Worker vs. Bear: Labor needs to move fast or get eaten as market gloom intensifies
January 16, 2016
If Steven Pearlstein is right about what the market’s dismal start to 2016 signifies, then we really need to move quickly to boost U.S. workforce clout.
In his Washington Post column yesterday, “The Bear Market May Have Already Begun,” Pearlstein calls out "the long-delayed correction of fundamental imbalances in the global economy that manifest themselves in prolonged and unsustainable trade deficits and surpluses, artificially low interest rates, misaligned currencies, real estate bubbles and inflated prices for commodities, stocks and other financial assets.”
He then describes what the ultimate rebalancing would look like in the United States: "Less borrowing and consumption and more savings and investment. That would mean a decline in the dollar to dampen our appetite for imports and boost exports, and with them higher inflation. It would require state and federal governments cutting pensions and entitlements and raising taxes in order to restore levels of public investments and bring long-term budgets into balance.” (Cynics like me will find less compelling his argument that it would mean "a dramatic shift in corporate behavior away from share buybacks and special dividends, in favor of investments in new equipment, research, product development and worker training.”)
I’m fairly befuddled by the details of market economics. I have trouble sorting out all the jargon and I don’t watch stocks. But I sure feel a chill when I hear predictions of further cuts in pensions and entitlements, rising taxes and inflation, and how "the smart money guys have begun to head for the exits” in anticipation of broader stock declines.
Panicked plutocrats are not good to workers.
Neither are Republican-led legislatures facing dramatic drops in revenue while pledging to never raise taxes.
If we are to have any hope of staving off broader declines in wages and worker well-being as things get rockier, we need to get smart and act now. We can’t wait for glacially paced reforms. Working families’ best defense against the gathering storm lies in the swift creation and immediate scaling-up of a "Chamber of Work”-type entity like American Wage Earners. Otherwise, we’ll be letting the powers that be drive the response to bear-market angst. And “the smart money guys” can be counted on to make damn sure that labor comes last.