Enron, maker of big promises and big donations, stands revealed as a four-flusher.
Is the Enron story one of outrageous mendacity or stupefying ignorance?
This letter was originally published on January 29, 2002 at www.michaelmoore.com
Pôrto Alegre, Brazil--In US living rooms, talk about such policy measures as the White House's proposed Free Trade Area of the Americas (FTAA) is likely to elicit clueless shrugs.
Having simmered on the back burner through the aftermath of September
11, Congress's effort to obtain records from Vice President Dick
Cheney's energy task force has now reached the boiling p
Right till the end of January, Dita Sari, an Indonesian in her late 20s, was preparing to fly from her home near Jakarta to Salt Lake City to bask in the admiration of assorted do-gooders and celebrities mustered by the public relations department of Reebok for its thirteenth annual Human Rights Awards, overseen by a board including Jimmy Carter and Kerry Kennedy Cuomo. Make no mistake, the folks--usually somewhere between four and six--getting these annual Reebok awards have all been fine organizers and activists, committed to working for minorities, the disfranchised, the disabled, the underdogs in our wicked world.
Dita Sari's plan was to proceed to the podium in the Capitol Theater in downtown Salt Lake City, on February 7, and then, when offered the human rights award, reject it.
Now, this annual Reebok ceremony isn't up there with the Nobels, or the genius grants from MacArthur. Despite Reebok's best efforts, it's definitely a second-tier event. Nonetheless, it has paid off for Reebok. Says Jeff Ballinger, an antisweatshop activist who's organized with shoe workers in Indonesia for the past thirteen years, "With this kind of ceremony, Reebok gets its name into respectable company. When they give a prize to someone like Julie Su, a lawyer for immigrant workers in California, people who wouldn't be seen dead in Nikes are impressed."
Dita Sari got picked by Reebok's judges because she defied her government on the issue of independent trade unions. In her own words: "In 1995, I was arrested and tortured by the police, after leading a strike of 5,000 workers of Indoshoes Inti Industry. They demanded an increase of their wages (they were paid only US $1 for working eight hours a day), and maternity leave as well. This company operated in West Java, and produced shoes of Reebok and Adidas."
She got out of prison in 1999. Since then she's been building a union in plants across Java. It was there that she got a good look at Reebok's contractors, the underbosses of all the apparel, footwear, computer and toy companies. These contractors run their plants in a notoriously harsh manner.
Reebok's flacks can brandish armloads of studies, codes, monitoring reports, guidelines and kindred matter, all attesting to the company's dedication to fair treatment of anyone making consumer items with the name Reebok printed on them. But nothing has really changed. "We've created a cottage industry of monitors and inspectors and drafters of codes," Ballinger says, "but all these workers ever wanted was to sit down in dignity and negotiate with their bosses, and this has never happened."
Due in large part to the efforts of the workers and Western allies like Ballinger's Press for Change, the daily wage in Indonesia actually went up more than 300 percent between 1990 and 1997, at which point the Asian economic crisis struck. Inflation wiped out all those gains. Workers' daily pay is now half what it was before the crisis hit.
These were the points Dita Sari was going to make when she got to Salt Lake City. Then she learned that Reebok intended to schedule her and other recipients for some public events before the actual award ceremony. Rather than let Reebok benefit in any way from her presence, Dita Sari pulled the plug and at last word is in Jakarta trying to raise relief money for workers left destitute by the worst flooding in decades. She's sent the speech she was planning to give at the awards:
I have taken this award into very deep consideration. We finally decide not to accept this....
In Indonesia, there are five Reebok companies. Eighty percent of the workers are women. All companies are sub-contracted, often by South Korean companies such as Dung Jo and Tong Yang. Since the workers can only get around $1.50 a day, they then have to live in a slum area, surrounded by poor and unhealthy conditions, especially for their children. At the same time, Reebok collected millions of dollars of profit every year, directly contributed by these workers. The low pay and exploitation of the workers of Indonesia, Mexico and Vietnam are the main reasons why we will not accept this award.
But isn't Reebok at least trying to do something decent? The way Dita Sari sees things, the attempt is phony. All the awards in the world--all the window dressing with Desmond Tutu, Carly Simon, Sting, Robert Redford--doesn't alter the basic fact that workers in the Third World are being paid the absolute minimum to make a very profitable product. The labor cost of a $70 pair of sneakers made in China, Vietnam or Indonesia is $1 or less.
Is there such a thing as a virtuous sneaker? Ballinger cites Bata, a Toronto-based company that runs its own factory in Jakarta. Its executives sat down with the union and worked out a contract with significant improvements on issues that employees care about greatly, like seniority. Though the margin has fallen recently, wage scales are better than minimum. Instances of bullying and intimidation are far fewer. Bata's shoes are sold in Indonesia for what an Indonesian can afford: $10 or less.
Ten years ago another courageous Indonesian, Teten Masduki, was asked by the Levi Strauss company to broker a clinic to be built near a contractor's factory. Teten, uncompromising labor advocate that he is, refused, even though the assignment would have made him a local hero. His reason: a clinic wouldn't give the workers what they need, a voice, the power to bargain.
Teten Masduki and Dita Sari see the world clearly, a lot more clearly than the celebrities and activists massed at such events as the one organized by Reebok in Salt Lake City, which is already awash with Olympian bunkum about human brotherhood. Dita Sari turned down $50,000 from Reebok. Teten Masduki turned down a tempting position with Levi Strauss. These days he's been responsible for chasing out a corrupt attorney general from his post as head of Indonesia's Corruption Watch. Do-gooders should study these fine examples and stiffen their spines.
The fortunes of American unions have taken a turn for the worse. Thanks to terrorism and recession, union members are reeling from a series of economic and political setbacks. Nearly half a million of them now face unemployment in the hotel and airline industries, and at Boeing, Ford, major steel-makers and other manufacturing firms. Many public employees will be clobbered next, as state and local budget crises deepen around the country. Already, teachers in New Jersey and state workers in Minnesota have been forced into controversial strikes over rising healthcare costs--a trend that affects millions of Americans. The accompanying loss of job-based medical coverage by many people who still have jobs should be fueling a revived movement for national health insurance, but few unions bother to raise that banner anymore.
Promising new AFL-CIO initiatives on immigration--like its call for legalization of undocumented workers--have been undermined by post-September 11 paranoia about Middle Easterners and federal scrutiny of thousands of them. Union organizing is stalled on many fronts, and rank-and-file participation in protests against corporate globalization--on the rise in Seattle and Quebec City--has faltered amid the myriad political distractions of the "war on terrorism." While labor's nascent grassroots internationalism remains overshadowed by flag-waving displays of "national unity," trade unionists have yet to be rewarded for their patriotism, even with a modest boost in unemployment benefits. Instead, President Bush is seeking cuts in federal job-training grants for laid-off workers. He's already won House approval for fast-track negotiating authority on future trade deals that threaten even more US jobs--and expects a Senate victory on that issue soon. To insure that collective bargaining doesn't interfere with the functioning of various executive branch offices now engaged in "homeland security," the White House just stripped hundreds of federal employees of their right to union representation. As University of Illinois labor relations professor Michael LeRoy observed in the New York Times, "a time of national emergency makes it more difficult for unions to engineer public support."
Into this bleak landscape arrives State of the Union, Nelson Lichtenstein's intellectual history of labor's past 100 years. Readers might take comfort from the fact--well documented by the author--that labor has been down before and, as in the 1930s, bounced back. Nevertheless, Lichtenstein's book raises disturbing questions about when, where and how that's going to happen again in a period when "solidarity and unionism no longer resonate with so large a slice of the American citizenry."
The author's views on this subject are informed by both scholarship and activism. A professor of history at the University of California, Santa Barbara, Lichtenstein wrote The Most Dangerous Man in Detroit, a definitive biography of one-time United Auto Workers president Walter Reuther. In 1996 Lichtenstein helped launch Scholars, Artists, and Writers for Social Justice (SAWSJ), a campus-based labor support network. Through SAWSJ, Lichtenstein has aided teach-ins and protests about workers' rights and worked with AFL-CIO president John Sweeney to re-establish links between unions and intellectuals that might help labor become a more "vital force in a democratic polity."
Consistent with this mission, Lichtenstein hopes to revive interest in what liberal reformers in politics and academia once called "the labor question." State of the Union is thus a history of the ideas about labor that animated much of the action--all the great union-building attempts during the past century. "Trade unionism requires a compelling set of ideas and institutions, both self-made and governmental, to give labor's cause power and legitimacy," Lichtenstein argues. "It is a political project whose success enables the unions to transcend the ethnic and economic divisions always present in the working population."
He begins his survey in the Progressive Era, a period in which "democratization of the workplace, the solidarity of labor, and the social betterment of American workers once stood far closer to the center of the nation's political and moral consciousness." Politicians, jurists, academics and social activists--ranging from Woodrow Wilson to Louis Brandeis to Florence Kelley of the National Consumers League--all joined the debate about the threat to our "self-governing republic" posed by large-scale industrial capitalism. How could democracy survive when America's growing mass of factory workers were stripped of their civic rights, and often denied a living wage as well, whenever they entered the plant gates?
The Progressives' response was "industrial democracy"--extending constitutional rights of free speech and association to the workplace, enacting protective labor laws and securing other forms of the "social wage." Unfortunately, national-level progress toward these goals foundered after World War I on the rocks of lost strikes, political repression and Republican Party dominance in Washington. "Neither the labor movement nor the state, not to mention industrial management itself, generated the kind of relationships, in law, ideology, or practice, necessary to institutionalize mass unionism and sustain working-class living standards" during the 1920s, observes Lichtenstein.
The years of the Roosevelt Administration were a different story. State of the Union recounts how Depression-era unrest--plus the efforts of an unusual and uneasy alliance between industrial workers, labor radicals, dissident leaders of AFL affiliates, pro-union legislators and New Deal policy-makers--led to passage of the Wagner Act. It created a new legal framework for mediating labor-management disputes and boosted consumer purchasing power via the wage gains of collective bargaining.
As industrial unions experienced explosive growth before and during World War II, the previously unchecked political and economic power of the great corporations was finally tempered through the emergence of a more social democratic workers' movement, led by the Congress of Industrial Organizations. The CIO spoke up for the poor, the unskilled and the unemployed, as well as more affluent members of the working class. Even the conservative craft unions of the AFL ultimately grew as a result of the CIO's existence because many employers, if they had to deal with any union at all, preferred one with less ideological baggage.
Then as now, the nation's manufacturing work force was multiethnic, which meant that hundreds of thousands of recent immigrants used CIO unionism as a vehicle for collective empowerment on the job and in working-class communities. Successful organizers "cloaked themselves in the expansive, culturally pluralist patriotism that the New Deal sought to propagate," says Lichtenstein. "Unionism is the spirit of Americanism," proclaimed a labor newspaper directed at "immigrant workers long excluded from a full sense of citizenship." The exercise of citizenship rights in both electoral politics and National Labor Relations Board voting became, for many, a passport to "an 'American' standard of living."
State of the Union credits some on the left for noting, then and later, that New Deal labor legislation also had its limits and trade-offs. Wagner Act critics like lawyer-historian Staughton Lynd complain that it merely directed worker militancy into narrow, institutional channels--soon dominated by full-time union reps, attorneys for labor and management, not-so-neutral arbitrators and various government agencies. During World War II, attempts by labor officialdom to enforce a nationwide "no strike" pledge led to major rifts within several CIO unions and helped undermine the position of Communist Party members who tried to discourage wildcat walkouts.
The "union idea" that was so transcendent among liberals and radicals during the New Deal underwent considerable erosion in the 1950s. Many leading writers, professors and clergymen had signed petitions, walked picket lines, spoken at rallies, testified before Congressional committees and defended the cause of industrial organization in the 1930s. These ties began to fray after World War II and the onset of the cold war, when the CIO conducted a ruthless purge of its own left wing. This made it much harder for "outsiders" with suspect views to gain access to the increasingly parochial world of the (soon to be reunited) AFL and CIO. As Lichtenstein shows in his survey of their writings, the subsequent alienation of intellectuals like C. Wright Mills, Dwight Macdonald, Harvey Swados and others was rooted in the perception--largely accurate--that union bureaucracy and self-interest, corruption and complacency had replaced labor's earlier "visionary quest for solidarity and social transformation."
Lichtenstein questions whether unions were ever quite as fat, happy and structurally secure as some economists and historians claimed (after the fact) in books and articles on the postwar "labor-management accord." If such a deal had really existed during those years, State of the Union argues, it was "less a mutually satisfactory concordat" than "a limited and unstable truce, largely confined to a well-defined set of regions and industries...a product of defeat, not victory."
Measured by dues-payers alone, "Big Labor" was certainly bigger in the 1950s--at least compared with the small percentage of the work force represented by unions now (33 percent at midcentury versus 14 percent today). But union economic gains derived more from members-only collective bargaining than from social programs--like national health insurance--that would have benefited the entire working class.
Labor's failure to win more universal welfare-state coverage on the European or Canadian model led to its reliance--in both craft and industrial unions--on "firm-centered" fringe-benefit negotiations. The problem with the incremental advance of this "privatized welfare system" for the working-class elite was that it left a lot of other people (including some union members) out of the picture. Millions of Americans in mostly nonunion, lower-tier employment ended up with job-based pensions, group medical insurance, paid vacations, etc., that were limited or nonexistent.
The fundamental weakness of this edifice--even for workers in longtime bastions of union strength--was not fully exposed until the concession bargaining crisis of the late 1970s and '80s. As Lichtenstein describes in painful detail, employers launched a major offensive--first on the building trades, then on municipal labor and then on union members in basic industry. Pattern bargaining unraveled in a series of lost strikes and desperate giveback deals. This allowed management to introduce additional wage-and-benefit inequalities into the work force, including two-tier pay structures within the same firm, healthcare cost shifting, more individualized retirement coverage and greatly reduced job security due to widespread outsourcing and other forms of de-unionization.
By then, of course, African-Americans in the South, who suffered longest and most from economic inequality, had already risen up and made a "civil rights revolution." Their struggle was one that unions in the 1960s--at least the more liberal ones--nominally supported and in which veteran black labor activists played a seminal role. Yet the civil rights movement as a whole clearly passed labor by and further diminished its already reduced stature as the champion of the underdog and leading national voice for social justice. In a key chapter titled "Rights Consciousness in the Workplace," Lichtenstein explores how unions, their contracts and their negotiated grievance procedures have been further marginalized by the enduring legal and political legacy of the civil rights era. According to the author, this has created "the great contradiction that stands at the heart of American democracy today":
In the last forty years, a transformation in law, custom, and ideology has made a once radical demand for racial and gender equality into an elemental code of employer conduct.... But during that same era, the rights of workers, as workers, and especially as workers acting in an autonomous, collective fashion, have moved well into the shadows.... Little in American culture, politics, or business encourages the institutionalization of a collective employee voice.
Now, every US employer has to be an "equal opportunity" one or face an avalanche of negative publicity, public censure and costly litigation. Discrimination against workers--on grounds deemed unlawful by the 1964 Civil Rights Act and subsequent legislation--has become downright un-American, with the newest frontiers being the fight against unfair treatment of workers based on their physical disabilities or sexual preference. At the same time, as State of the Union and other studies have documented, collective workplace rights are neither celebrated nor well enforced [see Early, "How Stands the Union?" Jan. 22, 2001]. What Lichtenstein calls "rights consciousness" is the product of heroic social struggle and community sacrifice but, ironically, often reinforces a different American tradition: "rugged individualism," which finds modern expression in the oft-repeated threat to "call my lawyer" whenever disputes arise, on or off the job.
To make his point, Lichtenstein exaggerates the degree to which individual complaint-filers at the federal Equal Employment Opportunity Commission (and equally backlogged state agencies) end up on a faster or more lucrative track than workers seeking redress at the National Labor Relations Board. There is no doubt, though, that high-profile discrimination litigation has paid off in ways that unfair-labor-practice cases rarely do. Among other examples, the book contrasts the unpunished mass firing of Hispanic phone workers trying to unionize at Sprint in San Francisco--a typical modern failure of the Wagner Act--with big class-action victories like the settlement securing $132 million for thousands of minority workers victimized by racist managers at Shoney's. The restaurant case involved much public "shaming and redemption" via management shakeups at the corporate level; Sprint merely shrugged off allegations of unionbusting until a federal court ruled in its favor.
Lichtenstein's solution is for labor today to find ways to "capitalize on the nation's well-established rights culture of the last 40 years," just as the CIO "made the quest for industrial democracy a powerful theme that legitimized its strikes and organizing campaigns in the 1930s." He looks to veterans of 1960s social movements--who entered the withering vineyard of American labor back when cold warriors like George Meany and Lane Kirkland still held sway--to build coalitions with nonlabor groups that can "make union organizational rights as unassailable as are basic civil rights."
In so doing, Lichtenstein recommends finding a middle way between a renewed emphasis on class that downplays identity politics--"itself a pejorative term for rights consciousness"--and an exclusive emphasis on the latter that may indeed thwart efforts to unite workers around common concerns. In the past, Lichtenstein notes, "the labor movement has surged forward not when it denied its heterogeneity" but instead found ways to affirm it, using ethnic and racial pluralism within unions to build power in more diverse workplaces and communities.
Given the enormous external obstacles to union growth, the author's other proposals--summarized in a final chapter titled "What Is to Be Done?"--seem a bit perfunctory. His "three strategic propositions for the union movement" do point in a better direction than the one in which the AFL-CIO and some of its leading affiliates are currently headed. State of the Union calls for more worker militancy, greater internal democracy and less dependence on the Democratic Party. These are all unassailable ideas--until one gets beyond the official lip service paid to them and down to the nitty-gritty of their implementation.
Too often in labor today--particularly in several high-profile, "progressive" unions led by onetime student activists--participatory democracy is missing. Membership mobilization has a top-down, carefully orchestrated character that subverts real rank-and-file initiative, decision-making and dynamism. The emerging culture of these organizations resembles Third World "guided democracies," in which party-appointed apparatchiks or technocrats provide surrogate leadership for the people who are actually supposed to be in charge. In politics, it's equally disheartening to see that labor's "independence" is not being demonstrated through the creation of more union-based alternatives to business-oriented groups within the Democratic Party or by challenging corporate domination of the two-party system. Instead, it's taking the form of very traditional and narrow special-interest endorsement deals with Republicans like New York Governor George Pataki.
This is not what Lichtenstein has in mind when he urges adoption of "a well-projected, clearly defined political posture in order to advance labor's legislative agenda and defend the very idea of workplace rights and collective action." His book applauds the authentic militants who battled contract concessions and the labor establishment prior to the 1995 palace coup that put John Sweeney and his associates in control of the AFL-CIO. While the author backs "the new agenda of the Sweeneyite leadership," with its primary focus on the right to organize, he argues that the fight for union democracy is equally "vital to restoring the social mission of labor and returning unions to their social-movement heritage."
How labor is viewed, aided, undermined or ignored by men and women of ideas (including the author) is, by itself, never going to determine its fate in any era. Workers themselves--acting through organizations they create or remake--are still the primary shapers of their own future, whether it's better or worse. Nevertheless, creative interaction between workers and intellectuals has helped spawn new forms of workplace and political organization in every nation--Poland, South Africa, Korea and Brazil--where social movement unionism has been most visible at some point in recent decades. In the United States, unions--and their new campus and community allies--face the daunting task of developing ideas and strategies that will "again insert working America into the heart of our national consciousness." If they succeed in restoring its relevance, the labor movement may yet have a broader impact on our society, and Lichtenstein's State of the Union will deserve credit for being a catalyst in that process.
There are no blue dresses to analyze in this one, or interns in berets to quiz. But make no mistake. The Enron scandal is the real thing--a window on the nexus of money and politics in Washington that is revealing our corrupted electoral, legislative and regulatory infrastructure.
Perhaps that's why the Bush White House is pushing the line that this is a business scandal, as opposed to a political one. But with mounting evidence that Enron executives were dictating Bush Administration appointments and policies affecting their company in particular and energy policy in general, Karl Rove is having a hard time getting his spin up to speed. Sure, there's a business component to the Enron affair. But, like most corporations these days, Enron was able to practice its brand of cutthroat cowboy capitalism only because of the ties it nurtured with the political class, which sets up the playing field on which businesses "compete." The Enron scandal reveals not just the lengths to which Wall Street and corporate America will go for obscene profits and personal enrichment at the expense of employees, shareholders and taxpayers but also the lengths to which politicians from Bush on down will go to help them.
Enron is about values, but not about the kinds of sexual peccadilloes condemned by Kenneth Starr and Ralph Reed--a notable beneficiary of Enron's largesse--or the traditional John Wayne-style flag-waving values of George W. Bush. As Michael Tomasky writes in the Washington Post, "'Values' can mean something else now, like integrity in business and government. It means that a president who ran on a promise of 'restoring dignity' to the White House ought to tell the truth about how long he's known the CEO who has been his biggest corporate backer. It means that the vice president should recognize as a simple ethical matter that the people...have a right to know which lobbyists he met with while formulating a major policy, just as Republicans demanded similar information from Clinton's health policy panel back in 1993."
If the political system works, if the opposition actually engages in opposition, if there is any justice--three huge ifs--the Enron scandal ought to shake Washington to the core and send tremors through the 2002 and 2004 elections. But that will happen only if Congress gets serious about performing its intended role in what is still supposed to be a system of checks and balances. The Senate must be aggressive not merely in issuing subpoenas to former Enron chief Ken Lay and his cronies but in pursuing the political players who associated with Lay. Representative John Conyers Jr., the Michigan Democrat who is the ranking member on the House Judiciary Committee, got to the heart of the matter when he announced that he will ask Rove to provide any information linking the Bush 2000 campaign with Enron. But Conyers will need a lot of help preventing the executive branch from weaving a cloak of invisibility around its inner operations (see Russ Baker on page 11).
Secrecy is a favored tool of the imperial presidency, and the Bush Administration's stonewalling on its Enron connections signals that it's declaring war on openness and is bent on quashing this scandal by any means. How about, for instance, distracting us with an endless war on an "axis of evil"?
Democrats must not be deterred by the Bush camp's attempts to erect a firewall of false patriotism as its defense against investigation. There are no longer any legal, moral or political grounds for not unleashing a multipronged, wide-ranging investigation into the Washington political culture that allowed an Enron--and how many more like it?--to operate unchecked. We already know a lot about who legally gave what to which politician, who lost pensions, who made out like bandits, how the scam worked, whose wheels were greased by soft money.
Now it's time for Congress to put the pieces together. Democrats in Congress should join reformer Republicans--yes, there are a few--to expose this scandal for what it is: a gamy display of excessive corporate power and a lack of economic democracy and government oversight. Congress needs to remember it's representing the people and deal with the tough issues raised by the cozy collusion between government and business (it should start with campaign finance reform in the House now and move on to putting labor and consumers on corporate boards, restoring defined benefits pensions, penalty-taxing excessive executive salaries, stopping stock price inflation and holding tricky auditors financially liable). The key vote on campaign finance is set for February 13. The outcome should tell us how serious the reform talk is.
Back in the spotlight, he condemns the trading of political favors for cash.
"I see Native people dying every day because they can't afford health insurance," Elouise Cobell said over the phone in mid-January from Washington, DC, as she prepared to testify against Interi