of activity among the current roster of candidates, Democratic or Rplublican, toward securing their candidacy.

Globalization and its effect on the US workforce is one topic of debate which appears to be too delicate to discuss and I would very much like to know each candidates' views on the subject.

I have been meaning to write this for sometime but it wasn't until today, when I read the article found at

http://laborstrategies.blogs.com/global_labor_strategies/2007/08/globalization-a.html

that I became interested enough in further pursuing this.

As a longtime viewer and knowing FOX's reputation for fair and balanced reporting, I believe your organization would benefit from airing this topic, specifically to get the pols to address it. I'm certain there are many of my fellow countrymen who would likewise appreciate hearing more from our politicians on this topic of discussion.

Sincerely,

Richard A. Holodak, aka Baby boomer in agony
Yorktown Heights, NY

P.S. I'm considering emigrating to some other country where sanity reigns; Norway, for instance. If and when I do, I will contact you so you can send a TV crew down to the tip of Manhattan island, to record the moment when my family loads itself into a rowboat and sets sail for a better place. I’ve lived in this country for over 55 years and have been increasingly disgusted with the downward spiral I’ve witnessed.

[Alicia]

For those of you who are interested in documentaries regarding globalizaton and labor issues, please check out some of these new documentaries available at www.newsreel.org:

Maquilapolis-

In making this documentary, the filmmakers worked collaboratively with the factory workers, providing cameras to the women and teaching them how to shoot. For five years the women documented their daily lives and the events in their communities often giving the film the intimate tone of a video diary. Lourdes Lujan, another promotora, shows us her home, Chilpancingo, a barrio bisected by a stream which flows down from a bluff occupied by nearly 200 plants that expel hazardous wastes. Chief among these is Metales y Derivados, a long abandoned battery recycling factory whose U.S. owner relocated to San Diego in 1994 to avoid paying fines and clean-up costs, leaving behind 23,000 metric tons of toxic waste. Chilpancingo residents downstream and downwind of the Metales site began to suffer skin and respiratory problems and, most ominously, an abnormally high number of children with birth defects.

The Other Europe-

Immigration is as hot button an issue across Europe as it is here. THE OTHER EUROPE is a penetrating study of the economics and politics behind the immigration debate with revealing parallels to our own country. The film provides a cross-section of the immigrant experience, from fairly successful to disastrous, in Spain, Germany and England. It argues that Europe is putting out a contradictory message to immigrants: the economic system says we have plenty of jobs and will pay you more than you could ever earn at home; but the political systems warns we don’t want you.

[Peter Hall-Jones]

Thanks again for yet another thought-provoking commentary. However I'd like to suggest another response which labor might take. As the New Unionism Network has shown (www.newunionism.net), the dominant narrative about union decline is a totally false one. Union numbers are going up in most countries, are stable in others, and are declining in about one third. In a global labor market these phenomena are obviously linked. Industrialisation in developing countries is a direct result of deindustrialisation in others. Unionism in manufacturing has gone up in the former and down in the latter. If the union movement were to operate at sectoral and enterprise level across borders then the whole equation would change. Numbers would stop being the key issue. The game would become how to use an increasing membership to extend worker influence. Some unions have clearly seen this, and network-based global alliances are proving to be effective levers in changing the way employers operate. There is a long way to go, but isn't this exactly the kind of direction these survey results are calling for?