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New Ground 139

November - December, 2011

Contents

  • A Living, Not Slavery by Bob Roman
  • Is the Tide Turning? by Michael Baker
  • Inequality: The Curse, the Consequence and a Cure by Bill Barclay
  • Class Warfare In America by Tom Suhrbur
  • New Ground 139.1 -- 12.01.2011

    0. DSA News

    We Won! by Michael Baker
    GOPDSA Pickets Trader Joe's by Tom Broderick
    Occupy Food Service by Michael Baker
    DSA National Convention

    1. Politics

    Healthcare Atrocity: Boycott Hyatt Hotels
    We Won, Part II
    Social Security "Reform" Is Really Theft
    Reviving Our Economy

    2. Democratic Socialism

    Socialism: Past and Future by Michael Baker
    America Beyond Capitalism

    3. Upcoming Events of Interest

    New Ground 139.2 -- 12.17.2011

    0. DSA News

    DSA Convention on Video
    Talkin' Socialism
    YDS Winter Conference

    1. Politics

    Hundreds Picket Hyatt
    We Won Part III: We Lost
    Workers' Republic

    2. Democratic Socialism

    Redefining Markets in a Democracy
    From Bolshevism to Stalinism: Ernst Thälmann & German Communism during the Weimar Republic

    3. Upcoming Events of Interest


    A Living, Not Slavery

    by Bob Roman

    Every now and again it's time for a new coat of paint: your apartment, my face. Nothing lasts forever, including Chicago's O'Hare and Midway airports. In common with many other cities, Chicago's approach to this is to put the airport concessions up for bid. Not only do the concession operators (similar in function to the operators of shopping centers) offer to pay more for the concession, they also offer to spend money rehabbing the space.

    Sounds like a great win-win idea, yes? Except for the employees at the stores and restaurants therein, who will lose their jobs with no guarantee of being rehired. And for their union that went through a good deal of work to help them organize and now will have to start the process, again, from scratch. It doesn't have to be this way. The workers can be a part of a win-win-win deal, and to that end a "Stable Jobs, Stable Airports" ordinance was introduced in the Chicago City Council on October 5 by Alderman Jason Ervin (28). A coalition of unions and community groups held a rally / press conference at City Hall prior to the council meeting, where the proposed ordinance was referred to the Committee on Workforce Development and Audit.

    The proposed ordinance begins by retaining the present airport workforce. The new concessionaires must hire the current employees, by seniority, for a trial period of 90 workdays. Those not needed are to be placed on a preferential rehire list. In principle, if the trial period doesn't work out, a retained employee might be let go, but this would be subject to the provisions of a collective bargaining agreement. This is because, more controversially, the ordinance also has a "labor peace" provision that requires concessionaires and other contractors to be signatories to collective bargaining agreements that forbid "picketing, work stoppages, boycotts or other economic interference." Unfortunately, these "labor peace" provisions are fairly standard in contracts these days, so much so that employers who are asked to sign agreements without one get a tad crankier than usual. The ordinance would allow the city to terminate a contract if there were no collective bargaining agreement, so there would be an incentive to bargain in good faith.

    The proposal also amends Chicago's Living Wage ordinance by expanding its coverage to workers at O'Hare and Midway airports. There are workers at the airports being paid the Illinois minimum of $8.25 an hour. The Chicago Living Wage is presently a bit over $11 an hour, so some workers could expect a raise.

    This should obviously be a win-win-win proposal. But the ideologues lurking in the various chambers of commerce and community economic development corporations have a whole repertoire of arguments that "prove" any deal that doesn't maximize the profits of the business class will also screw everyone else. These are arguments as old as the hills, and they've been proven wrong time after time, but they need to be answered.

    To that end, Virginia Parks and William Sites of the University of Chicago, Jack Metzgar of Roosevelt University, and Ron Baiman of the Chicago Political Economy Group collaborated in an uncommissioned study, a cost-benefit analysis of the proposed ordinance (see http://insidechicagoairports.typepad.com/files/stable-jobs-stable-airports-study.pdf ). For most employees, the biggest immediate benefit would be coverage under Chicago's Living Wage Ordinance. They estimate some 1,600 workers would see an average pay increase to $22,000 from $18,000, representing a net annual increase in purchasing power of $3 million to $8 million. Now, this is a number small enough to be lost in the statistical noise of the Chicago economy, but it should be plain that it nevertheless would make a really big difference in the lives of the affected employees. These are not high school kids but adults with adult responsibilities. Typically, when employees are better paid, they also stay with the job, resulting in higher productivity and lower training costs. Employers could thus save at least $700,000, the study estimates.

    The study estimates the aggregate cost to employers of coverage under the Living Wage ordinance to be $6.9 million. If that were taken entirely out of profits, they estimate a reduction of total profits of 14% to 16% at O'Hare and 23% to 27% at Midway. This would still leave profit margins above similar stores located outside airports because airport concessions have a distinctly monopolistic tinge to them. And you know what that means: The consumer pays. And what would that amount to? 16 cents per trip at O'Hare and 21 cents per trip at Midway.

    If you're inclined to be skeptical of studies like this, you're probably right to be so. For example, the business side of employment policy, the lemon-mouthed and green eye-shaded cynics of the "free" market, have a model all ready for the chamber of commerce types to plug in the numbers and thereby "prove" that a living wage ordinance will cost a fortune, destroy business, and create a wasteland where once was plenty. But Chicago is not unique. What has been the actual experience of extending a Living Wage ordinance to an airport?

    For just that reason, Roosevelt University's Mansfield Institute for Social Justice and Transformation and the Chicago Committee for Working Class Studies sponsored a meeting at Roosevelt University's Gage Gallery on the evening of November 1. The meeting reinforced the conclusions of the cost-benefit analysis by presenting the experience of Los Angeles. Madeline Janis, the Executive Director of Los Angeles for a New Economy (www.laane.org ) was the featured speaker.

    Los Angeles began its campaign for a Living Wage ordinance a few years before Chicago, and it began at a time when LAX airport was undergoing a rebidding and renovation process similar to what is beginning in Chicago today. People were beginning to lose their jobs at the airport, and this had the effect of including LAX in the coverage of the living wage ordinance. There were the usual chamber of commerce arguments against the living wage ordinance, but ultimately it was passed. Today, LAX is going through another cycle of rebidding concessions and renovation, and it's a feeding frenzy of businesses wanting a piece of the airport. There's nary a complaint about the living wage ordinance. This also demonstrates the win-win-win nature of the Stable Jobs, Stable Airport ordinance.

    Alderman Jason Ervin introduced the ordinance, and he was among the speakers at the November 1 meeting. He noted that while 31 sponsors constitute a majority in the city council, that's also no guarantee that the ordinance will pass. Mayor Emanuel has not taken an explicit position on the ordinance, but his airport commissioner has trotted out all the old free market arguments against it.

    The ordinance has been referred to Committee on Workforce Development and Audit. This is not exactly a left-wing stronghold. Of the 18 committee members, 5 are co-sponsors and another 3 non-sponsors had participated in the Grassroots Collaborative's Peoples' City Council meeting and signed the resolution (see http://www.chicagodsa.org/ngarchive/ng137.html#anchor297498 ). While this is an optimistic beginning, the ordinance clearly has a long ways to go.


    Is the Tide Turning?

    by Michael Baker

    An important Evanston City Council budget meeting was held October 29 at 9 am. The Community Labor Alliance for Public Services (CLAPS) wanted to ensure the City Council heard the community's opposition to privatization. As a result, CLAPS organized a rally at 8:30 am just outside of the meeting's venue. The rally had a sizable and spirited turnout and included some powerful speakers: Henry Bayer, Executive Director of AFSCME Council 31; Kevin Johnson, President, AFSCME 8191; Florence Estes, Staff Rep, AFSCME Council 31; Judy Wittner, Community Labor Alliance for Public Services; and Charles Hogan, retired Evanston public service employee. After the rally, many folks attended the City Council meeting, continuing to hold their signs in support of public services and speaking during the public comment portion of the meeting.

    Clearly, some of the aldermen heard CLAPS' message. In fact, Alderman Rainey (8th Ward) proposed putting all the jobs back into the budget. Other aldermen expressed their support for this proposal, some during the meeting and some to CLAPS members personally. The proposal didn't come to vote, but it shows the progress CLAPS has made in saving Evanston's public services. When CLAPS began the campaign only four months ago, all public services were "on the table" for potential privatization. Now, CLAPS is on the verge of saving all public services.

    In spite of the exciting progress CLAPS has made, CLAPS states it is now more critical than ever that the Evanston community pressure their aldermen. As a result, CLAPS is asking Evanston residents to continue phoning or e-mailing their alderman to express their opposition to privatization and layoffs. CLAPS suggests the following talking points when folks contact their aldermen:

    • Workers should not be paying for the City's $700,000 mistake. In 2010, the City Council voted to outsource garbage and yard waste to Groot Industries. Within 4 months Groot came back asking for (and getting!) an additional $700,000. Now, the City Manager wants to layoff dozens of workers with a total savings of $721,000. He may deny that connection, but it appears the City Manager is trying to plug that hole with layoffs.
    • The head of the Department of Parks and Forestry, Doug Gaynor, stated in a memo to City Council that the proposal to eliminate 6 positions in Parks and Forestry and outsource their work to a private vendor would have "definite drawbacks." These include loss of flexibility and loss of a needed vehicle for snow removal. He states also that the possible savings that may be realized through the outsourcing would likely "be short-lived." The City's report also lists 38 services currently done by in-house Parks and Forestry staff, which would no longer be done if turned over to a private vendor. Privatizing will result in a serious shrinking of services and lead to a serious threat to property values, quality of life, and the beauty of our lakefront, which is key to Evanston's character and economic development.
    • Parks and Forestry staff work as snow command personnel. Eliminating 5 field staff would put Evanston in serious jeopardy in the instance of weather or security emergencies. In February of this year, a winter blizzard left Evanston snowed-under. Field staff in several departments, including Parks and Forestry, are cross-trained to do snow plowing and were able to turn on a dime to clear the blizzard in record time. They were even given special commendations by the Evanston City Council. Contracting these positions to a for-profit vendor would seriously reduce staff response time and quality of service during City emergencies.
    • Outsourcing of Parks and Forestry would eliminate critical administrative functions. In addition to field staff, the proposal calls for eliminating the Secretary II position. This employee currently performs some 67 complex tasks which would be pawned off to other staff who already have their own full-time jobs to do. Other Parks and Forestry personnel have testified that the administration of the program would be devastated with the elimination of this position. Even the head of the Department is against eliminating this and other positions.
    • Citizen input throughout the budget process shows opposition to privatization. 2,000 citizens signed a petition against the outsourcing of public services which was presented to the City Council. Privatizing services received a -7 (that's minus 7) vote tally in the Engage Evanston online survey. The Top Ten budget balancing ideas on Engage Evanston were related to revenue generation, not cuts in services or job elimination. (See "City Services and Service Change Ideas Evaluation: FY 2012 Budget Process" at www.cityofevanston.org .)
    • Evanston residents support revenue generation that, according to the City, could go a long way in closing the projected deficit. Several ideas for revenue generation supported by Evanston residents include (just as examples): (1) Enforcement of all code ordinance (revenue up to $350,000 projected); (2) Increased collections of money owed to City (revenue up to $300,000 projected); (3) Increase in parking fees (revenue up to $120,000). These revenue generation ideas alone, if pursued to their fullest extent (generating $770,000) could more than pay for the 11 positions the City would eliminate (worth $721,000).

     

    Editor's Note: Michael Baker is Co-Chair of CLAPS. For Labor Beat coverage of the October 29 rally, see http:/ /www.youtube.com/watch?v=FZu9ucd52V4.


    Inequality: The Curse, the Consequence and a Cure

    by Bill Barclay

    The US today faces three overriding political economic problems: jobs, finance, and inequality. The third of these, the huge and rapid increase of inequality over the past 35 years, is the core problem we face. In what follows I briefly outline each of the problems and then develop the dimensions of the central problem -- the curse -- of inequality. I argue that the extreme of inequality we find in the US today both destroys the ties that should link us together as a society and was also the primary cause of the financial crisis of 2008 and the subsequent Great Recession. Finally, I argue that an attack on inequality that is organized around taxing the financial sector may offer the best approach to defining and developing a new political economy.

    The first problem is the deficit problem, the deficit in jobs. The often celebrated US jobs machine has failed to generate enough decent jobs -- and often simply enough jobs -- to meet the needs of our people. I am not referring merely to the recent job losses and unemployment levels of the Great Recession, although it is certainly true that both the personal misery and the foregone economic output resulting from the spike in the numbers of un- and under-employed are significant. However, the jobs deficit has been long in the making. In the first 35 years after World War II, recessions in the US were short, and employment levels, as measured by the number of people working, bounced back quickly. The average length of time to return to pre-recession employed numbers (as many or more employed people as existed prior to the recession) was only 9 months, and the longest time was 12 months. However, beginning in the 1980s, the bounce back time lengthened: to 23 months after the 1990-91 recession and to 37 months after the 2000-01 recession. It has now been two years since the official end of the Great Recession (12/07 - 6/09) and we are still more than 7 million jobs below the number that existed in November 2007.

    The second problem is one that has been noticed only more recently and is still a matter of dispute: nonetheless I believe it apparent that the US has a financial sector that is both too big and too inefficient for the political economy as a whole. It is important to keep in mind that financial institutions and financial workers do not actually create anything. Instead, it is the task of finance to facilitate the functioning of the larger political economy by raising and allocating capital, ensuring the low cost and timely flow of investment funds between net saving sectors to net investing sectors of the political economy. Or at least that used to be the case. However, just as the jobs deficit was long in the making, so the bloating of finance has taken time to occur. As one measure, from the mid-1970s to the pre-Great Recession peak, financial sector profits as a percent of total corporate profits more than doubled, going from 15-18% to almost 45%. This increase represented a major shift in profitability between non-financial and financial businesses. Until the late 1970s, the rate of profit for financial firms was lower than for non-financial business; however, following the first wave of financial deregulation in the early 1980s, financial profit rates soared, frequently doubling that of non-financial firms. Two important results were, first, the increasing financialization of non-financial firms and second, the outpacing of growth in financial assets to actual economic output. On the first point, firms such as GE, GM and Ford began to make more (sometimes even all) of their profits from financial activity rather than from traditional manufacturing. On the second point, while the ratio of financial assets to US GDP was in the 4:1 to 5:1 range between the 1950s and the 1970s, beginning in the 1980s it rose rapidly, reaching a 9:1 ratio by the early 2000s. As I argue below, this has been the result of financial allocation decisions by the class of rentiers: those who derive most of their very high incomes not from wages and salaries but from dividends, capital gains and interest. These decisions led to the unproductive use the large accumulation of capital in the hands of a small group of people.

    Thus the third and underlying problem: the dramatic increase in income inequality that has occurred in the past 35 years. This huge and rapid upwards redistribution has almost tripled the income share of the top 1% of the population,1.25 million households. In the mid-1970s this group received about 8.5% of total US income. Today they receive 22-24% of total US income. (Note: I am talking about income, not wealth. Wealth is even more concentrated.) A very small group of households command $2.6 - $3.0 trillion dollars of income each year. These 1.25 million households receive more income than the bottom half of all US households, 62.5 million households.

    The Problem of Inequality: The Culture of Too Much

    The problem of increased inequality is the fundamental one. It drives the problems in the political economy as a whole. It also gives us a way to think about what needs to be changed and what kinds of policies could be implemented to change it. Rather than start with numbers, many of which readers are, I am sure, already familiar with, I will illustrate this inequality through the culture of excess, what one on-line publication calls the culture of Too Much (http://toomuchonline.org ).

    Let's take a few examples. For him, the culture of excess offers an $85,000 pool table. Now, you may well ask, how could one spend $85,000 on a pool table? Well, this one has an electrical system that lights up to track the path of each of your shots as well as the path of the balls you hit (or missed). For her, since she might be jealous of the money spent on your pool table, there is luggage that runs $25,000 - 50,000 a piece. Why? Because each piece is covered with gems. As the clerk selling the luggage put it, "many of our customers buy luggage for their luggage."

    Our couple will take their little get away on their 350 foot yacht, longer than a football field. They need a yacht to get to that island they picked up off the Mediterranean Coast. On the way to their island they can relax under $25,000 shower heads -- that can be configured to spray champagne. After their shower, they can grab their $410 corkscrew and enjoy a glass.

    Are these uses of resources and money obscene? Of course they are. Do they contribute to the well being of society as a whole? Of course not, even though producing the pool table, the luggage and the yacht all "created jobs." (The fact that almost any human activity can "create jobs" does not mean that we should support any and all "job creation" programs.) More importantly, might these examples illustrate some trends that are bad for all of us?

    The Curse of Inequality

    There are lots of ways in which the extreme level of inequality that we find in the US today could be socially destructive. Those with less than enough to live on may envy those with Too Much, may even be driven to despair and perhaps individual acts of violence. At the other end, there is considerable evidence that, when the distance between your life and that of most people can only be measured by money, you lose any sense of empathy with the situation of others. These "others" (most of us) become merely symbols that can be manipulated. Of course, from the purely instrumental perspective of a corporate CEO, a hedge fund manager or an investment banker, this loss of empathy is perhaps useful to their ends.

    Before talking about the political economic dynamics of asset price bubbles and debt creation that were driven by this increase of inequality, I want to look at inequality from anther angle. In what follows I am drawing heavily on a book called The Spirit Level by Kate Pickett and Richard Wilkinson. In their book, Pickett and Wilkinson examine the relationship between a broad range of quality of life measures and the extent of inequality in various societies. But they do this analysis with a twist. Rather than looking at all the more than 200 countries on the planet, they separate out the rich societies, those countries with per capita income of more than $20,000 a year and focus on them. This gives them a group of 23 countries to look at on both an overall Index of Health and Social Problems and scores on the individual variables that comprise the index. Their data show, beyond that level of affluence, where a society has solved the age old economic problem of enough for all to live on (shelter, food, etc); there is no significant relationship between further affluence (as measured by per capita income), and health, education, happiness, etc. In sum, further economic growth does not, in and of itself, improve a society's standing, or the experience of individual members of that society, on these variables.

    The first point to be clear on is that, as I said earlier, there is no statistically significant relationship between level of national income per capita and scores on either the overall index or most of the individual measures of social and political well being when these rich countries are compared. There is no correlation between further increases in per capita income and better scores on the index of social well being. However, there are marked differences on both the index as well as individual components between different countries in this group. Pickett and Wilkinson ask what explains these differences in health, education, happiness, etc. if increasing per capita income does not. Their answer, which they document extensively, is that these differences are correlated with the degree of inequality within these countries. They use two measures of inequality, the Gini Index and the ratio of income of the top quintile (20% of families) to the bottom quintile. Mathematically the Gini Index can range from 0.0, if everyone has an equal amount of income, to 1.0 if one unit has all the income. The range among these 23 countries is roughly .25 - .50 and on the quintile comparison, about 3:1 to 9.5:1. On both measures, the US ranks near the top in terms of inequality.

    On the overall Index of Health and Social Problems, the US is by far the worst, significantly exceeding Portugal, a country with only slightly less economic inequality than the US. The Index contains three broad categories of social well being: health, including life expectancy, infant mortality and obesity; public safety/security, including homicide and imprisonment rates; and social well being, including drug and alcohol addiction, children's educational performance, teenage births and social mobility. They also look at scores on a trust measure that, I believe, nicely brings together all the other findings.

    Pickett and Wilkinson find statistically significant relationships between levels of income inequality and these variables. (They do not look at wealth, for which data is less readily available.) More equal societies have lower rates of infant mortality, longer life expectancy, less obesity, and lower rates of homicide and imprisonment. They have higher levels of children's educational achievement and intergenerational mobility. Perhaps most tellingly, in responding to the question "I think that most people can be trusted," people in more equal societies are more likely to answer "yes". I believe that the responses to this question say much about the tone of day-to-day interactions between strangers in a society, concerns about crime and the willingness to support policies that may benefit others. It is also worth noting that US scores on this question have shifted significantly toward the "no" answer over the last 35 years of rapidly increasing inequality.

    Pickett and Wilkinson strengthen their analysis by looking at most of these same measures across different states in the US, again ranking state by levels of income inequality. And again the more equal states do better.

    It should come as no surprise that the US fares poorly on these measures when compared to other advanced industrial economies. While not always the worst (sometimes that dubious distinction falls to Singapore or Portugal), the US is consistently in the bottom group, and at times, as on percent of population in prisons, an extreme outlier. To make sense of these results, it is important to recognize that, in terms of inequality, the US is much closer to Mexico than to Sweden.

    For socialists and progressives more generally, there is another important point to note. With the exception of Japan, the level of inequality of market outcomes (pre-tax) is not much different between the US and most of the other countries in the sample. The difference occurs when public policy, the role of government, comes into play. The impact of government on the level of inequality in the US is very limited in contrast to that for almost all of the other countries in the group. These other countries use, in a conscious manner, the public sector to counter the destructive inegalitarian outcomes of the private market. For example, in the mid 2000s decade, the Gini Index for the US, pre-tax was .46, similar to Australia (.46), Germany (.51), Netherlands (.42), and even Sweden at .43. However, post tax, the Gini Index for the US was .38, while that for Australia was .30, for Germany .30, the Netherlands .27 and Sweden at .23. The public market in the US is weak, with little redistributional impact compared to that for other rich countries. The conscious nature of these policies in Western Europe and elsewhere is caught in the paper submitted by the Nordic countries to the 2011 Davos World Economic Forum which argued that:

    "Individualism has its place. Participants [in Nordic Societies] respect the work ethic and punctualityBut investing in social trust quietly builds a strong sense of common, inter-generational, and place based responsibility that yields high dividends over time."

    The Nordic countries have the highest scores on the trust measure.

    What Is to Be Done?

    We need policies that address all three of our problems: the rapid growth of inequality, the jobs deficit and the oversized financial sector. There is certainly much to be said for restructuring our income tax. In the past 35 years of rapid growth of inequality, both federal and state income tax rates have failed to recognize the increased concentration of income and adjust accordingly. Of course, this failure was not chance but the result of deliberate policy pursued by the top 1% of households by income as well as business interest groups.

    There are many varieties of "tax reform". But I think the best place to begin attacking inequality, the overgrown financial sector and the jobs deficit, is another kind of tax: a financial transaction tax (FTT). The basics of an FTT are:

    (a) to tax transactions, the buying and selling, of stocks, debt, and currencies;

    (b) to extend the tax coverage to both the actual financial assets as well as derivatives (e.g. options and futures) based on these assets; and

    (c) to make the amount small enough that it is insignificant to long term investors in these markets as well as businesses seeking to hedge the risk of an transaction in the actual asset but large enough to impact the excessive profits accruing to the financial sector from activity that contributes little or nothing to the economy as a whole.

    It is important to be clear on what an FTT is actually taxing, since opponents have tried to muddy the waters. The tax is not on the asset, nor is it equivalent to a value added tax since assets changing hands do not add value. Rather the tax falls only on the trading of the asset. No trades, no tax.

    How much money could an FTT extending across all three financial asset classes and derivatives raise? There are a broad range of estimates, extending from 1% or so of GDP to as much as 5-6% of GDP (equivalent in the US case to $140 - $840 billion per year). In part, the range reflects differing rates for an FTT and, in part, assumptions about how much trading activity would be reduced by such a tax. But at even the low end of the range the tax would:

    (a) raise a significant amount of money;

    (b) for reasons explained below change the role of the financial sector; and

    (c) be an important step towards countering the strong forces towards increased inequality.

    One very useful way of understanding the financial crisis of 2008 and the subsequent Great Recession and jobless recovery is to divide the US population into income groups and examine the income and consumption experience of these different groups during the long lead up to the 2008 collapse.

    In terms of income, in the 1970 - 2006 period, the real annual earnings of males in the top 10% of income households increased by almost 80%; in contrast, males at the median decile saw almost no change in their real income and males in the bottom decile experienced a 60% decline in real terms. I believe that this income dispersion would be concerning enough even if there were significant mobility between the top decile (or top 5%) and the rest of the population, but there has been no increase and probably even a modest decrease in income mobility over the past few decades. Immobility into or out of the top 5% of income receivers is particularly striking.

    We might expect that the response to lagging incomes would be a reduction in consumption by those at the lower end of the income hierarchy. While this did occur, the consumption gap between the top income households and the bottom income households grew much less rapidly than the income gap. Comparing households at the 90th percentile to those at the 10th percentile, the income gap grew from roughly 4.3:1 in 1980 to over 6.6:1 in 2006. However, the consumption gap, as measured by non-durable goods purchases, grew from only 3.5:1 to 4:1.

    How is that possible? The answer, of course is debt. Debt, after all is simply the other side of wealth. If there is a lot of debt in a society (such as is the case in the US today), there is also a lot of wealth. One person or entity's debt is another person or entity's asset. Just as was the case for income, we would expect to see different experiences in terms of growth of debt when we divide the US into top and bottom income groups -- and we do. In 1984 the debt: income ratio for the top 5% of households by wealth was 0.8 and that for the remaining 95% of households was about 0.7. By 2007, however, the ratio for the top 5% was just under 0.7 -- and that for the bottom 95% was 1.4.

    Borrowing by the bottom 95% of households who faced stagnant (median deciles) or even declining (bottom deciles) real income partially compensated for the pressure to "keep up with the Jones," narrowing what would otherwise have been a highly visible, and perhaps politically volatile, consumption gap. A large and growing portion of the income that flowed upwards was recycled via the financial sector as loans to the bottom 95%. Much of this was in the form of mortgage debt that was packaged into various investment products -- by the financial sector. And this brings us back to finance.

    But first it is important to stress the implications of the use to which the top 5% -- especially the top 1% -- of households put their rapidly growing income and wealth. These concentrated investible assets could have been used for at least three very different purposes.

    One choice would have been to consume these excess funds in ever more lavish life styles. And, as illustrated above, some of that did occur.

    Secondly, the top 1% (or 5%) could have invested in productive enterprises that expanded output and employment, whether in upgrading traditional manufacturing to maintain US competitiveness or trying to leapfrog to the next generation of manufacturing, perhaps in the emerging green industries. This use of investible assets would have generated the kind of good jobs we see created in countries such as Norway or Germany where manufacturing exports remain competitive in the global market and wages remain high. Almost none of that occurred in the US. And this is a very important point. We are talking here about the people right-wing economists and political pundits insist on calling the "job creators." But they didn't invest in creating jobs when they had both the opportunity and plenty of funds to do so.

    So, what did they do with their new found riches? They invested in and traded financial assets. There was, of course, some speculation in the physical assets of housing but most of their housing related speculation occurred through the products created by financial "engineers" and hawked by financial marketing departments: MBS, CDOs, etc. The potential market for these financial innovations was (and is) huge: according to the 2010 Merrill Lynch/Capgemini study of the world's high net worth population, a total of about 40,000 individuals in the US have $6 trillion -- that's with a "tr" -- of financial wealth. This number excludes things like primary residences, cars, yachts, etc. Marketing to, allocating, managing, and tapping into that wealth drove the US finance sector to a relative size never before seen -- except in the late 1920s. Finance value added share of GDP almost doubled between 1975 - 2006 although employment grew very little. By the mid 2000s, finance contributed 18% of the top 0.1% of taxpayers in the US even though the sector accounted for less than 5% of total employment.

    Thus an FTT would be paid primarily by the top 1% (or 5%) of income households and would also serve as a break on the cancerous growth of finance. How much revenue could an FTT raise? As noted above, the answer depends on the assumptions about the impact of a tax on the propensity of very high income households and large financial institutions to trade.

    However, the positive impact for the US political economy and the countering effect on inequality would occur whether the tax raised revenues at high or low end of the estimated range. If the tax raises large amounts of money, in the $500 - $800 billion range (indicating a limited decline in trading activity), there would be a significant redistribution away from the high income households and large financial institutions into the public economy. This money could be used to underwrite a major direct jobs creation program at the federal level such as has been developed by the Chicago Political Economy Group or proposed by Rep. John Conyers' HR 870 "Twenty-First Century Humphrey-Hawkins Full Employment and Training Act."

    Alternatively, if the money raised by an FTT were at the low end of the range, there would still be a significant amount raised (in the order of 1% of GDP) that could strengthen the public sector. More importantly, a reduced amount of revenue raised by an FTT would indicate a significant decline in financial trading and speculation. This would have two positive consequences. First, the primary avenue by which the top income households had disposed of their surplus capital would be effectively shut down and, second, the continued accumulation of these funds would also be slowed since rent seeking activity that has dominated among the so-called job creators would be much more difficult to undertake. Further, this change would affect not only the top 1 - 5% of households. It would significantly reduce the revenues gained by financial institutions, both from cutbacks in their own high speed trading and from the creation and trading of new financial instruments. In addition, the financialization of non-financial businesses would also be curtailed. Thus, either way, an FTT could drive a very different use of the excess capital accumulating in the hands of the rentier class, the functionless investors described by Keynes and others.

    Conclusion

    I have argued that the large and rapidly increasing inequality is both a curse for our every day lives and at the roots of the three major political economic problems facing the US. Extreme inequality such as that characterizing the US destroys social bonds. Beginning in the late 1970s, the rapid growth of inequality created a small rentier class of extremely wealthy individuals, with a share of national income achieved only once in the 20th century, during the years immediately prior to the Great Depression. This rentier class chose to use their new-found wealth not to create jobs or drive the economy forward in the new globalized market but instead in lavish consumption and primarily in financial speculation and trading. The result was predictable (and was foreseen by political economists not blinded by the rational agents assumptions of neoliberalism): an asset bubble followed by a crash. Now we face the problem of building a new economy.

    There are several policies and proposals as to how to build that new economy. I have argued that one policy idea a financial transaction tax, must have a central role in this effort. An FTT is, as they like to say in the finance business, a win-win proposition. First, it is an essential tool in the fight to stop and reverse the long-term trend towards greater inequality in the US. Second, an FTT is also a potential source of significant revenue for socially beneficial uses. How much revenue depends upon the market's response to the tax. Financial speculation -- trading -- that is rendered uneconomic by the tax will cease and that which only becomes somewhat less profitable will likely continue.

    The underlying rationale for an FTT then is to assist in reshaping and rebalancing the US political economy as well as the experience of living in that political economy. From the reality of access to good jobs to the daily sense of trust and social well being, an FTT offers us the opportunity to move away from rent seeking activities carried out by a small segment of the population, ably abetted by financial and political elites. An FTT would help move us towards a political economy where social needs -- and social and political mechanisms to meet these needs -- are the subject of politics and the substance of a social economy that allows all of us to live wisely, agreeably and well.

     

    Editor's Note: Bill Barclay worked in the financial services industry for 22 years. Since retiring, he's been active with the Chicago Political Economy Group, the Oak Park Coalition for Truth and Justice, and the Democratic Socialists of America. For an example of how a financial services tax could create 40,000 productive jobs in Chicago alone, see www.cpegonline.org/documents/ChicagoCommunityJobsPlan.pdf .


    Class Warfare In America

    by Tom Suhrbur

    When progressives called for tax increases on the top income earners in the U.S., conservative Republicans scream "class warfare." Class war is a reality in America but not in the way that conservative claimed. Over the last 30 years, the conservative tax, trade and labor policies of the federal government have resulted in a huge upward redistribution of wealth to the wealthiest Americans. In 2007, the New York Times reported that "the top 300,000 Americans collectively enjoyed almost as much income as the bottom 150 million Americans. Per person, the top group received 440 times as much as the average person in the bottom half earned, nearly doubling the gap from 1980."

    I recently came across one particularly shocking example of how the American corporations are waging class war against the working class -- for profit of course. On a recent flight, I came across a half-page advertisement in the airline's magazine promoting capital investment in low wage labor in China. The company that took out the ad was ITI Manufacturing, a Houston -based corporation. In the ad entitled "Overseas Manufacturing Isn't As Scary As You Think", ITI claims that it:

    "has been helping customers manufacture goods in China for over 30 years ­- boosting profits and reducing costs. . . . ITI handles all the logistics such as finding the right factory, negotiating prices, overseeing the tooling and factory production, quality inspections, production financing, insurance, shipping, custom clearance and delivery. . . .With full time ITI employees working in nine established offices in China, ITI will help you to take advantage of low overseas labor cost ­- without sacrificing the quality or reliable supply of your product."

    Notice the words "Low overseas labor costs." Class war is being waged in America by the transnational corporations. The war is nothing new but it was greatly intensified with the election of Ronald Reagan in 1980. His program of limited government, deregulation, privatization and "free trade" has dominated the public discourse over the last 30 years. Economist Timothy Smeeding summed up the current trend of rising inequality in the Social Science Quarterly:

    "Americans have the highest income inequality in the rich world and over the past 20­30 years Americans have also experienced the greatest increase in income inequality among rich nations. The more detailed the data we can use to observe this change, the more skewed the change appears to be... the majority of large gains are indeed at the top of the distribution."

    The choices that we are facing today are very clear. Either we raise taxes on those who can most afford it or we take another step in driving down the standard of living for the working people by cutting social programs and public education. Either way, it is class war.

    Editor's Note: Tom Suhrbur recently retired after 26 years as a union organizer for the Illinois Education Association. He is currently the Vice-President of the Illinois Labor History Society.


    New Ground #139.1

    12.01.2011

    Contents

    0. DSA News

    We Won! by Michael Baker
    GOPDSA Pickets Trader Joe's by Tom Broderick
    Occupy Food Service by Michael Baker
    DSA National Convention

    1. Politics

    Healthcare Atrocity: Boycott Hyatt Hotels
    We Won, Part II
    Social Security "Reform" Is Really Theft
    Reviving Our Economy

    2. Democratic Socialism

    Socialism: Past and Future by Michael Baker
    America Beyond Capitalism

    3. Upcoming Events of Interest



    DSA News

    We Won!
    by Michael Baker
    As many readers of New Ground are aware, Chicago DSA for the past few months has been involved in a community-labor campaign to save public services in Evanston, Illinois from privatization. I am happy to report that the campaign was highly successful.

    In the current political environment in the United States, which is driven by the stagnating domestic economic growth characteristic of mature capitalist economies, private companies have been seeking growth and profits through expansion globally and by targeting the private sector domestically. All too often, they have done so successfully. As result, the victory against privatization in Evanston offers progressives a rare opportunity for a paean and for a study of a successful campaign against privatization.

    The Cultural & Political Context
    Many New Ground readers will be quite familiar with the City of Evanston, but as New Ground has many readers outside the Chicago area, some contextual information about might be useful. The following is not a tour d'horizon of the cultural and political factors relating to Evanston but an summary of some of the more important ones.

    The City of Evanston. The City of Evanston, population of over 73,000, boarders Chicago on the south and Lake Michigan on the east. Due to its location, Evanston is the first community on Chicago's "North Shore." For historical reasons, Evanston is not a suburb but a city in its own right and, unlike other North Shore communities, is quite diverse both racially/ethnically and economically. Evanston is the home of Northwestern University, and the denizens tend to be quite liberal, even when of higher income. The community is represented by Jan Schakowsky, who is extremely popular and indicative of the city's political milieu. Evanston has a council-manager system of government. The city is divided into nine wards, each of which is represented by an alderman, or member of the Evanston City Council. The city mayor presides over the city council meetings but generally does not vote, except in the case of a tie or other exceptional circumstances.

    The Local Union. The local union representing public employees is the American Federation of State County and Municipal Employees (AFSCME) Council 31/Local 1891. The local is of historical and symbolic importance due to Evanston's diverse population, approximately 22.5% of which are African American, as the local was formed in 1969 in direct response to the Memphis Sanitation Workers' Strike. To date, many workers in the union are African American, and half of those who live in Evanston are African American.

    The Groot Fiasco. In November 2010, the City of Evanston entered into a contract with Groot Industries to pick up garbage and yard waste, work that was previously done by the city's Streets and Sanitation Department. (The Streets and Sanitation Department retained the work picking up recycling.) By February 2011, Groot had raised its price by $700,000 for the remainder of a 5-year contract. Such practices are common and well-documented among private contractors in municipalities-they bid low, force the city into a long contract, and then increase the price. In addition to these explicit costs, Evanston has incurred costs for the bidding process and for auditing and monitoring Groot. With regard to the latter, many municipalities have discovered that if they do not spend money on proper oversight, contractors can get away with shoddy or incomplete work and massive cost escalation. In spite of the city's attempts to monitor Groot, many Evanston residents have found the quality of Groot's work poor and have been doubly offended when they contact the city to complain and are told that they must contact Groot, who is unresponsive and the source of the problem.

    The Blizzard of 2011. In February of 2011, Evanston experienced a blizzard that shut down the city. Fortunately, City of Evanston employees are cross-trained to do many different jobs, and employees from several different departments, working as a team, stepped up to run the snow plows and clear the streets. Some workers did not go home for days in order to get the job done, only taking care of their own families' needs after the cities' streets were clear. After the blizzard, the city employees received special commendations from the City Council for their work. Then, astonishingly, during the 2012 budgeting process, the City Manager, in spite of the fiasco with Groot and the feted dedication of the city employees, proposed more privatization, including the positions of some of these employees in spite of the fact that a private contractor would not offer the cross-trained flexibility of the city workers because the contractor's services are strictly defined by the terms of the contract. Furthermore, a private contractor would not have the knowledge and expertise the city employees, who have decades of experience among them and know every twist and turn of the city's roads and alleys.

    The City's Attack on Workers Begins
    Like many cities in early 2011, the City of Evanston was struggling with how to balance its 2012 budget. However, the notion of struggle is relative. Unlike many cities around the country, which are facing eminent financial disaster, Evanston is far from even the remotest possibility bankruptcy and, in fact, holds a triple-A rating from both Moody's and Fitch. Nevertheless, the city did have an obligation to balance its budget and was reluctant to raise taxes (at least very much) on its residents, some of whom were under financial stresses. As a result, cuts and privatization were on the agenda.

    In early August of 2011, under the direction of City Manager Wally Bobkiewicz, the city administration recommended the privatization of a wide range of public services. The recommended outsourcing would have resulted in the elimination of dozens of city jobs about 45% of which were held by Evanston residents. Approximately half of these employees lived in the historically African-American neighborhoods of the 2nd and 5th Wards.

    The recommendations for outsourcing were compiled by the city's "Budget Team" which was instructed to "review and make recommendations" regarding 39 areas of public services. Unfortunately, the methodology used by the Budget Team in its study was fundamentally flawed and reflected the agenda of "Priority-Based Budgeting," advocated by conservative, anti-public sector groups like American Legislative Exchange Council (ALEC). A notable example is the value matrix used to assign numerical values to different public services, values that were illogical, inconsistent, and seemingly arbitrary.

    The Budget Team's study, titled "City Services and Service Change Ideas Evaluation, FY 2012 Budget Process," was unveiled by Mr. Bobkiewicz at a City Council meeting on August 8, 2011. The report listed the services under consideration for subcontracting to private vendors and the number of jobs supporting each service. The following extrapolation shows which services were being considered and the highest potential number of non-supervisory jobs that could be cut if the services were privatized:

    • Alley Maintenance (17)
    • City Vehicle Fleet Program (9)
    • Crossing Guards (49)
    • Forestry Services (17)
    • Parks Maintenance (18)
    • Recycling (10)
    • Street Light Service (4)
    • Street Maintenance/Street Sweeping (9)

    In addition, the report recommended the elimination of Community Health Initiatives but was unclear about the fate of the Children's Dental Clinic, which had a patient list of 2,000. There was growing demand for services at the clinic, formed in 1967, to provide free or low cost dental care for children. According to the report, the local private providers that accept Medicaid would be "unable to handle the volume in the absence of the dental clinic."

    After the unveiling, the city's budgeting process consisted of continued discussions at City Council meetings and two ancillary meetings organized by the City Manager ostensibly to invite community input on the budget. The latter were rather proforma and consisted of little more than those in attendance prioritizing lists of services to be cut and city fees, taxes, and other revenue streams to be increased. Interestingly, many residents who attended these meetings noted that the city ironically hired a professional facilitator (rumor has it at $14,000) to facilitate the two meetings.

    In addition, the City Manager created a public survey called Engage Evanston that was made available both in print and on-line so as to solicit community input on the budget. Probably to the City Manager's chagrin, privatizing public services received a -7 (minus 7) in the survey, and the top ten budget balancing ideas on were related to revenue generation, not cuts in services or job eliminations.

    Organized Labor and the Community Strike Back
    Even before the Budget Team's study and recommendations, Evanston public workers sensed that more attempts at privatization and job eliminations were coming. As a result, the union representing Evanston public workers, AFSCME 31/Local 1891, started fighting privation and job eliminations early in the budgeting process. The union conducted public outreach at events like the local farmers' market to make the case for public services. At the same time, the union understood they needed to do more than just educate the public if they were to be successful. They needed to recruit citizens to fight on their side, so as a result, the union began organizing a coalition with concerned citizens. The community and labor coalition that resulted was named the Community Labor Alliance for Public Services (CLAPS). The group was co-chaired by AFSCME Representative Flo Estes and Chicago Democratic Socialists of America's (Chicago DSA) Michael Baker. The groups' mission was to raise awareness about the consequences of privatization and to defeat all privatization and job elimination efforts.

    At a CLAPS meeting held after the release of the Budget Team's study, the coalition agreed upon a tripartite strategy to defeat the City Manager's proposals for privatization and job eliminations:

    • Mobilize residents to pressure the aldermen to oppose privatization and job eliminations;
    • Drive a wedge between the City Manager and the City Council over the issue of privatization and job eliminations;
    • Discredit the City Manager's privatization and job elimination schemes and the concept of privatization in the minds of the public.

    CLAPS' first action toward implementing its strategy was a petition drive. The petition drive was focused on Evanston residents exclusively since, obviously, they are the voters about which the aldermen would be concerned. In order to make the issue easy for potential signatories to digest, the petition stated,

    We, the undersigned residents of Evanston, petition the City Council to keep city services in-house. Public services are for the good of the community and should not be run at a profit. City of Evanston public servants are experienced, accountable, flexible and make a positive contribution to our quality of life. Keep our community under the control of Evanston citizens, by keeping public services in the public's hands!

    The petition drive served four critical functions for CLAPS: It made the public aware of the issue; it educated the public about CLAPS and served as a recruiting tool; it gave CLAPS a tool with which to pressure the aldermen and to drive a wedge between the City Manager and the aldermen; and it collected the contact information (addresses, phone numbers, e-mail addresses) of folks CLAPS could contact regarding future mobilizations.

    The petition was made available both on-line on the CLAPS' website and in print. Within two months, CLAPS was able to collect 1600 signatures, which made a strong impression on the aldermen when CLAPS presented the petitions at a city council meeting. Over the life of the campaign, CLAPS managed to collect a little over 2,000 signatures. The decline in the rate of signature collection is due to the fact that the petition drive became less of a priority as the campaign evolved. Nevertheless, the petition drive played an important role in impressing the City Council early in the campaign and enabled CLAPS to develop contacts which proved invaluable throughout the campaign.

    Subsequent to kicking off the petition drive, CLAPS began mobilizing its contacts to reach out to their aldermen on an ongoing basis by phone or e-mail to express their opposition to privatization. CLAPS' contacts consisted of CLAPS' members, residents who had signed the petition, and Chicago DSA contacts in Evanston. To reach all of these contacts, e-mail, phone, postal mail, and social media were utilized. To facilitate the discussions with aldermen, CLAPS prepared a set of talking points, which were made available on the CLAPS' website and were reiterated in CLAPS' outreach to its contacts. These talking points were periodically revised throughout the campaign to reflect new developments and to emphasize the most exigent issues. Some of the talking points CLAPS used were as follows.

    Cost Overruns. In November 2010, Evanston entered into a contract with Groot Industries to pick up garbage and yard waste. By February 2011, the company had raised its price by $700,000 for the remainder of the 5-year contract. Who knows what further increases are in store up through 2015. A well-documented practice among private contractors in municipalities is to bid low, force the city into a long contract, and then increase costs.

    Costs of Monitoring. Beyond actual contract costs, the city incurs costs associated with bidding, auditing and monitoring private contractors. Without spending money on proper oversight, other municipalities have discovered that contractors can get away with shoddy or incomplete work and massive price escalations. This cost is often hidden in the budget to give the impression outsourcing the service is saving money.

    Loss of Flexibility and Safety. City of Evanston employees, who were recently commended by the City Council for their dedicated work during the blizzard of 2011, are cross-trained to do many different jobs. Employees from several different departments, working as a team, stepped up to run the snow plows and clear the streets. That's how they managed to keep the city going ­ by going the extra mile. Services performed by a private company are strictly defined by the precise terms of the vendor's contract. They cannot go an extra inch without charging extra dollars. During a weather or security emergency, we need the flexibility to coordinate services in-house.

    Loss of Institutional Knowledge. Current City of Evanston employees have decades of experience among them. They know every twist and turn of the city's roads, alleys, sewers, parks and traffic lights. They know the neighborhoods. They know what works and what doesn't work. Loss of expertise to an outside private contractor is a steep cost that may not show up on a balance sheet.

    Costs of Layoffs. The city must pay unemployment benefits to the employees it lays off, and these workers may also qualify for public welfare programs. Any laid off workers will lose income and health insurance, and Evanston businesses will lose customers.

    Workers should not be paying for the City's $700,000 mistake. In 2010, the City Council voted to outsource garbage and yard waste to Groot Industries. Within 4 months, Groot came back asking for (and receiving) an additional $700,000. Now, the City Manager wants to layoff dozens of workers with a total savings of $721,000. He may deny that connection, but it appears the City Manager is trying to plug that hole with layoffs.

    The head of the Department of Parks and Forestry, Doug Gaynor, stated in a memo to City Council that the proposal to eliminate 6 positions in Parks and Forestry and outsource their work to a private vendor would have "definite drawbacks." These include loss of flexibility and loss of a needed vehicle for snow removal. He states also that the possible savings that may be realized through the outsourcing would likely "be short-lived." The City's report also lists 38 services currently done by in-house Parks and Forestry staff, which would no longer be done if turned over to a private vendor. Privatizing will result in a serious shrinking of services and lead to a serious threat to property values, quality of life, and the beauty of our lakefront, which is key to Evanston's character and economic development.

    Parks and Forestry staff work as snow command personnel. Eliminating 5 field staff would put Evanston in serious jeopardy in the instance of weather or security emergencies. In February of this year, a winter blizzard left Evanston snowed-under. Field staff in several departments, including Parks and Forestry, are cross-trained to do snow plowing and were able to turn on a dime to clear the blizzard in record time. They were even given special commendations by the Evanston City Council. Contracting these positions to a for-profit vendor would seriously reduce staff response time and quality of service during City emergencies.

    Outsourcing of Parks and Forestry would eliminate critical administrative functions. In addition to field staff, the proposal calls for eliminating the Secretary II position. This employee currently performs some 67 complex tasks which would be pawned off to other staff who already have their own full-time jobs to do. Other Parks and Forestry personnel have testified that the administration of the program would be devastated with the elimination of this position. Even the head of the Department is against eliminating this and other positions.

    Citizen input throughout the budget process shows opposition to privatization. 2,000 citizens signed a petition against the outsourcing of public services which was presented to the City Council. Privatizing services received a -7 (that's minus 7) vote tally in the Engage Evanston on-line survey. The Top Ten budget balancing ideas on Engage Evanston were related to revenue generation, not cuts in services or job elimination.

    Evanston residents support revenue generation that, according to the City, could go a long way in closing the projected deficit. Several ideas for revenue generation supported by Evanston residents include (just as examples): (1) Enforcement of all code ordinance (revenue up to $350,000 projected); (2) Increased collections of money owed to City (revenue up to $300,000 projected); (3) Increase in parking fees (revenue up to $120,000). These revenue generation ideas alone, if pursued to their fullest extent (generating $770,000) could more than pay for the 11 positions the City would eliminate (worth $721,000).

    When sympathizers received responses from their aldermen, they were encouraged to report back to CLAPS, so CLAPS could monitor how aldermen were leaning on the issue. Since CLAPS only knew if people contacted their aldermen or received a response if they shared that information, CLAPS did not have a reliable measure of the effectiveness of the mobilization. But based on the piecemeal information CLAPS did receive, the mobilization seems to have had impact.

    In addition to encouraging sympathizers to contact their aldermen, CLAPS attempted to mobilize people to attend all City Council meetings, whether the 2012 budget was on the agenda or not, between August and November, the time frame for the budget discussion and approval process, and to attend all the ancillary community meetings specially organized by the City Manager ostensibly for community input on the budget. In addition to having a physical presence at the meetings, CLAPS also wanted supporters to speak on behalf of public services and against privatization. Most of the city council meetings had a public comment portion at the beginning of the meeting in which residents were allowed to speak for around 3 minutes on any given topic. Attendance from sympathizers and union members was stronger at some meetings than others, and not all supporters were comfortable with public speaking. In addition, residents who supported public workers but were not mobilized by CLAPS occasionally attended City Council meetings and spoke on behalf of public workers. CLAPS, of course, took the opportunity to connect with these supporters. Even though the level of attendance was not consistently high, having supporters at these meetings made an impact on the aldermen. CLAPS did note that the Evanston City Council engages in some scheduling behavior that possibly violates the Open Meetings Act. For example, in some cases, meeting times or locations were changed or not announced with sufficient notice. Also some meetings did not have definite times posted; the time was given only as the City Council Meeting will begin after the XYZ meeting. CLAPS believes these practices merit investigation.

    In another attempt to increase public pressure, CLAPS utilized yard signs. Some CLAPS members were adamant about yard signs; others were skeptical about the potential impact versus the cost and time commitment and whether CLAPS could get enough yard signs in prominent locations to be effective. After some discussion, the organization agreed to move forward with yard signs. Several ideas about what text should appear on the signs were considered, some of which were cheeky and humorous. Ultimately, the group decided on the relatively tame, yet clever and to the point, "Public ­ Not Private ­ Works." Based on the number of comments CLAPS received from residents who saw the signs, the signs seemed to have an impact.

    To raise the profile of the campaign and to increase pressure, CLAPS made extensive attempts at media outreach. Throughout the campaign, and particularly after any major development or event, either CLAPS or the union would send out press releases. CLAPS used Chicago DSA's media contact list, and the union used its own list. While the media response was not overwhelming, CLAPS did receive local newspaper coverage, video coverage by Labor Beat, and offers to appear on local progressive radio talk shows. In addition, CLAPS members wrote articles for local newspapers, and the union ran an advertising campaign in the same. Even though the media coverage was minimal and, for the most part local, CLAPS believes it was effective as, after articles written by CLAPS would appear, CLAPS would discover city officials repeating CLAPS' own words in subsequent articles. Imitation, after all, is the best form of flattery.

    In a more formal attempt to discredit privatization through public education, CLAPS organized a public forum on privatization. The event was held at the Main Library of the Evanston Public Library and consisted of a featured speaker, followed by a public discussion. The featured speaker was Emily E. LaBarbera Twarog, Assistant Professor at the University of Illinois at Urbana-Champaign. Professor Twarog used a historical approach to belie the myth that privatization is a silver bullet to solve municipalities' budget woes and to explain why municipalities have services owned by the public. CLAPS had inauspicious weather on the evening on the event, but nevertheless, the forum was well attended with not an empty seat in the house. The audience clearly enjoyed the speaker, and a spirited discussion followed, which caused the meeting to run over time.

    The climax of CLAPS' campaign was a rally assembled outside the Lorraine H. Morton Civic Center, the building in which the City Council meetings are held, immediately before a pivotal meeting on the 2012 budget. The rally was originally envisioned as a march in downtown Evanston that would proceed to the Lorraine H. Morton Civic Center. Primarily for logistical reasons, the march concept was scraped in favor of a rally. CLAPS was prepared to hold the rally with our without a permit but explored the permitting process with the city, principally because CLAPS wanted the city to know about the rally to increase public pressure. The rally had a sizable and spirited turnout and included some powerful speakers: Henry Bayer, Executive Director of AFSCME Council 31; Kevin Johnson, President, AFSCME 8191; Florence Estes, Staff Rep, AFSCME Council 31/CLAPS Co-Chair; Judy Wittner, Community Labor Alliance for Public Services; and Charles Hogan, retired Evanston public service employee. After the rally, many attendees marched to attend the City Council meeting, continuing to hold their signs in support of public services and speaking during the public comment portion of the meeting.

    The Outcome
    CLAPS learned a great deal from the anti-privatization campaign. Most notably, CLAPS learned that the struggle against privatization can be won and that we needed to keep our minds open and to be prepared to expect the unexpected. With regard to the latter, CLAPS originally thought that the Streets and Sanitation Department would be the most heavily targeted for privatization since it had been the target of the previous privatization with Groot. However, as the budget process unfolded, it became clear that the Parks and Forestry Department would be the most heavily targeted. Perhaps, this was due to the previous privatization fiasco with Groot or the fact that Parks and Forestry had not been affected by privatization and layoffs in the past, so it was "their turn." In addition, some of the aldermen who we expected to be our biggest allies turned out not to be. And in the end, some aldermen who we thought would not be on our side turned out to be our biggest advocates.

    When CLAPS began the campaign, all public services were "on the table" for potential privatization. Over the life the campaign, as the city went through its budgeting process and CLAPS applied its tripartite strategy, everything is "one the table" devolved into eliminating 5 Parks and Forestry field workers through privatization, privatizing all crossing guards, and eliminating a secretary position in Parks and Forestry. In the end, through the dogged strategy outlined above, CLAPS managed to save all but the Parks and Forestry secretary. The incumbent, fortunately, due to the union contract, will be reallocated to a position in another department. While CLAPS' victory was not perfect, one elimination is a far cry from where the campaign started. Unfortunately for the city, the secretary position is a crucial one to keeping the Parks and Forestry Department running, so CLAPS believes this is a decision the city will soon regret.

    The credit for this victory goes to all who helped get petitions signed, called their aldermen, expressed their views at ward and City Council meetings, delivered yard signs, helped with mailings, and got the message out to their neighbors. Together, the residents of Evanston sent a clear message to their elected officials that privatization is not an acceptable way to balance a budget and that, if the city officials ever try this again, they're going to have a fight on their hands.

    GOPDSA Pickets Trader Joe's
    by Tom Broderick
    The Coalition of Immokalee Workers (CIW) picks whole fresh tomatoes used by food industries and groceries around the country. They have been pressing for better pay and improved working conditions for several years. Fast Food chains Taco Bell, McDonald's, Burger King and Subway have signed agreements with the CIW. Food Service companies Bon Appetit Management Co., Compass Group, Aramark and Sodexo have signed the agreement. The Florida Tomato Growers Exchange, the marketing coop to which many of the employers below, has dropped its opposition to the agreement. One grocer, Whole Foods, has signed the agreement.

    The CIW approached Trader Joe's about signing the agreement. Trader Joe's is a national chain, with several stores in the Chicago Metropolitan area. Trader Joe's refused to meet with the CIW and their community allies. Instead it launched a public relations campaign stating that it is in compliance with what the CIW looking for. They even state in a letter from the corporate office that in some cases they are tripling the penny more per pound of tomatoes picked by the farm workers. However nothing is verifiable. There is no transparency, only a corporate statement that all is well.

     Trader Joe  Trader Joe
     Trader Joe  Trader Joe
     Trader Joe  Trader Joe
       

    McDonald's was initially reluctant to sign the agreement, which includes third party verification of the terms of the agreement. The CIW launched a national campaign, centered in the Chicago area (McDonald's Corporation is located here). Oak Park was a hub in the Western Suburbs. Chicago proper saw lots of activity. Informational picketing at individual restaurants was one of the tools of the campaign. Chicago DSA and the Greater Oak Park chapter of DSA worked in both locations.

    Given Trader Joe's refusal to meet with representatives of the CIW, the CIW has called for informational picketing at Trader Joe's across the country. Chicago Fair Food, which was formed around the McDonald's campaign, responded with two pickets in Chicago.

    Oak Park area residents came together on Sunday, November 20th for the first informational picket at a Chicago area suburban Trader Joe's ~ the one in Oak Park. Many of those who took part were involved in the McDonald's victory. There was a one hour walking picket followed by a short meeting with the manager. We presented more than 200 signed letters asking Trader Joe's to meet with the representatives of the CIW and sign the agreement. We asked that the manager to forward them to the corporate office, which he agreed to do. We also assured him that we are aware that he is in no position to make policy and it is policy we want to affect.

    People from Ascension Parish, the Green Party, Third Unitarian Church, Chicago Fair Food, Unity Temple, Teamsters Local 705, First United Church of Oak Park, District 7 MoveOn, Sisters of Blessed Virgin Mary, Oak Park Coalition for Truth & Justice and Chicago/Greater Oak Park Democratic Socialists of America made our presence felt.

    During the picket, Trader Joe's positioned the window blinds to keep people inside the store from seeing us or our signs. Management also sent a representative out to provide us with a letter of misinformation from the corporate office. The letter is part of the public relations campaign declaring all is well ~ trust us. Sorry TJ, no can do. Expect more pickets in the Chicago area as well as nationally.

    If you are interested in helping put together an informational picket either in the city or in the suburbs, contact the DSA office at 773 384 0327. Let us know where you want to target a Trader Joe's in your neighborhood.

     

    Occupy Food Service
    by Michael Baker
    On Saturday, November 26, Chicago DSA members braved the Chicago wintery drizzle to bring food and comradery to the stalwart Chicago occupiers at the Chicago Board of Trade. We offered meat and vegetarian entrees, breads, and desserts, all home-made, and bottled water to the approximately 15 occupiers, many of whom expressed their appreciation for the fare. Chicago DSAers enjoyed conversing with the occupiers and hearing their perspectives on the occupation movement and answering questions about DSA.

    A few of us were interviewed on camera by an out-of-town 8th-grade teacher about their participation in the occupation and about DSA. So look for these videos on YouTube someday.

    After 45 minutes or so, our work was done, and the group began packing up the remaining food and supplies to head home. At this time, a Chicago police officer, who had been sitting in his car across the street the entire time, came over to tell the group it was time to "pack it up." His heart was clearly not in his task.

    DSA National Convention
    Thank you to the members and friends who tossed money in the hat to subsidize low-income or unemployed delegates to this year's DSA National Convention. Chicago sent 5 delegates to the convention. Three of them were new members. We raised enough for the Chicago delegation and were able to contribute to the national office's subsidy fund with the rest.

    A brief convention report, the text of the resolutions passed, and the minutes of the convention are posted on the national DSA site. The Priorities resolution is the most substantive as it indicates what the DSA national office (and many of the DSA locals) intends to be engaged in. The minutes include the names of the new National Political Committee membership. It's all available HERE.



    Politics

    Healthcare Atrocity: Boycott Hyatt Hotels
    After more than two years of contract negotiations, crisis looms as Hyatt threatens to strip health insurance from 1500 Chicago workers and their families unless they give up their fight and abandon their boycotts. In so doing, Hyatt is forcing workers to choose between their families' immediate medical needs and a fight for their long-term survival.

    In negotiations, Hyatt has refused to budge on crucial demands to curb subcontracting and ease working conditions for housekeepers-demands met by Hilton and other hotel employers citywide. In response, Hyatt workers have stood up and made tough sacrifices by striking and calling for hotel boycotts.

    Please join us in sending a message to Hyatt's CEO Mark Hoplamazian to maintain health insurance until Hyatt workers win a just settlement! CLICK HERE.

    Also: save the date: Thursday, December 15, 3 PM. Join thousands of UNITE HERE members and friends in front of Hyatt's International HQ, 71 S. Wacker in Chicago. We will not be moved!

    For more information about the boycott of Hyatt hotels, CLICK HERE.

    We Won, Part II
    The Illinois General Assembly was held hostage by the Chicago Mercantile Exchange and other large corporations, but House resisted the demand for $300 million in tax breaks by voting down the measure, 8 to 99. That it passed the Senate by a somewhat narrower margin suggests this may have been more theater than deliberation, but you can read more about it HERE.

    Social Security "Reform" Is Really Theft
    At the Fox Valley Labor Tribune, Tom Suhrbur points out that while Social Security "provides benefits to retirees, it was never intended as a government pension plan. S.S. is social insurance ­ a safety net for the least fortunate. S.S. is an effective anti-poverty program. It's a highly efficient system that puts money in the pockets of the most needy." MORE.

    Reviving Our Economy
    From the Chicago Political Economy Group: Over the last three decades the U.S. economy has gotten fundamentally out of balance and increasingly dependent on private or public sector deficits to maintain demand. Since the start of the Great Recession in 2008 we have replaced (by bailing out -- mostly financial) private deficits with public deficits. Cutting the public deficit (without fundamental restructuring) without restoring another unsustainable private deficit (as in the late 90's) will simply cause the economy to further decline.

    In fact, without fundamental economic restructuring, federal deficit cutting will hurt both in the short-run and the long run. Instead, this new CPEG policy brief focuses on how we restructure and revitalize our economy away from an increasingly unsustainable and debilitating "rentier" structure, to a more viable and sustainable advanced "unequal exchange" economy. CLICK HERE.



    Democratic Socialism

    Socialism: Past and Future
    by Michael Baker

    Socialism: Past and Future by Michael Harrington, Arcade: New York 2011, $16.95, paperback, 336 pp

    I was recently at Princeton University visiting my spouse, who is on a fellowship there. Whenever I am in Princeton, I enjoy browsing Labyrinth Books, which always has a good supply of lefty books, both new and used. Much to my surprise, on my recent visit, I came across a copy of Michael Harrington's book Socialism: Past and Future -- a new copy.

    I was excited that a publisher had invested in re-publishing this book and what the implications of that investment were -- notably the perceived existence of a market for it.

    I learned from a correspondence with the publisher, Skyhorse Publishing, that the book was very recently published, November 2011. Arcade Publishing, the original publisher of the book, filed for bankruptcy in 2009, and Skyhorse Publishing, Inc., purchased Arcade's assets with the goal of putting all Arcade's books back into print. (Arcade is now an imprint of Skyhorse Publishing.) An Associate Publisher informed me that Socialism: Past and Future was a book Skyhorse rushed to make available again "because of its history of and importance." Unfortunately, Skyhorse does not have the rights to any of Harrington's other works.

    For those who do not know the history of Socialism: Past and Future, the book was originally published in 1989. Harrington began writing the book the day he learned his cancer was inoperable and that he had a limited time to live. He asked his doctor to keep him alive long enough "to complete a summary statement on themes I had thought of throughout an activist life." As the Editor's Note to the new edition states, "Socialism: Past and Future was Michael Harrington's last book ... [the] text was literally Harrington's last word on the subject -- a cause he had dedicated his life to understanding."

    In some ways, the book is a compendium of Harrington's thought, as he revisits many ideas found in his earlier books, but he refines and updates these ideas in revisiting them. The central theme of the book is that if humanity is to enjoy freedom, solidarity, and justice in our century socialist transformation is the only hope. As Harrington states elsewhere, he notes that the future is collectivist. The choice we face is whether the future will be a top-down collectivism or a democratic, id est, socialist, collectivism. He writes, "Under capitalism, there is a trend toward a growing centralization and planning that is eventually global, but it takes place from the top down; under socialism, that process is subjected to democratic control from below by the people and their communities" (9). In making his case, Harrington surveys and critiques socialist history and discusses how socialist theory can be applied to contemporary economic and political situations. The last chapter of the book appraises the concept of "visionary gradualism" as a method for achieving substantive socialist transformation.

    The Editor's Note to the new edition states, "[W]e believe his vision for socialism as 'the hope for human freedom and justice' is as relevant and informative today as it was upon its first publication." I would go even further and state that Harrington's vision is now needed more urgently than ever if we are to preserve and increase freedom and achieve democracy. Many trends about which Harrington expresses concern, such as the increasing centralization and globalization of capitalism, have accelerated astronomically since his writing. And many of the forces in which he expresses hope, such as the labor movement and social democratic parties, are weaker and, with regard to the latter, have drifted to the right. At the same time, there are exciting and inspiring trends around us which need socialist influence if they are to move us toward democracy. The "Occupy" movement is one such trend on many people's radar, but exciting activity is occurring in other areas as well such as in food politics and in the labor movement. As a result, the time is a propitious one for the re-publication of this Harrington classic and for us to discover for the first time or revisit the wisdom it holds.

    America Beyond Capitalism
    At Dollars & Sense, Gar Alperovitz tells us how "thousands of co-ops, worker-owned businesses, land trusts, and municipal enterprises are quietly beginning to democratize the deep substructure of the American economic system." MORE.



    Upcoming Events of Interest

    Events listed here are not necessarily endorsed by Chicago DSA but should be of interest to DSA members, friends and other lefties. For other events, go to http://www.chicagodsa.org/page9.html.

    Saturday, December 3, 10 AM
    Teach-In on School Closures
    King College Prep High School, 4445 S. Drexel, Chicago
    How to save endangered neighborhood schools from closure or privatization. MORE INFORMATION.

    Monday, December 5, 6 PM to 8 PM
    Journal of Ordinary Thought Winter Issue
    St. Leonard's House, 2100 W. Warren Blvd, Chicago
    Readings from the JOT Winter 2011 issue. MORE INFORMATION.

    Tuesday, December 6, Noon
    Part-Time Faculty Association Demonstration
    Columbia College, 600 S. Michigan Ave, Chicago
    To draw public attention to college practices that are anti-labor and harmful to college faculty, staff, and students.

    Saturday, December 10, 12:30 PM
    Executive Committee Meeting
    Chicago DSA office, 1608 N. Milwaukee, Room 403, Chicago
    All DSA members are welcome.

    Saturday, December 10, 3 PM to 4 PM
    Health Disparities in Chicago
    Columbia College, 600 S. Michigan Ave, Chicago (room will be posted)
    Presentation by Steve Whitman on disparities in health care among Chicago communities followed by open discussion. MORE INFORMATION.

    Saturday, December 10, 3 PM to 6 PM
    The Occupy Movement: What Does Democracy Look Like?
    Jane Addams Hull House Museum, 800 S. Halsted, Chicago
    Panel discussion and poetry. MORE INFORMATION.

    Thursday, December 15, 3 PM
    Protest Hyatt's Threat to Health Care
    Hyatt International HQ, 71 S. Wacker Dr, Chicago
    Join UNITE HERE Local 1 and friends in protesting Hyatt's threat to discontinue health benefits. MORE INFORMATION.

    Thursday, December 15, 7:30 PM to 9:30 PM
    Crisis of the Left
    Harper Memorial Library, 1116 E. 59th St, Room 130, Chicago
    One of the Platypus Affiliated Society panel discussions, this one featuring Mike Ely, Roberta Garner, and Alex Hanna. MORE INFORMATION.


    New Ground #139.2

    12.17.2011

    Contents

    0. DSA News

    DSA Convention on Video
    Talkin' Socialism
    YDS Winter Conference

    1. Politics

    Hundreds Picket Hyatt
    We Won Part III: We Lost
    Workers' Republic

    2. Democratic Socialism

    Redefining Markets in a Democracy
    From Bolshevism to Stalinism: Ernst Thälmann & German Communism during the Weimar Republic

    3. Upcoming Events of Interest



    DSA News

    DSA Convention on Video
    DSA's Vimeo Video Channel has been updated to include excerpts from the 2011 DSA National Convention. Check it out HERE. Bill Barclay particularly recommends John Nichols' Friday evening presentation: "By far the best talk -- and best political analysis" and it "will leave you fired up."

    Talkin' Socialism
    Episode 10 -- Karl Marx: a World to Win
    Recorded 11.19.2011: Chicago DSA member Michael Aubry interviews Chicago DSA Political Education Director, Bill Pelz, about his new biography of Karl Marx. MP3 (39.6 MB) or Ogg Vorbis (29.3 MB).

    Hey! New! RSS feeds, so you can subscribe to the podcast and receive it automatically, are available:

  • MP3 RSS Feed
  • Ogg Vorbis RSS Feed
  • YDS Winter Conference
    The Young Democratic Socialists' annual Winter Conference will be held February 17 to 19 at St. Francis College in Brooklyn Heights, New York. "The Return of the Democratic Left: Building a Youth Movement for the 21st Century" will be the theme of the event, and it will feature Cornel West and Frances Fox Piven, and others. More information, including registration, is at the conference web site HERE.



    Politics

    Hundreds Picket Hyatt
    Hundreds of hotel workers and allies picketed the Hyatt's global headquarters today in protest of Hyatt's proposal to strip health insurance from Chicago hotel workers and their families after more than two years of contract negotiations. Bargaining between Hyatt and the members of UNITE HERE Local 1 hit a turning point in late November after Hyatt threatened to cut off health benefits unless workers give up their fight and abandon their boycotts. Now hotel workers, religious leaders, and health advocates are calling on the company to withdraw its threat to Chicago workers. If Hyatt refuses, thousands of workers and members of their families in Chicago could lose health insurance at the end of February. MORE.

    For ABC News' 25 second coverage of the picket line, including a great shot of Tom Broderick peeking under his sign toward the end, CLICK HERE.

    We Won Part III: We Lost
    "Make Wall Street Pay Illinois is deeply disappointed in the State Senate's action today and we call on Governor Pat Quinn to veto this fundamentally flawed piece of legislation. SB 397 is a corporate welfare bill that sends Illinois' budget priorities in the exact wrong direction." MORE. Also see THIS.

    Workers' Republic
    For Chicago residents with cable, CANTV will be airing the documentary Workers' Republic on Sunday, December 18, 5 PM on Channel 19. The documentary chronicles the 2008 occupation of Chicago's Republic Windows and Doors factory by its workers. A panel discussion featuring Bob Bruno and UE's Leah Fried and Armando Robles follows. MORE.



    Democratic Socialism

    Redefining Markets in a Democracy
    The former Prime Minister of Greece, PASOK's George Papandreou, begins by observing:

    In the aftermath of the global economic crisis that began in 2008, Greece found itself at the centre of a sovereign debt crisis in Europe. This latest crisis has highlighted systemic flaws that are shaking the fundamentals of the European Union. These developments have had implications for the whole world.

    First of all, these developments demonstrate how right we were when we called for decisive action to be taken by the governments of Europe and globally to curb the inordinate power of the financial sector back in 2008. MORE.

    From Bolshevism to Stalinism:
    Ernst Thälmann & German Communism during the Weimar Republic
    Dr. Norman LaPorte's lecture and discussion on November 5, 2011, is now on the web, courtesy of the Open University of the Left. This event was organized and sponsored by Institute for Working Class History, and co-sponsored by Chicago DSA and the Open University of the Left. Dr. Norman LaPorte is an author and Senior Lecturer at the University of Glamorgan-Cardiff (Wales). CLICK HERE.



    Upcoming Events of Interest

    Events listed here are not necessarily endorsed by Chicago DSA but should be of interest to DSA members, friends and other lefties. For other events, go to http://www.chicagodsa.org/page9.html.

    Tuesday, December 20, 7 PM
    Christmas Party
    Lombard Mennonite Church, 528 E Madison St, Lombard
    West Suburban Faith-Based Peace Coalition celebrates Christmas and their founder, David Martin. MORE INFORMATION.

    Friday, December 23, 2 PM to 4 PM
    A Revolutionary Christmas Carol
    Beginning at LaSalle & Jackson, Chicago
    March to the Lincoln Memorial at Columbus & Congress for a 3 PM performance of "A Revolutionary Christmas Carol," based on the Dickens classic. MORE INFORMATION.


         

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