A Tribute to Neil Kearney 1950-2009

He was less than two years into a heart-wrenching job – leader of a global union whose workers endure the worst excesses of globalization. He had already visited more than 150 garment factories and textile mills on every continent.

That was in March 1990, when I first met Neil Kearney, general secretary of the International Textile, Garment, and Leather Workers Federation (ITGLWF). By chance, we were then both in Bangladesh, where he had meetings with the fledgling trade unions, some affiliates of his federation, some not.

I was there researching the country’s sweatshops. He was there to eliminate them, much to the anger of the owners and managers of the country’s garment factories, even though he wasn’t trying to eliminate the shops, just the “sweat,” or grueling conditions, in them.

This month Kearney once again visited Bangladesh, for the 50th time in 20 years, some said. But he didn't complete his tight four-day schedule, which included an investigation into reports, publicized in Europe, that a large factory was in gross violation of its worker rights commitments.

Early on the morning of Thursday, November 19, the heart of tireless Neil Kearney stopped beating. He was 59 years old.

The Bangladesh Garment Manufacturers and Owners Association (BGMEA), and several union leaders held a Thursday press conference at the employers’ headquarters to announce Kearney’s death. Together, the BGMEA and the unions started a three-day mourning period on Friday.

“We lost a great friend of Bangladesh who fought for the welfare of the core segment of our country,” Shafiul Islam Mohiuddin, the BGMEA’s acting president, said.

In Brussels, the shocked headquarters staff of the ITGLWF announced that the Federation’s congress will, as scheduled, hold its world congress in Frankfurt, Germany, on December 2-4. The planned theme, “Unionize = Decent Work = Decent Life,” will be supplemented by a celebration of how much Neil Kearney’s life has contributed to decent work and to the decent life of workers throughout the world.
* * *
My book, “Justice at Work: Globalization and the Human Rights of Workers,” mentions Neil Kearney at points in four different chapters, but of course that falls far short of telling the full story. His action-packed life has story material for a dramatic movie, even if, or especially if, it focused on Bangladesh alone.

Print Page Read more!

A shameful embrace of sweatshops in a book on oppression of women

In their new best-selling book, “Half the Sky,” two New York Times writers, Nicholas D. Kristof and Sheryl WuDunn, make an eloquent appeal for ending the worldwide oppression of women. Unfortunately, they mar their case by arguing that sweatshops are actually good for women.

“Sweatshops have given women a boost,” they write. They acknowledge “inequities of garment factories – and they are real – the forced overtime, the sexual harassment, the dangerous conditions.” But, they argue, sweatshop jobs are preferable to hoeing fields all day back in the home village.

In most of their book, Kristof and WuDunn recount shocking examples of how women in many countries suffer as 21st century slaves. Still, some women do not remain passive. They stand up and fight against the prevailing culture of oppression and, against all odds, make progress, often with outside help from non-governmental organizations (and sometimes from Kristof personally).

Yet “Half the Sky” fails to recognize the many courageous initiatives of factory workers in Indonesia and some other countries to improve their lot. In fighting against extreme abuses, these young women, too, welcome all thw support they can get from anti-sweatshop groups in the United States and Europe, whose citizens buy the T-shirts, dolls, and other consumer goods the women make.

In a long endnote, the co-authors point out that “a feminist critique…has emerged to dispute our arguments,” a critique that “contains an element of truth.” For this very limited insight into reality, Kristof and Dubunn rely completely on feminist sources, as the endnote makes clear. Too bad that they didn't interview a few sweatshop workers. If they had done so, their insights might have been substantially less limited.

In the latest of his periodic efforts to discredit the anti-sweatshop cause, Kristof goes so far to recycle a 15-year-old rumor saying:

-- that after Senator Tom Harkin in 1993 introduced a bill (never passed) to ban the import of goods made by girls and boys under 14, Bangladesh garment owners “promptly fired tens of thousands of these young girls,' and
-- that “many of them ended up in brothels and are presumably now dead of AIDS.”

This story pops up regularly in articles opposing the use of trade legislation to improve labor standards (the point about the children dying of AIDS is a new wrinkle). I personally know two researchers, one a Bangladeshi, who have devoted extensive efforts to verify this old story but have discovered no evidence to support it.

“Half of the Sky” offers this recommendation: “Instead of denouncing sweetshops, we in the West should be encouraging manufacturing in poor country.” The implied assumption -- that the anti-sweatshop movement discourages manufacturing in poor countries – is false.

Here’s one example, reported at length by Steven Greenhouse in the November 18 New York Times.

Soon after workers in a Honduras factory unionized, Russell Athletic, one of the country’s leading sportswear companies, closed the plants, making 1,200 workers jobless. That was a flagrant violation of the company’s licensing agreements.

Gearing up quickly, the United Students against Sweatshop launched a nationwide campaign in which, among other things, more than 100 colleges and universities agreed to sever or suspend their licensing agreements with Russell. Finally, over the September 14-15 weekend, Worker Rights Consortium, a USAS sister organization, signed a landmark agreement with Russell under which Russell will

-- reopen the Honduras factory with 1,200 rehired workers.
-- open another plant in Honduras to be covered by a union contract.

Moises Alvarado, president of the union at the closed plant, told the New York Times: “For us, it was very important to receive the support of the universities. We are impressed by the social conscience of the students of the United States.”

As its epigraph, “Half the Sky” uses the Chinese proverb, “Women hold up half the sky.” Ignoring the world’s oppressed female garment workers from a large fraction of that half is a blunder and a scandal.

Print Page Read more!

Justice at Work: too optimistic?

Professor David Cingranelli, professor of political science at Binghamton University, got an “error’ report when he tried to leave a comment on my November 14 blog. He did finally get through by regular email with the following critique.

I’ve been thinking more generally about your arguments in your excellent new book, “Justice at Work: Globalization and the Human Rights of Workers.” I love the book, but I think you are way too optimistic about the potential of Corporate Social Responsibility, anti-sweatshop movements, personal boycotts, and fair traded goods movements as ways to deal with the most negative effects of globalization on workers.

I also think national policies like the [proposed] prohibition on spending taxpayer dollars for goods made by forced child labor make Americans feel good, but are similarly ineffective. There are few incentives for US politicians to enforce the provisions of laws such as these, and, more importantly, if the unethical producers of such goods don’t sell them here, they will sell them somewhere else.

Only international norms promulgated by the United Nations through the ILO and enforced by the World Bank and IMF can effectively solve these problems. IMF and World Bank leaders resist this idea. But, unlike the WTO, both of these institutions are Specialized Agencies of the United Nations, and the United Nations’ twin missions, according to its own charter, are to promote peace and human rights. No UN entity can say that the promotion of human rights is not part of its own mission. In your blog you have reported on some small steps taken by the World Bank towards this end, but much more remains to be done.

Current policies of the IMF and World Bank are actually leading to reduced government respect for a wide range of human rights around the world. This fact is well documented in my recent book with Rodwan Abouharb, Human Rights and Structural Adjustment (Cambridge University Press, 2007).

Chapter 9 presents the results of a global, comparative study showing that, other things being equal, the longer a developing country has been under structural adjustment programs, the worse its respect for workers’ rights including freedom of association and collective bargaining.

Thank you for providing so much good information about the effects of globalization on the most vulnerable of the world’s workers. While I disagree with some of your opinions, your voice has helped me refine my own thoughts about this important subject.

-- David Cingranelli, professor of political science, Binghamton University.

(An undergraduate class of his had a two-week, six-hour discussion of Justice of Work.)

Print Page Read more!

Glaring contradictions in corporate social responsibility movement

Global corporations based in Europe are almost twice more likely than those based in the United States to have labor and human rights policies covering their global supply chains. But that doesn’t mean that the Europeans do better than their American counterparts in implementing their corporate social responsibilities.

The U.S.-Europe statistical discrepancy is revealed in a study released November 11 by the IRRC Institute: 43 percent of European companies have labor/human rights policies for their worldwide operations, whereas only 23 percent of American multinationals do. Moreover, those European corporate polices are more likely that the Americans’ to describe monitoring procedures, targets for improvement, and enforcement mechanisms.

At a conference on corporate social responsibility held in Stockholm on November 11, an international trade union leader, Jim Baker, gave concrete examples of glaring internal contradictions in the CSR movement. He cited this experience in particular:

“We have spoken with some European companies with interests in the U.S. who say they are committed to human rights, including a couple here in Sweden. We have asked them to disassociate themselves from the anti-union propaganda being used against modest legislation, the Employee Free Choice Act, to correct some of the abuses in U.S. labor law.

“Although they say they are shocked by what is being said and done, not one has yet distanced itself from that anti-human rights corporate campaign.”

Baker also described contradictatory behavior in the country of Georgia. There the government and trade unions, working with the most representative employers’ organization, proposed pro-worker reforms in the labor code.

“Who is now blocking the reforms? The U.S. Chamber of Commerce in Georgia,” Baker said, adding that one of that chamber’s large patrons is a firm that, some years ago, made a lot of money doing CSR audits.

Baker, coordinator of the Council of Global Unions, was a speaker at a conference of the Swedish Presidency of the European Union, where John G. Ruggie, the UN Special Representative for Business and Human Rights, made the keynote presentation.

The Swedish Presidency formally renewed its support for Ruggie’s “Protect, Respect, Remedy” framework that the UN Human Right Council unanimously approved in June 2008. (For background, see my June 4, 2008. blog report on “This UN Work Seems Back on Track.)

“The Protect, Respect, Remedy framework gives us a path out of the make-believe world of CSR,” Baker said in his remarks. He went on to explain:

“The Ruggie framework makes it clear that business responsibility includes the respect of laws and international standards related to human rights….[It] is a good way to make sure that rights are respected in supply chains, in small and medium-sized enterprises and by competitors.”

Print Page Read more!

No to spending taxpayer dollars for goods made by forced child labor

The U.S. government is taking steps to prevent federal agencies from buying goods made by forced or indentured child labor. The policy, if put into effect and enforced, would ban federal procurement of hand-made bricks, cotton, electronics, and toys made by abusive child labor in China, among other countries and other products.

At present, there are “gaping holes in federal procurement policy,” says Bjorn Claeson, executive director of SweatFree Communities. As a result, the U.S. government can now “purchase products made outside the United States in the most egregious sweatshop conditions.”

21 Countries on New List; Only One on Old

An “initial determination” by the Department of Labor on September 10 concluded that 29 products of 21 countries were made by forced or indentured child labor. The products of Burma are the most numerous to make the list – seven in all, ranging from beans (green, soy, and yellow) to teak.

The Labor Department’s action, taken in conjunction with the State and Homeland Security Departments, updates the 2001 list that implemented an executive order issued by President Bill Clinton two years earlier. Burma was the only country on that 2001 list, with 11 products.

According to Labor, the updated list is “based on recent, credible, and appropriately corroborated sources.” In the case of China, the sources of two of its citations, those for forced child labor in toy and electronic manufacturing, were a New York Times investigative article, reporting by the U.S. Embassy in Beijing, and a report by Macro International, a research and consulting firm.

The final decision on the list will come after the 90-day public comment period, that is, after December 10. Comments can be made by email to EO13126@dol.gov.

The 1999 Clinton executive order stands out as one of the very few governmental tools available to deter official purchases of sweatshop products. The executive order’s penalties are meager, however. Contractors are deemed in compliance simply by self-certifying that they are.

As a result, anti-sweatshop groups did not greet the September 20 Labor Department announcement with celebrations. But the human rights organizations themselves have yet to fully recognize the potential that the government procurement process has for promoting the common good.

Who will take the lead in convincing the Obama administration to strengthen the 1999 executive order 13126 on the “Prohibition of Acquisition of Products Produced by Forced or Indentured Child Labor”?

For more on this subject, see the previous (November 11) posting, "Moving to stop spending taxpayer money on sweatshop goods."

CORRECTION: The 2001 Labor Department determination listed two countries, Burma and Pakistan, not just Burma.
Print Page Read more!

Moving to stop spending taxpayer money on sweatshop goods

The Federal government, according to official policy, can and does buy supplies made in sweatshops, foreign and domestic. A grassroots movement to change that is gaining strength.

Short of the federal level, 39 cities, 15 counties, eight states, and over 100 public school districts have already adopted procurement rules to ensure that the uniforms, shoes, and other products they buy for police, fire, and other public employees are not made in sweatshops.

Laying the ground work for extending such a ban to the Federal level was a major focus of the sixth annual “Sweatfree Communities summit” held in Washington, D.C., November 6-8.

“There’s a big gap in federal procurement policies,” says Bjorn Claeson, executive director of Sweatfree Communities, the non-profit organization that unites the movement.

A potentially ground-breaking document, “Principles for International Sweatfree Federal Government Procurement,” was released at a forum held on Capitol Hill on January 6. It is a five-page working draft compiled by Claeson with contributions from the AFL-CIO, the Change to Win union alliance, the International Labor Rights Forum, and other like-minded organizations.

To help member governments meet their sweatshop-free purchasing goals, Sweatfree Communities has recently formed the Sweatfree Purchasing Consortium. Still in the developing stages, it has two core functions:

-- Connect government buyers with suppliers pre-screened as sweatfree.
-- Serve as the contact and coordinating points for monitoring suppliers, investigating complaints, and achieving effective remedies.

Might any of these efforts conflict with the rules of the World Trade Organizations? Briefly, no; they are “WTO compliant,” says Claeson, whom I interviewed by phone.

Unfortunately, because of heath problems, I was unable to attend the summit. But I am impressed by what I read on two Websites and what I heard from Claeson. This is a movement whose time has come.

The two Websites, http://www.sweatfree.org, and a separate one for the consortium, http://buysweatfree.org, contain a surprising wealth of information. A particularly useful one for ordinary shoppers is the 2009 Shop with a Conscience Consumer Guide, with listings for women’s wear, men’s wear, baby clothes, footwear, outerwear, T-shirts, and sports equipment.

Among the 2009 Sweatfree Summit co-sponsors not mentioned here before are these: the Catholic Relief Services, the United Methodist Church Global Ministries, and Georgetown University Law School, which hosted all the sessions except for the one on Capitol hill.

Print Page Read more!

Looking at the economic world as it really is

“Real-world” economists now have a whole Weblog of their own. They have just launched it at http://rwer.wordpress.com with a series of articles that look at the economic world as it really is.

There you’ll find answers to questions mostly ignored by U.S. media. For example:

-- What country in Latin America is expected to have record economic growth this year even though it ignored the advice of the IMF and the U.S. business press?

-- Why are the investment rules in the pending U.S.-Colombia free trade agreement “dangerous, outdated, and out of touch with most of the [non-U.S.] trade agreements in the world”?

The first article is by Mark Weisbrot, co-director of the Center for Economic and Policy Research; the second, by Kevin P. Gallagher, professor of international relations at Boston University..

The new Real-World Economics Review blog replaces the Website of the same name, which is an outgrowth of the “Post-Autistic Economics” movement, the pioneer in re-thinking conventional economics.

Print Page Read more!

How contamination gets ground into a global hamburger

The grilled hamburger that a 22-year-old Minnesotan, Stephanie Smith, ate on October 6, 2007, ravaged her nervous system and left her paralyzed from the waist down. She was among the 640 people sickened at that time by eating American Chef’s Selection Angus Beef Patties, which carried a virulent poison, E.coli.

Smith’s hamburger, made by Cargill Inc., a giant multinational, and bought at Sam’s Club, a division of Wal-Mart, had multiple origins. Ingredients came from slaughterhouses and processing plants in at least four states and a somewhat remote South American country, Uruguay.

Her burger was among those came from a grinder at the Cargill plant in Butler, Wis., on August 16, 2007. Its largest ingredient was beef trimmings, half fat, half meat, purchased from Greater Omaha Packing, supplemented by ingredients from two other U.S. plants, one in Texas and one in South Dakota.

The other supplier, a slaughterhouse in Uruguay, provided lean meat from grass-fed cattle, which helped maintain a certain minimum level of fat content in Cargill hamburgers – 26.6% in the lot from which Smith’s came, according to company records.

“In all,” a New York Times reporter wrote, “the ingredients for Ms. Smith’s burger cost Cargill about $1 a pound, or about 30 cents less than industry experts say it would cost for ground beef made from whole cuts of beef.” Cargill had $116,600,000,000 in revenue last year.

Like most large U.S. producers of ground beef, Cargill does not test ingredients for E.coli before grinding them into patties. One of the few giants that does so is Costco.

At what point did the contamination of the Smith burger occur?

The mix of ingredients from multiple places was such that none of the experts, federal, state, or Cargill, could tell.

The above information comes from an exhaustive report by Michael Moss published in the October 4 New York Times. The Times’ investigation revealed health safety flaws throughout the Cargill ground beef system. Federal records and other documentation showed that the inspection system of the whole ground beef industry is seriously flawed and that the U.S. Department of Agricultures had a “restrained approach” in carrying out its legal duty to enforce food safety.

The Times report throws light on how a multinational corporation fragments its production even under global economic integration. Cargill’s fragmentation creates a cross-border diffusion of responsibility whereby it is extremely difficult to identify specific sources of contamination and those who are responsible for it.

Print Page Read more!

Ideas on Making it in America

“Building the new economy – making it in America” is the theme of an all-day conference in Washington on Thursday, October 29. Top speakers include AFL-CIO President Richard Trumka and US Steel President John Surma.

Wish I could attend, but my bum legs usually keep from straying far from home. But I’ll be able to follow much of it on Facebook or Twitter.

The Alliance for American Manufacturing and the Institute for America’s Future are the co-sponsors. Related information can be found on their Websites.

Print Page Read more!

U.S. Reviewing Urgent Question: Link investor rights with duties?

“We feel this is a critical moment to take a fresh approach to bilateral investment treaties and the investment chapters of trade agreements….We look forward to working with the administration to [establish] a whole new framework for the governance of international investment that protects the public interest in the United States and abroad.”

So says a “collective statement” by representatives of labor, environmental, and economic development groups in a report prepared at the administration’s request for its review of U.S. policy on cross-border investment.

Among the concerns raised in the statement was that current investment rules “provide sweeping protections for U.S. investment abroad, without commensurate investor obligations,” thereby facilitating and accelerating the movement of U.S. jobs, production capacity, and technology.

“Strong labor provisions and a record of effective enforcement of those provisions should be a precondition for any negotiations, [but] they are not enough,” the statement adds. “A whole new framework is needed to reverse the devastating impacts of offshoring on U.S. workers and communities.”

Any such reversal will require detailed revisions of a 2004 document called the “Model BIT,” which serves as the official guide for negotiating bilateral investment treaties and the investment chapters of regular free trade agreements.

The present model is tilted too far in favor of investor rights. Among the recommended changes to restore balance, all opposed by business groups, are these:

-- Favoring cress-border investors with no rights more extensive than those granted investors under the U.S. constitution.
-- Clarifying the meaning of “indirect expropriation” (against which the investor is protected) so as to ensure, for example, that a government will not be restrained from, and penalized for, improving health, safety, environmental, and other legitimate public welfare objectives.
-- Changing the present arbitration system of dispute settlement to one involving only governments (state-to-state), among other reasons because outside arbitrators are not qualified to determine the public interest at stake.

China's Mercantilism a Major Threat

Another important change would try to create “a level playing field” globally between private enterprises and those “state-owned” – meaning particularly those owned by the People’s Republic of China.

That change is urgent for several reasons cited in the statement. For example:

-- “China engages in trade based on mercantilist principles, and has a strategic industrial policy meant to create and expand industrial sectors with the intent of becoming dominant within China and globally. In fact, China has targeted ten sectors or ‘pillars,’ including steel, telecommunications, and aerospace. To achieve dominance, the Chinese government subsidizes home-grown industries (commonly SOEs, or state-owned enterprises), manipulates its currency for export advantage, and insulates its domestic enterprises from foreign competitors in a host of ways.”

-- “As investment flows into the United States continue to grow [by over 70 percent since 2004], it can be anticipated that the U.S. market [for foreign investment in the U.S.] will expand substantially. Consequently, BITs can no longer be viewed solely as a package of rights and obligations to protect outward investment by U.S. investors in less developed nations. BIT obligations apply with equal force to investments within the United States by foreign companies and governments, including SOEs.”

The collective statement quoted above is signed by nine persons, including Linda Andros of the United Steelworkers, Matthew Porterfield of Georgetown University’s Institute of Public Law. and Martin Wagner of Earthjustice.

Their statement is part of a long document that also reflects the views of business interests as formulated by other eight persons. That document in turn is part of a much longer report submitted to the Secretary of State on September 30.

I have highlighted, mostly be direct quotation, those parts of the analysis that most clearly state the major issues impacting workers and their organizations. However important, it is a daunting chore, except to those who want to know what’s at stake behind many thousands of sentences in legalese.

Print Page Read more!

The next crucial human rights test for Obama: APEC summit meeting in Singapore

On his first Presidential trip to Asia, President Obama will stop in Singapore next month to address the 20th anniversary meeting of the Asia-Pacific Economic Cooperation (APEC) forum, which groups 21 countries on the Pacific rim.

APEC is a glaring example of an intergovernmental institution that by long tradition includes representatives of business but not of labor. (See "Only Businessmen Allowed Here: APEC.”) APEC thus symbolizes the Bush era paradigm that excludes workers, their rights, and their organizations from public policymaking.

Consistent with that paradigm, more than 800 of the world’s top business leaders will represent the “private sector” at the Nov. 13-15 APEC summit, and worker issues will not be on the agenda. Among the government leaders who will address the delegates, besides President Obama, will be the presidents of Russia, Indonesia, Australia, and Communist China.

“Engagement between the public and private sector is the highlight,” an APEC press release says. “Intreractive open dialogue and panel discussions will pave the way for the alignment of APEC policies and goals with global business.”

In other words, according to APEC, labor is not a part of the private sectior, and public sector policies should be aligned with global business.

Will Mr. Obama express any disagreement, or at least discomfort, with the monopoly that APEC, as an intergovernmental body, gives to one part of the private sector and to the views of that single part? Will he take the opportunity to distiniguish the Obama administration’s economic polices from those that the Bush administraion supported in APEC?

So far, there is no sign that he will.

“APEC is strategically important to the United States,” a State Department official told Congress on October 14, “because it is a primary venue for multilateral engagement with the Asia-Pacific on economic key interests.”

In that testimony, Kurt Tong, the acting senior official for APEC in the State Department’s Bureau of East Asian Affairs, made no significant distinction between current U.S. policies toward APEC and those the past. In his words on the “rubric of inclusive growth,” for example, Tong praises “flexible labor markets,” which is generally code for anti-worker policies such as opposing unions and minimum wages.

Business plays a direct, formal role in APEC through the APEC Business Advisory Council (ABAC), established in 1995. One of its foremost purposes, as its mission statement puts it, is to champion free and open trade and investment. “Our initiatives turn policy goals into concrete results,” ABAC adds.

Asian-Pacific unions and their parent labor international body, then named the International Confederation of Free Trade Unions, founded the Asia Pacific Labor Network in l995, hoping to match the power of business and to raise the profile of labor issues in APEC. Despite repeated efforts, they have failed.

They seemed to come close last year, when, a month before the November 2008 APEC summit in Peru, Peruvian President Alan Garcia, told a union delegation that he would support a role for labor and labor issues in APEC. Nothing happened.

The struggle is not over, however. The cause is just, and will not die.

Print Page Read more!

How to win a Nobel Prize in economics

Early October is a good time to root for your favorite economist to win a Nobel Prize. Mine this year was Thomas Paley, an economist with broad and long experience in think tanks, the labor movement, and governmental agencies. Unfortunately, he didn’t make it. Instead, two other American scholars were awakened by early morning phone calls from Stockholm October 12 notifying them they had won the 2009 Noble prize in economics.

The Swedish Royal Academy of Sciences cited both of them, Elinor Ostrom, a professor of political economy at Indiana University, and Oliver Williamson, an economist at the University of California at Berkley, for their “analysis of economic governance,” particularly for contributing to the understanding of how institutions act in situations not covered by detailed contracts or law.

“Whereas economic theory has comprehensively illuminated the virtues and limitations of markets, it has traditionally paid less attention to other institutional arrangements,” the Nobel press release explains. Attachments to the release describe how Ostrom and Williamson have contributed to filling that void – theoretical and actual -- in economic governance.

Thereby, the Nobel committee passed over economists who have done ground-breaking research to fill another gap – theoretical and actual: the gap in global economic governance, which today has gained an immediacy from the economic crisis gripping much of the world. Among the scholars who have focused on this area are Thomas Paley and Dani Rodrik, professor of international political economy at Harvard’s Kennedy School of Government.

My own decades-long personal exploration of the global economy, as described in my book, “Justice at Work: Globalization and the Human Rights for Workers,” and on this Weblog, has convinced me

-- that the global economy undervalues work, workers, and worker organizations and
-- that economists traditionally also undervalue work, workers, and worker organizations.

The economist who, in my limited view, departs most sharply from that tradition is Thomas Palley, author two books, dozens of articles in academic journals, and numerous policy papers. His most recent work is a timely policy paper for the New Century Foundation titled “America’s Exhausted Paradigm: Macroeconomic Causes of the Financial Crisis and Great Recession.” I summarized the main points of that paper in my August 25, 2009, posting on this Blog under the heading: “Rx: a new economic model that would value work and workers.”

Let me try summarizing that summary.

Palley’s key point, as I saw it, was that the “neo-liberal” policies adopted after 1980 under Ronald Reagan put workers in a box, figuratively and literally. The box’s anti-worker policy pressures come from four sides:

--globalization (chiefly free trade and unfettered movement of capital),
-- a retreat from full employment,
-- labor market flexibility (i.e., to fight unions, minimum wages, unemployment benefits, and other worker rights), and
-- “small government” (deregulation, privatization, and outsourcing, all to the disadvantage of workers).

In commending Professors Williamson and Ostrom, the Nobel panel noted that both scholars were “instrumental in establishing economic governance as a field of research.” Indeed, the selection itself adds to that legitimacy.

Were someone like Tom Palley similarly rewarded, the selection would also serve to stimulate research in global economic governance, where the role of workers and their organizations suffers from wholesale neglect.

“What Do Unions Do?” by two Harvard economists, Richard B. Freeman and James L. Medoff, published in 1984, was an economic assessment of American unionism of that era. It badly needs updating. More accurately, a new book is needed to reveal a new paradigm – how workers and their unions are involved in 21st century global economic governance.

One chapter, or more, could be devoted to an empirical study of the trade union movement in Malaysia and its historic campaigns for Malaysian workers and often against the Malaysian government and the foreign multinationals that profited from “labor market flexibility.” In defiance of the government, for example, the Malaysian Trades Union Confederation has long publicly supported adding requirements for enforceable labor standards to international trade agreements.

Many other countries have a wealth of labor material ready to be mined by researchers in the 21st century model of global economic governance. The research is worth doing for its own sake, and – who knows? – could even lead to a pre-dawn phone call from Stockholm.

Print Page Read more!

A timely lesson for health care reform: subsidiariy and solidarity

Subsidiarity, a concept better known in Europe than in America, has become a specialized import for use in the U.S. health care controversy. “By some accounts, it is a magic word that transforms Catholic social teachings into anti-government libertarianism,” writes Stephen Schneck, a professor of political science at The Catholic University of America and director of its Life Cycle Institute.

That’s an error, Schneck says in his October 6 posting on the “Catholics in Alliance for the Common Good” blog. In a short course titled “Subsidiarity 101: A Lesson for the Health Care Debate,” he calls subsidiarity “that hallmark idea of Catholic social teaching: the preferential option for the poor.”

Schneck traces subsidiarity’s usage in the 19th and early 20th centuries, starting with the ideas of Bishop Wilhelm Emmanuel von Ketteler of Mainz, Germany. Ketteler “developed an understanding of subsidiarity as part of a Catholic ‘third way’ in political economy between dehumanizing extremes of socialism and capitalism.“

Then Pope Leo XIII, in Rerum Novarum, “elaborated von Kettler’s third way balance of government and private initiative. Policies should be pursued at the level or mix most effective for the common good.”

Benedict XVI has offered the most recent Papal formulation of subsidiarity. As Schneck explains:

“Caritas in Veritate (2009) emphasizes the duty of governments to provide for the social welfare of citizens when non-governmental means do not rise to the level of needs. (no 35) But, even more interestingly, this newest encyclical suggests that subsidiarity alone is insufficient to achieve the harmonious balance in the social order that Catholic social teaching demands. Subsidiarity, His Holiness claims, must be balanced by practices of solidarity a term which he links closely with the obligations of government." Quoting Benedict directly:

"The principle of subsidiarity must remain closely linked to the principle of solidarity and vice versa, since the former without the latter gives way to social privatism, while the latter without the former gives way to paternalist social assistance that is demeaning to those in need. (no. 58)"

Schneck concludes with this analysis of subsidiarity and health care:

“In truth, nothing in Catholic social teachings, including the idea of subsidiarity, requires that America’s health care crisis be addressed with a particular policy approach, whether by state, private enterprise, voluntary associations, or anything else. The Church has been quite happy with state-run plans—and the Vatican's own plan is quite similar to what one finds in Italy or other European countries. But, if a private or semi-private system worked to provide successful comprehensive coverage of all in society, then it would also satisfy the concerns of the social teachings. Of course, that's the rub.

“Tragically, the crisis of health care in America is testament to the failure of private sphere mechanisms to address such social needs. And, that failure surely invokes John Paul II’s argument that government must step up when critical social needs go unmet. Forty-five to fifty million Americans are now without adequate health care coverage, nearly one-third of those are children. This is what is behind the American bishops' longstanding insistence that as a society we are faced with a moral imperative regarding health care. Democrat, Republican, libertarian, or whatever, our Church reminds us Catholics that we cannot dodge that imperative.”

Print Page Read more!

World leaders still sticking to their dangerous old ways

Today’s economic crisis grows out of “an unbalanced globalization” that redistributed income away from work and workers to finance and financiers. So says a new report issued by the International Trade Union Confederation (ITUC) to mark the World Day for Decent Work on October 7.

The report, titled “Jobs – the Path to Recovery: How employment is central to ending the global crisis,” calls upon world leaders to adopt “a global charter for sustainable economic activities.” It also emphasizes the readiness of the labor movement, at both the national and international levels, to take on a role so far denied it – helping shape “this new model to tackle the crisis and to build a fairer world economy for future generations.”

At present, “the push for a return to ‘business as usual’ is taking hold,” Gus Ryder, ITUC general secretary, warns in the preface. His examples:

-- Wall Street is again paying itself gigantic bonuses after having been bailed out with taxpayers’ money.
-- Parts of the financial trading system are still operating in the shadow industry or are borrowing cheap from taxpayers, lending at high rates and raking in the difference.
-- Opportunities for huge profits remain, for the wealthy and the few.

Most of the 57-page report is a restatement of policies that the ICTU, as representative of 170,000,000 workers in 157 countries and territories, has advocated before. Will the leaders of the G20, the International Monetary Fund, the Organization for Economic Cooperation and Development, the World Bank, and the World Trade Organization pay attention this time?

Hopefully, they will end their policy of excluding global labor from the table of global decision-makers. But it will take more than hope. It will take pressure. Including the pressure of events.

Print Page Read more!

A crime wave: stealing worker pay

Mark your calendar: Thursday, November 19. It’s the National Day of Action to Stop Wage Theft, organized by Interfaith Worker Justice and its 22 affiliates throughout the country.

“Wage theft is a crime wave that nobody talks about,” says Kim Bobo, executive director of Interfaith Worker Justice and author of “Wage Theft in America.”

The theft takes various forms – failure to pay the legal minimum wage, failure to pay overtime at time and a half, failure to pay for anything at all for overtime hours, failure to allow a meal break, and even prohibiting injured workers from filing worker compensation claims.

The victims are concentrated in apparel manufacturing, discount retailing, child care, hotel staffing, and other low-wage industries. And the thieves are not all isolated rogue employers.

When three Hyatt Hotels in the Boston area fired 98 housekeepers this August, it was discovered that the company hired to do the work, the Atlanta-based Hospitality Staffing Solutions. has a record of wage- law complaints filed in Florida, Georgia, Massachusetts, and Pennsylvania. The firm’s president, Rick Holliday, president of the firm, with employees in 450 hotels around the country, blamed “administrative mistakes.”

A comprehensive study of wage-law violations conducted early this year in three large cities – Chicago, Los Angeles, and New York – concluded: “The framework of worker protections that was established over the last 75 years is not working.” The study, “Broken Laws, Unprotected Workers,” found that among the 4,387 workers interviewed, the amount lost because of wage law violations averaged $51 a week.

Of course, such practices plague workers outside the United States too. The latest publicized evidence of that comes from Father Christopher Hartley, who has lived and worked for 10 years among Haitian sugar cane workers in the Dominican Republic.

In a report dated August 31, Father Hartley describes how the exploitation of the plantation workers has continued despite years of documentation by the U.S. State Department, Amnesty International, and other human rights groups. “Not much has changed,” he writes, “except the manner in which the human rights violations occur.” For example, in some plantations the harvested cane now gets weighed at night without any witnesses. Weight fraud results in pay fraud.

Hartley has written to the Commission of the European Union (EU) to intervene under terms of the new Economic Partnership Agreement between the EU and the African-Caribbean-Pacific nations.

What can you do? For starters, you ought to get involved in the activities of Interfaith Worker Justice.


Print Page Read more!

Both saltwater and freshwater economists got it wrong on free trade -- and still do

“How Did Economists Get It So Wrong?” was the title of a New York Times magazine article on September 6. Good question -- answered at length by Paul Krugman, a Pulitzer prize-winner in economics. Now the question has become: did Krugman get it wrong in a crucial respect – international trade?

In his 7,000-word essay, Krugman targeted mainline economists not only for failing to foresee today’s economic crisis but, more important, for being blind “to the very possibility of catastrophic failures in a market economy.” They blinded themselves by their exuberant faith in an efficient free market, a faith that they successfully spread to others, policymakers included.

In the field of macroeconomics, a significant theoretical difference has long existed quietly between those whom Krugman called “freshwater” economists (mainly at inland schools) and “saltwater economists” (mainly in coastal U.S. universities) over the cause and cure of recessions. That difference did not erupt on the policy level until the unprecedented economic shock hit last year.

What both salt- and freshwater economists ignored

The September 20 Times magazine has now printed nine letters with thoughtful comments on Krugman’s article. One was from Philip K. Verleger Jr., a business professor at the University of Calgary in Alberta, Canada, a former staff economist at the U.S. Council of Economic Advisors and a visiting fellow at the Peterson Institute for International Economics in Washington, D.C.

Verleger praised Krugman’s essay “as far as it goes,” but faulted it for ending “at the edge of salt water.” His three-paragraph critique is worth quoting in full:

“Krugman does not raise the subject of international trade. Yet for years saltwater and freshwater economists have all written and preached of the benefits of free trade. Larry Summers [now director of the National Economic Council], for example, has endorsed the view that trillions of dollars of benefits would accrue by opening international markets. I was part of the chorus for more than 10 years as a fellow at the Peterson Institute for International Economics.

“Here, too, I believe economists got it wrong. The United States’ economic situation has been harmed, not helped, by the push for free trade. America’s skilled workers and middle class are undoubtedly much worse off thanks to the market-opening measures negotiated over the past three decades at the encouragement of almost all economists. The losses have occurred because the theoretical benefits projected by economists are blocked again and again by our trade partners.

“Unfortunately, few economists are willing to offer the same detailed criticism of trade policies that Krugman has offered of macroeconomics.”

The good news is that many policymakers now do understand that the financial markets, and their industry, are not self-regulating. As President Obama said in his weekly address on September 19, Congress must “put in place a series of tough, common-sense rules of the road that will protect consumers from abuse, let markets function fairly and freely, and help prevent a crisis like this from ever happening again.”

But it is not at all clear whether the Obama administration understands that international trade also is not self-regulating, and that it too needs a series of tough, common-sense rules of the road that will protect consumers and workers, let markets function fairly and freely, and help prevent a crisis like this one from ever happening again.

Print Page Read more!

Urgent advice for G20 summiteers: Jobless recovery is no recovery

The world’s top labor leaders are urging the world’s top government leaders to make the global unemployment crisis the No. l priority on their agenda.

It is imperative, the labor leaders insist, that the government leaders turn their G20 summit next week into a jobs summit. “As regards unemployment, the worst is still to come,” says labor’s Pittsburgh Declaration, after the city in which the summit will be held September 24-25.

In releasing the 14-page declaration on September 16, Gus Ryder, general secretary of the International Trade Union Confederation (ITUC), said: “Governments must do much more to arrest the plunge in jobs.”

Although the G20 summit is a meeting of governments, about 50 union leaders from every continent will be in Pittsburgh to lobby their government officials on the urgency of the unemployment crisis.

According to the OECD, the number of jobless people is likely to reach 57,000,000 people this year in its 30 member-countries. Counting the whole world, 200,000,000 may be pushed into extreme poverty this year.

And yet a New York Times headline announced on September 5, “In Unemployment Report, Signs of a Jobless Recovery,” juxtaposing two opposing trends: a continuing decline in employment and a seeming improvement in some sectors of the economy.

“Many experts,” the Times explained, “envision a jobless recovery, in which the economy grows and job losses persist.”

Whatever the future holds, there’s something we should get straight right now. A jobless recovery is a contradiction in terms. It is an oxymoron. Failure to recognize it as such prolongs a dangerous delusion about the economy: that it can work fairly well even when unprecedented millions of men and women are without work.

That delusion reinforces policymaking that concentrates on improving financial markets, to the exclusion of the labor market. How much confidence can we place in an economy whose growth is unconnected with work when so much work is left undone?

‘Inequality’ identified as the root of global crisis

While the Pittsburgh Declaration has a long inventory of specific reforms to be adopted, it also calls on world leaders to “build a new model for a balanced economy,” for this fundamental reason:

“It [the new model] must bring to an end the policies that have generated massive inequality between and within nations over the past two decades and that are the root causes of the current global crisis. A fairer redistribution of wealth is the only sustainable route out of this crisis – and the only way to restore the trust of working people in their economic and financial systems.”

To build a new model requires leaders to “muster the political will to break with the policies of the past so as to ensure that there is no return to ‘business as usual’.”

More specifically, it requires them to “turn away” from a model they embraced at the London G20 summit early this year when they endorsed the current model of “an open world economy based on market principles.”

However, the Declaration adds, workers and unions “have no confidence that this time governments and bankers will get it right.” To get it right, “it is essential that the voices of working people in developed, emerging, and developing countries are heard in the G20’s discussions.”

The G20 does heed the advice of bankers and their organizations. When will the G20 start listening to the voices of workers and their organizations?

Print Page Read more!

Seeking better ways to evaluate a nation’s well-being

How to tell whether a country is making progress? Experts have been grappling with that question for years under the auspices of the Organization for Cooperation and Economic Development (OECD).

They have now come up with recommendations that will be discussed at the October 27-30 OECD World Forum on “Statistics, Knowledge, and Policy” to be held in Busan, Korea.

The goal is to reach an international consensus on indicators that transcend the traditional one, the Gross Domestic Product (GDP), which measures a nation’s total flow of goods and services.

It’s time to end “GDP fetishism,” Joseph Stiglitz, the Nobel Prize-winning economist, told a Bloomberg reporter last week. “So many things that are important to individuals are not included in GDP. There needs to be an array of numbers, but we need to understand the role of each number. We may not be able to aggregate everything together.”

In a September 14 announcement OECD Secretary-General Angel Gurria observed that there is a growing gap between what official statistics state and the conditions under which people live their daily lives. “This gap,” he said, “can be clearly damaging both to the credibility of political debate and action and to the very functioning of democracy in our countries.“

The World Forum in Korea is part of a global project on measuring the progress of societies, initiated by the OECD five years ago.

A newly released draft OECD working paper sets out a proposed framework to measure that progress – a framework “broad-based and flexible enough to be applied in many situations around the world.”

Print Page Read more!

The President's Trade Quandries

Trade and globalization: where do they rank on the list of President Obama’s priorities? If you rely on the White House Website, they are not a priority of his at all.

When I checked the Website five days ago, I found that the home page listed 22 “issues,” lined up alphabetically from Civil Rights to Women. Then I clicked on “Additional Issues” at the end of the 22-item list. Seven more popped up, with Faith at the top, followed by six more listed alphabetically, from Arts to Transportation. No Trade or Globalization.

I turned to a “contact us” form, whicd invites the viewer to submit comments or questions for the President or his staff. I submitted the following;

"Mr. President: Why are two highly important issues -- globalization and trade -- omitted from your list of issues and additional issues?. That's very strange. You need to take a clear stand on these issues, considering their impact on American working men and women. I know your advisers would like to duck these issues, but that's impossible. Bob Senser"

I checked a box marked “a response requested.” Today, after getting no response, I scanned the Website again. The 22 issues and seven additional issues were still there as before. No additions.

It occurred to me that Globalization and Trade might be treated under Foreign Policy or Economics. No, they are not.

The President is the midst of a historic struggle for universal health coverage for Americans, a goal that none of his predecessors, from President Truman on, had achieved. I presume that his “issues” staff did prepare drafts at least on Trade, but that anything clear on this controversial subject would ignite additional fireworks, which the White House did not want to set off at this time.

In any case, because of conflicting pressures, foreign and domestic, as well as a less than full grasp of globalization, the President appears to be in a real quandary on trade. But he will certainly have to take a stand of some kind next week, when he addresses the AFL-CIO convention in Pittsburgh, followed by a G20 summit the following week in the same city.

Will he come down on the side of workers? Or on the side of major American corporations whose highly profitable off-shore production, imported into the United States, accounts for 40 percent or more of the huge U.S. trade deficit?

On September 11 the President imposed increased duties for three years on tire imports from China, ruling in favor of a petition by the United Steelworkers and a few U.S.-based corporations. See my article, “Obama Faces Crucial Test on Trade,” for background.

In explaining the President’s decision, U.S. Trade Representative Ron Kirk said: “When China came into the WTO, the U.S. negotiated the ability to impose remedies just like this one…Enforcing trade laws is key to maintaining an open and free trading system.”

Print Page Read more!

Very rich getting very much richer

Robust economic gains were widely shared in the three decades after World War II. The average income for the bottom 90 percent in those years (1946-1976) actually increased more rapidly percentage-wise than the average income of the top 1 percent. Those days are long gone.

In the three decades since 1976, the incomes of the bottom 90 percent of households have risen only slightly, but the incomes of the top 1 percent have soared, as illustrated in the above graphic provided by the Center on Budget and Policy Priorities (CBPP), a Washington think tank.

That is among of the income disparities highlighted in a September 9 CBPP report on newly released Census Bureau/IRS data analyzed by economists Thomas Piketty and Emmanuel Saez

Although economic equality is high in the United States, inequality in wealth is even higher, as noted in Bard College’s Levy Economics Institute 2007 report on inequality, one of the Institute’s series on the Measure of Economic Well-Being.

The CBPP report does not deal with whether the increased concentration of income caused the economic collapse that began in 2008. At least one noted economist does – Thomas Palley in a policy paper for the New America Foundation. See my August 25 Weblog story on it, titled “Rx: a new economic model that would value work and workers.”

Print Page Read more!