What goes down comes around. Amidst all the attention to United Airlines' post-September 11 woes, no one noticed the ringing irony of its tapping John W. Creighton Jr.
The social safety net has become frayed because of welfare "reform."
President Bush is using his popularity in the wake of the September 11 terrorist attacks to push through some deeply partisan legislation.
September 11 showed us true American heroes. Now let's build on their strength.
The September 11 attack on the World Trade Center led journalists and image-makers to rediscover New York's working class. In an extraordinary essay in Business Week titled "Real Masters of the Universe," Bruce Nussbaum noted that during the rescue effort, "big, beefy working-class guys became heroes once again, replacing the telegenic financial analysts and techno-billionaires who once had held the nation in thrall." Nussbaum fulsomely praised "men and women making 40 grand a year...risking their own lives--to save investment bankers and traders making 10 times that amount." In The New York Times Magazine, Verlyn Klinkenborg, describing the construction workers who formed the second wave of rescuers, wrote, "A city of unsoiled and unroughened hands has learned to love a class of laborers it once tried hard not to notice."
Until September 11, working-class New Yorkers had disappeared from public portrayals and mental maps of Gotham. This contrasted sharply with the more distant past. When World War II ended, New York was palpably a working-class city. Within easy walking distance of what we now call ground zero were myriad sites of blue-collar labor, from a cigarette factory on Water Street to hundreds of small printing firms, to docks where longshoremen unloaded products from around the world, to commodity markets where the ownership of goods like coffee was not only exchanged, but the products themselves were stored and processed.
Much of what made post-World War II New York great came from the influence of its working class. Workers and their families helped pattern the fabric of the city with their culture, style and worldview. Through political and ethnic organizations, tenant and neighborhood associations and, above all, unions they helped create a social-democratic polity unique in the country in its ambition and achievements. New York City became a laboratory for a social urbanism committed to an expansive welfare state, racial equality and popular access to culture and education.
Over time, though, the influence and social presence of working-class New Yorkers faded, as manufacturing jobs disappeared, suburbanization dispersed city residents and anti-Communism made the language of class unacceptable. Then came the fiscal crisis of the 1970s, which saw a rapid shift of power to the corporate and banking elite. When the city recovered, with an economy and culture ever more skewed toward a narrow but enormously profitable financial sector, working-class New York seemed bleached out by the white light of new money.
The September 11 attack and the response to it have once again made working-class New Yorkers visible and appreciated. Not only were the rescuers working class, but so were most of the victims. They were part of a working class that has changed since 1945, becoming more diverse in occupation, race and ethnicity. Killed that day, along with the fire, police and emergency medical workers, were accountants, clerks, secretaries, restaurant employees, janitors, security guards and electricians. Many financial firm victims, far from being mega-rich, were young traders and technicians, the grunts of the world capital markets.
The newfound appreciation of working-class New York creates an opening for insisting that decisions about rebuilding the city involve all social sectors. Whatever else it was, the World Trade Center was not a complex that grew out of a democratic city-planning process. We need to do better this time. Labor and community groups must be full partners in deciding what should be built and where, how precious public funds are allocated and what kinds of jobs--and job standards--are promoted. Some already have begun pushing for inclusion; others should begin doing so now.
In the coming weeks and months, we need to rethink the economic development strategies of the past half-century, which benefited many New Yorkers but did not serve others well. Might some of the recovery money be better spent on infrastructure support for local manufacturing, rather than on new office towers in lower Manhattan? And perhaps some should go to human capital investment, in schools, public health and much-needed housing, creating a work force and environment that would attract and sustain a variety of economic enterprises.
Winning even a modest voice for working-class New Yorkers in the reconstruction process won't be easy. Already, political and business leaders have called for appointing a rebuilding authority, empowered to circumvent zoning and environmental regulations and normal controls over public spending. The effect would be to deny ordinary citizens any role in shaping the city of the future. As the shameful airline bailout--which allocated no money to laid-off workers--so clearly demonstrated, inside operators with money and connections have the advantage in moments of confusion and urgency.
But altered perceptions of New York may change the usual calculus. On September 11, working-class New Yorkers were the heroes and the victims, giving them a strong moral claim on planning the future. Rightfully, they had that claim on September 10, too, even if few in power acknowledged it. It ought not require mass death to remind us who forms the majority of the city's population and who keeps it functioning, day after day after day.
It's time to ask "borderless" corporations: Which side are you on?
The fighters are powerless workers in need of rights and justice.
Joe Stiglitz is no fan of Washington consensus-style globalization. Read "The Globalizer Who Came In From The Cold," an interview with Stiglitz on the IMF, World Bank and WTO conducted by Gregory Palast.
Unions are grieving over lost members while bracing for uncertainties ahead.
The new war on terror isn't going to be of much use in combating the present plunge in America's well-being. Well before the twin towers fell to earth the country was entering a fierce decline, and it is assuredly going to get worse.The fall in growth and investment from early 2000 to early 2001 was the fastest since 1945, from 5 percent growth to zero. So fast, indeed, that people are only now catching on to the extent of the bad numbers, and battening down the hatches as bankruptcies begin to rise.
How did we get from the Merrie Then to the Dismal Now? The bubble in stock prices in those last five years sparked an investment boom, as corporations found mountains of cash available, either from the sale of overvalued stocks or by borrowing money from the banks against the high asset value of those same stocks. And as the Lewinsky years frolicked gaily by, there was a simultaneous consumption boom as the richest fifth of the citizenry--the Delta Force of national consumer spending--saved a lot less and spent a lot more.
The shadows were there for those who cared to look for them. In 1998, 1999 and 2000, when the boom was reaching historic proportions, when annual borrowing by US corporations had reached a historic peak as a percentage of GDP, when Fed Chairman Alan Greenspan was vaunting the power of markets, the rate of profits was falling in the nonfinancial corporate sector, significantly so in manufacturing.
The bubble was due to burst. Now, with the market going down, corporations have less money, can borrow less and invest less. Consumers have less to spend and have begun to lose their appetite anyway. Down go the rates of investment and consumption, and the amount of government debt that the Bush Administration can muster as a Keynesian stimulus will be more than offset by a decline in private debt, as people turn prudent and ratchet up their savings.
But the problems go deeper. The corporate investment boom of the late 1990s took place against a backdrop of falling profitability. Who builds new plants when the bottom line is turning sour year by year? Answer: US corporations in the late 1990s. There was no correlate of investment against the rate of return, hence the amassing of overcapacity on a herculean scale. Between 1995 and 2000 retail store space grew five times faster than the population. Earlier this year, Business Week reckoned that only 2.5 percent of communications capacity is being used.
The most notorious sector was telecommunications, where borrowing was vast and stocks insanely inflated, with analysts boiling up ever more ludicrous ways of claiming profitability for their favored stocks. The degree to which stocks rose above profits was greatest in technology, media and telecommunications (TMT). In this sector, the leading edge of the boom, between 1995 and 2000 the value of TMT stocks grew by 6.1 times, but their earnings by only 2.1 times.
The Organization for Economic Cooperation and Development's survey of the United States for 2000 makes for chastening reading. By that year, the final distension of the bubble, the value of Internet companies reached 8 percent of the total value of all nonfinancial corporate assets in the economy. But most of those companies made only losses. Of 242 Internet companies reviewed in the OECD study, only thirty-seven made profits in the third quarter of 1999, the prepeak of the bubble. Their price-to-earnings ratio was 190 to one; precisely two of these accounted for 60 percent of profits. The other thirty-five profitable companies traded on an average p/e ratio of 270 to one; the 205 remaining companies made losses. For 168 of the companies for which data are available, total losses in the third quarter of 1999 amounted to $12.5 billion at an annualized rate, even as their stock-market valuation reached $621 billion.
You want a definition of a bubble? That's it.
So was there really a "New Economy" emerging in the sunset of the century, as proclaimed by so many exuberant choristers? True, the 1995 to 2000 economy did do better than in any five-year period back to the early 1970s. By all standard measures, such as productivity, economic growth, wages, growth of investment, unemployment and inflation, it was a pretty good time. But as Professor Robert Brenner of UCLA, whose Boom, Bubble, Bust: The US in the World Economy is about to be published by Verso, aptly asks, "If the five years 1995 to 2000 truly saw the emergence of a New Economy, manifesting 'extraordinary performance,' as Clinton's Council of Economic Advisers put it, what are we to call the period 1948 to 1973, which excelled the recent period in every respect?" Productivity growth was about 15 percent slower in those five recent years than in the twenty-five years between 1948 and 1973.
Obit writers for the great boom of 1995-2000 usually avert their eyes from the fact that despite all the exuberance of those giddy years, in terms of growth of gross domestic product, of per capita GDP, of wages and productivity, the 1990s as a whole did worse than the 1980s, and the 1980s worse than the 1970s. In other words, the golden end of the twentieth century was a continuance of the long stagnation of the world economy that began in 1973.
For now? On the one hand, overcapacity; on the other, a drop in investment and consumption, driven first by the drop in the market, then by fear. It will be quite a while before anyone feels the need to invest, hence to borrow. Give the rich a tax cut? It won't help. They'll put it in the bank. Government investment? Yes, if it were done on an appropriately vast scale, but only public investments of a sort that Republicans have never countenanced and that vanished from the political platforms of the Democratic Party decades ago. For sure, planes and missiles for the Navy and Air Force, plus the millions in food aid dropped on Afghanistan, plus new computers for the Office of Homeland Security, aren't going to do the trick.