As a Russian studies major at Yale in the 1970s, I observed Soviet
"elections" that were conducted more fairly than the 2002 Yale
Corporation's board of trustees election. Why is the Yale Corporation so
threatened by the candidacy of a prominent New Haven pastor who cares
about Yale and its workers?
The last time a prospective trustee was nominated by petition was almost
forty years ago, when William Horowitz became Yale's first elected
Jewish trustee. Back then 250 signatures were required for ballot
qualification; that has since been raised to 3 percent of eligible
alumni--some 3,200 signatures today. The Rev. Dr. W. David Lee, an
African-American pastor of one of New Haven's largest churches and a
graduate of the Yale Divinity School, gathered 4,870 signatures. If
elected, he would be the only New Haven resident other than Yale's
president to sit on the corporation's board.
But he is also supported by Yale's employee unions, and the
university--one of America's great institutions of higher learning--does
not like that. Normally, the Standing Committee for the Nomination of
Alumni Fellows of the Association of Yale Alumni nominates two or three
alumni to stand for election. This year, apparently threatened by Lee's
grassroots efforts, the committee nominated only one, Maya Lin, creator
of the Vietnam War memorial, around whom the Yale Corporation and its
allies could rally.
As an alumnus, I received no fewer than six mailings--from the alumni
organization, from wealthy Yale alumni, from former corporation board
members--all criticizing Lee for failing to identify who paid for his
mailing, for his "aggressive campaign" and for his "ties to special
interests, labor unions."
In a campaign flier (containing no disclosure of who paid for it), the
Association of Yale Alumni quoted comments from Lee critical of the
university. It is not surprising that a minister of a large church at
which many Yale employees worship might at times express substantial
differences with a university that pays many of those workers less than
a living wage.
As if the Yale Corporation had not already made its interests known,
even the ballot package--paid for by the university and sent to all
voters--was slanted in favor of the corporation's candidate. The
official publication intimates support for its favored candidate from
"over 700 alumni," including the Association of Yale Alumni, the
officers of Yale college classes and Yale clubs and other alumni
associations. The other candidate, the Yale Corporation stated in the
ballot package, was "nominated by petition"--(as though Lee's 4,870
signatures did not indicate the support of those alumni).
Reminiscent of elections conducted in one-party states, the corporation
refused to allow an observer to be present when the ballots are counted.
It is not in the Yale bylaws, he was told.
It is unfortunate that Yale, which has produced so many national
leaders, has earned a widespread reputation for its antiunion activities
[see Kim Phillips-Fein, "Yale Bites Unions," July 2, 2001]. To all but
declare war on Yale's workers and its union, and on an outstanding young
New Haven leader, can only exacerbate city-university tensions and roil
Yale's already troubled labor-management waters.
How could one pro-worker candidate who aspires to a lone seat on a board
of nineteen of America's most influential people unleash the fury of an
entire university hierarchy? Why do powerful people--the kind who sit on
Yale's board--feel so threatened by a local minister? Why can't one of
the world's most prestigious universities--with a multibillion-dollar
endowment--pay its workers a living wage?
For God. For Country. For Yale.
From Padua's Piazza Insurrezione, where I was standing at 11 in the
morning on April 16, the general strike--Italy's first in twenty
years--looked and sounded like a great success. More than 70,000 people
were already jammed inside the mid-sized square along with their broad
union banners and thousands of flags. Three immense vertical
standards--one for each of the labor confederations--loomed over the
crowd. The noise was deafening: drums, horns, gongs, a PA system on the
electronic equivalent of steroids and 70,000 voices cheering each
"We're ten million strong! More than half the labor force is striking
against the antidemocratic policies of Silvio Berlusconi's center-right
government! Three-hundred thousand are marching in Florence, two-hundred
thousand in Rome..."
The demonstrators in Padua--a university town forty minutes west of
Venice--weren't just striking, they were celebrating. Gathering together
70,000 adversaries of Berlusconi in the heart of the miracolo del
nord-est--the economic miracle of Italy's conservative northeast
where small- and mid-scale manufacturers have produced one of Europe's
greatest concentrations of wealth--was a miracle in itself. The union
banners identified the protesters: eyeglass assemblers from Santa Maria
di Salva, carpenters from Iesolo, leather workers from Verona (most of
them African immigrants), poultry processors from San Martino, hospital
workers and schoolteachers from Venice. But students, university
professors, insurance brokers and television producers also carried
union banners. Thousands of others--teenagers, homemakers, young
professionals--marched with family and friends.
The unions called the strike to protest a reform that would undermine
the 1970 Workers' Statute, the key guarantee of labor rights in Italy.
That's why Sabina Tonetto, a 26-year-old software consultant from the
town of San Donà di Piave, said she was in the piazza. Yet the
company she works for doesn't come under the statute's jurisdiction;
it's too small. And with her skills, she said, "I run no risk of being
laid off." She stayed away from work as a matter of principle: "Certain
things"--the Workers' Statute--"must not be touched. All of us have to
do our part."
Just a few blocks away, the stalls in the farmers' market in Piazza
della Frutta and the shops along Via Dante and Corso Garibaldi were open
for business. Well-dressed pedestrians perused the displays of
handcrafted shoes, silk scarves and designer jackets--variations of what
they were already wearing. The espresso bars were serving up sandwiches,
pastries and pricey chocolates. The streets were peaceful. Nothing in
the shoppers' demeanor, nothing in the merchants' conversation,
connected to what was happening nearby. The noise from Piazza
Insurrezione didn't carry. For anyone who wasn't right there, the
general strike might as well not have taken place.
That's Italy today. While much of Europe has been shifting rightward,
Italy tilted somewhat faster and farther and is now precariously poised,
its citizenry both evenly and deeply divided. About half voted
free-marketer Berlusconi into office in May 2001. His supporters include
the business elite and some workers disillusioned with the left, but
most are small and medium-sized manufacturers, store owners,
professionals and self-employed craftspeople. They are numerous in
Italy, prosperous and happy to have Berlusconi as long as he doesn't
raise their taxes. The other half of the citizenry is outraged by a
prime minister who aims to undermine the labor movement, dismantle the
public sector and foil the prosecutors who have indicted him for
After nearly a year of collective depression and political paralysis,
anti-Berlusconi citizens are starting to mount a credible opposition,
coalescing around the left wing of the labor movement but reaching
beyond to include intellectuals, students, media figures and ordinary
people who are getting involved for the first time. Since January not a
week has gone by without a rally or march or strike bringing anywhere
from 3,000 to 2 million people into the piazzas. The protests are
uniting generations and social classes. So far they've remained loose
enough to attract independents and broad enough to incorporate both the
center and left.
According to Valentino Castellani, a left Catholic and former mayor of
Turin, "The healthy parts of society are finally saying, 'Enough! This
can't go on.'" For Luciano Gallino, a prominent sociologist, the social
protest movements that have sprung up in the last few months represent
"an awakening of civic passion."
Berlusconi provoked the uprising by refusing to modify a series of
"reforms" custom-designed to protect his vast business empire and shield
him (and several Cabinet members) from prosecution for corruption. The
naked self-interest, the almost outlandish specificity of the
legislation, was too much for many Italians to take. One law (already
passed by Parliament) decriminalized the falsification of financial
statements in the private sector. This let Berlusconi off the hook
because he was under indictment for that crime. A second law, also
enacted, makes it difficult for Italian prosecutors to use "letters
rogatory," the standard instrument for obtaining evidence from another
country. This conveniently sabotaged a case in which Berlusconi was
accused of bribing judges, a case that depended on evidence from Swiss
Another law, which has passed the Chamber of Deputies, states that
owning a business does not constitute a conflict of interest for a prime
minister as long as he or she does not run the business. Since
Berlusconi has turned over the administration of his enterprises to
members of his immediate family, he would not have to sell any of his
holdings, which include three of Italy's four private television
networks, the nation's largest publishing conglomerate, Mondadori, and
an advertising agency that dominates the national market.
Although the left unions have been fighting Berlusconi's policies from
the start, the spontaneous street protests began in response to a reform
that would allow the government to exert political pressure on the
judiciary. When judges and prosecutors staged a walkout, two professors
at the University of Florence called on citizens nationwide to support
them. The response was overwhelming and persistent. By February a rally
in Milan's Palavobis sports facility, which holds 12,000, drew a crowd
of 40,000. That same month, leftist film director Nanni Moretti (Caro
Diario, The Son's Room) set off a political revolt when he
spoke to a rally in Rome's Piazza Navona organized by the center-left
Ulivo (Olive Tree) coalition. Instead of making the predictable rally
remarks, Moretti lambasted the coalition leaders, who were standing next
to him, for focusing on petty internal power plays rather than offering
an alternative to Berlusconi. He claimed that he no longer identified
with their politics. The crowd's wild applause and the ensuing debate,
which went on for weeks in the newspapers, embarrassed the Ulivo
leadership into admitting they had lost touch with their constituency.
In March the girotondi ("ring-around-a-rosy protests") began.
Resurrecting a feminist tactic of the 1970s, protesters, holding hands,
circle around a building that figures in one of Berlusconi's reforms. If
they are protesting his control over 90 percent of the airwaves, they
circle around the state broadcasting headquarters; if they are
protesting steps toward privatizing education or healthcare, they circle
around a school or hospital. Girotondi are taking place all over
Italy--often initiated by grassroots groups, announced just a few days
ahead of time, and advertised through leaflets and by word of mouth. In
addition to citizen protests against Berlusconi's reforms, there are
frequent demonstrations against corporate-led globalization and racist
treatment of immigrants.
According to Nicola Tranfaglia, dean of the humanities faculty at the
University of Turin and one of the opposition's prominent intellectuals,
"These movements don't trust the political parties. They are similar in
some ways to 1968, but then it was young people. Today you see people of
What anchors this spirited civic engagement is the labor movement--more
precisely, the largest and most left-leaning of the three union
confederations, the Italian General Confederation of Labor, or CGIL. "In
just three months, the CGIL has pushed the center-left so there's a
tougher opposition and greater unity," Tranfaglia said.
If any one issue unites the opposition to Berlusconi, it is the attack
on the Workers' Statute. Berlusconi wants to drop Article 18, which
stipulates that if a judge finds that an employer has fired a worker
unfairly, that worker can choose to go back to his or her job or accept
a money settlement. Italians in the opposition see Berlusconi's move as
an attack on basic individual rights. L'articolo 18 non si tocca
("Article18 cannot be touched") has become the central slogan of the
Berlusconi and his allies in the most powerful business organization,
Confindustria, argue that Article 18 creates labor market rigidity; as
long as it stays on the books, they say, employers will refuse to hire
additional workers, the economy will produce no new jobs and investors
the world over will shun Italy. Sociologist Luciano Gallino thinks this
is nonsense. "Eliminating Article 18 has nothing to do with creating
jobs. It's the first step in labor market deregulation. It would open
the door to creating a class of the working poor"--a phenomenon that
Italians on the left see as typically American. Berlusconi's attack on
Article 18 serves another purpose: "He is trying to split the labor
movement," former Mayor Castellani said. Everyone in the opposition
Italy has had three politically diverse and competing union
confederations since the onset of the cold war. Their ability to
cooperate is endlessly fluctuating. The Italian Confederation of Workers
Unions (CISL) is the second-largest confederation, the most willing to
compromise with Berlusconi's government and the least interested in
defending Article 18. The smallest confederation, the Italian Union of
Labor (UIL), was also inclined to bend on Article 18. But Sergio
Cofferati, secretary general of the CGIL, refused to budge an inch. He
ended up rescuing the entire opposition.
Cofferati is the new hero--patron saint says it better--of Italy's left.
When the other two confederations refused to support a protest march to
defend Article 18, Cofferati insisted that the CGIL hold the
demonstration by itself. Over a million people converged on Rome on
March 23 in the largest rally since the Second World War. Cofferati also
called for the general strike on April 16, and his March triumph
embarrassed the other unions into going along. By the time of the April
25 Liberation Day rallies and the May Day rallies, 200,000 people were
showing up wherever he spoke. The crowds chant "Sergio! Sergio!" no
matter who else is standing on the stage, senior citizens break through
the security lines and throw themselves into his arms, teenagers line up
Cofferati's second and, by statute, final term as head of the CGIL ends
in June. The opposition activists are begging him to lead the
center-left coalition of parties. But he has decided to return to
Pirelli, the giant rubber and tire company where he worked as a
technician two decades ago--to do what, he won't say. He claims that he
has no intention of withdrawing from politics. In April, he helped found
"Aprile," a group that will coordinate the work of the large left
faction within the party of the Left Democrats. But he'll make no bid,
yet, to lead the left formally.
Berlusconi may have made a mistake by going after Article 18. Two of the
several parties in his coalition--the National Alliance (the
ex-neo-Fascists) and remnants of the old Christian Democrats--have
criticized his hard line. Whereas Berlusconi considers himself a
conservative in the mold of Britain's Margaret Thatcher, the other two
parties are less ideologically pure free-marketers. It is difficult to
predict Berlusconi's next move. Some Cabinet members hint that he would
like to find a face-saving compromise on Article 18. His labor minister,
however, claims he will fight the unions to the end. If the reform
becomes law, the unions have vowed to collect signatures for a national
referendum. Organizing for a referendum to revoke the law on letters
rogatory has already begun.
With the right and far right in Europe gaining ground, the ongoing
protests in Italy look like a hopeful sign. But Berlusconi still has the
upper hand. He is the first head of government in post-Fascist Italy
ready and able to disregard "the piazza" and impose his will through his
solid majority in Parliament. "Berlusconi is setting up a regime for
himself. He's not a fascist. He's populist and authoritarian. A
Peronist. Liberal democracy in Italy is in danger," Nicola Tranfaglia
On May 26, about 11 million Italians will vote in local and regional
elections. Although these contests do not necessarily mirror public
opinion on national issues, everyone will interpret them as a showdown
between Berlusconi and the opposition. The center-left has a chance to
improve its standing. The far-left Communist Refounding party has agreed
to cooperate with the center-left coalition--something it refused to do
in last year's election, thereby assuring Berlusconi's victory.
In the meantime, citizens are rallying in the piazzas, collecting
signatures and marching around buildings. As a result, most Italian
small-d democrats would agree with Luciano Gallino when he says, "I'm a
little less pessimistic."
The recent decision of the Supreme Court in the case of Hoffman Plastic
Compounds, Inc. v. National Labor Relations Board makes it plain that
the Court's majority lives in denial of the social reality millions of
working people face every day. The Court began by making worse an
already bad precedent. As a result of a previous decision in the case of
Sure-Tan Inc. v. National Labor Relations Board, millions of
undocumented immigrants lost the right to be reinstated to their jobs if
they were fired for joining a union. Now the Rehnquist Court says they
can also forget about back pay for the time they were out of work.
The decision rewards employers who want to stop union organizing efforts
among immigrant workers--the very people who've built a decade-long
track record of labor activism, often organizing themselves when unions
showed little interest in them. Their bosses can now terminate
undocumented workers who join a union, without monetary consequences.
But the Court's logic goes further, willfully ignoring social reality.
Today in 31 percent of union drives employers illegally fire workers,
immigrant and native-born alike. Federal labor law may prohibit this,
but companies already treat the cost of legal battles, reinstatement and
back pay as a cost of doing business. Many consider it cheaper than
signing a union contract. In the Court's eyes, however, retaliatory
firings are not even a violation of law.
William Gould IV, former chair of the National Labor Relations Board,
points to "a basic conflict between US labor law and US immigration
law." The Court has held that the enforcement of employer sanctions,
which makes it illegal for an undocumented immigrant to hold a job, is
more important than the right of that worker to join a union and resist
exploitation on the job.
According to Rehnquist, Jose Castro, the fired worker in the Hoffman
case, committed the cardinal sin of falsely saying he had legal status
to get a job. This lie, told by millions of workers every year, is
winked at by employers who want to take advantage of immigrants' labor.
It is only in the face of union activity that bosses suddenly wake up to
the fact that their workers have no papers (and usually then fire only
the ones involved with unions).
This decision isn't about enforcing immigration law, despite Rehnquist's
pious assertion that employers can already be fined for hiring people
like Castro. It's about money. When it becomes more risky and difficult
for workers to organize and join unions, or even to hold a job at all,
they settle for lower wages. And when the price of immigrant labor goes
down, so do the wages for everyone else. The decision has already been
misused by some employers, who have told their immigrant workers they no
longer have the right to organize at all, or have illegally refused to
pay them the minimum wage or overtime.
A recent study by the Pew Charitable Trust counts almost 8 million
undocumented people in the United States. They make up almost 4 percent
of the urban work force, and more than half of all farmworkers. The flow
of workers across the border will not stop anytime soon. The National
Population Council of Mexico reports that "migration between Mexico and
the United States is a permanent, structural phenomenon--the intense
relationship between the two countries makes it inevitable."
Sacrificing the rights of those workers will not stop people from
crossing the border, nor end the need for the work they do. If they are
to have legal status, the door to legal immigration must be opened and
sanctions repealed. But come they will, regardless. The Court's message
to them, however, is: Know your place. Do the work, stay in the shadows,
accept what you are given and never think of organizing to challenge the
structure that holds you in chains.
The Enron "outrage," AFL-CIO president John Sweeney told a rapt crowd of several hundred workers at Milwaukee's Serb Memorial Hall, is "not the story of one corporation's abuses, but sadly it's an example of business as usual in boardrooms and executive suites all across the country." Over the coming months, at a series of town-hall meetings around America, the AFL-CIO will warn workers that they, too, could be "Enroned," and it will call for "no more business as usual."
In an unprecedented way, argues AFL-CIO corporate affairs director Ron Blackwell, the Enron scandal "opens up a channel of public discourse on issues of retirement security and corporate accountability." In the booming nineties nobody wanted to hear why corporations and capital markets had to be better regulated, and reformers were left pleading for corporations to be "socially responsible." But today, "new economy" job-hoppers as much as steelworkers have good reasons to listen to union warnings about deeply flawed 401(k) plans and Social Security privatization.
The labor movement helped win millions in severance pay for laid-off Enron workers, provided legal counsel for workers battling Enron's creditors, sued Enron executives (through union-affiliated Amalgamated Bank) on behalf of pension funds that lost hundreds of millions of dollars in Enron's collapse and helped ex-Enron workers--both union and nonunion--tell Congress and the public how they were misused. The AFL-CIO requested new Securities and Exchange Commission rules and forced four Enron directors to withdraw from renomination at other corporate and public boards. Now labor is challenging Enron director Frank Savage's renomination to Lockheed Martin's board, sending the message that independent directors have a public trust.
Besides supporting auditor reform, the AFL-CIO is promoting legislation to strengthen the rights of workers in 401(k) plans--to a point. Senator Jon Corzine, backed by the Pension Rights Center, initially proposed prohibiting employees from holding more than 20 percent of their employer's stock in their plans. But after complaints from unions representing some workers who had bet big with their employers' stock, like pilots and GE employees, the AFL-CIO backed Senator Ted Kennedy's legislation, which places a less stringent limit on the employees' 401(k) holdings of their employers' stock but which, quite importantly, would require equal worker and employer representation in governing the plans. Enron worker Dary Ebright, who lost $300,000 from his 401(k), argues that limits make sense. "If that had been in place," he said in Milwaukee, "I wouldn't be here today."
Sweeney hopes that unions can use votes on Enron-related reforms to draw lines in this year's elections showing what candidates put first--corporations or workers. The AFL-CIO attacked Republican Representative John Boehner's legislation, passed in April, for "wip[ing] out existing retirement protections for workers under the guise of responding to" Enron. The House bill would permit investment firms to advise workers about financial products, like mutual funds, from which those firms profit--precisely the kind of 1990s conflict of interest that is under investigation at several Wall Street brokerages. While providing limited protections for workers and preserving executive privileges, the House bill would also make it easier for corporations to exclude most employees from retirement plans. Labor's advocacy for Enron workers and retirement security could also strengthen organizing, including efforts among white-collar workers, by sparking a more "enlightened" view of a collective voice at work, as it did with former Enron vice president Dennis Vegas, now a union enthusiast.
But a budding labor scandal threatens the movement's credibility on corporate accountability. It appears that a few labor leaders, sitting on the board of ULLICO, parent of Union Labor Life Insurance Company, personally profited from privileged deals in the Enronlike boom and bust of telecommunications upstart Global Crossing, while their unions' pension funds were denied the same opportunity. Robert Georgine, president of ULLICO and former president of the AFL-CIO's building and construction trades department, former Iron Workers president Jake West, Plumbers president Martin Maddaloni and Carpenters president Douglas McCarron are among those who got windfalls of several hundred thousand dollars. In March Sweeney, who did not take part in the deal, called on ULLICO, like Enron, to appoint an independent committee and counsel to investigate, but in mid-April Georgine said he would take a "somewhat different" approach. "We're not going to ask Enron to live by one set of standards and ULLICO to live by another," Sweeney insisted. Many union officials say they were shocked and disgusted by the news, a reminder that "no more business as usual" is a widely applicable slogan, even within union ranks.
A Mexican migrant acquaintance once told me that he'd love the opportunity to brief Congress on immigration policy. Let us imagine him now, walking into the hallowed chamber, dressed in his typical migrant attire: a fading Oakland Raiders jersey, oversized bright orange painting pants, imitation Air Jordans. He wears a baseball cap with the epigram ¡qué viva México, cabrónes! rendered in red, green and white--the colors of the Mexican flag. He reaches into his well-worn backpack and pulls out some handwritten notes on crumpled sheets of paper, and begins:
First, I would like to tell the distinguished sirs and madams a bit about the migrant life. I'm from a luckless southwestern Mexican town whose timber-based economy is in tatters--no sign of economic development on the horizon, NAFTA or no. I made my first trip to the States at 13, a solo journey that included a few months of indentured servitude to a "coyote," a real cabrón. I paid off what I owed him by picking aluminum cans out of the garbage. When I finally broke free, I took to the road.
I never had a problem getting a job. With a cheap forgery of a green card, the bosses never looked twice. As the years went by, I cruised from state to state. I got married to a girl from home and soon we were on the road together, hopping back and forth across the border that supposedly separates our nations.
Beginning in the latter half of the 1990s, our border-crossings became increasingly difficult. Suddenly, you built walls on the US-Mexico border. Big ones, made of coppery steel. These you have referred to as "interdiction measures," which include programs with names like Gatekeeper, Safeguard and Hold the Line. Since 1995 as many as 1,400 migrants died on that line, pushed by your Border Patrol into the remote, deadly desert and lonely stretches of the Rio Grande.
You recently deployed the first of more than 1,600 National Guard troops along the frontiers with both Canada and Mexico, to provide "tactical" support to the other agencies on the line. The last time you put the military on the line, the result was the shooting of an 18-year-old who was out herding his goats; you did the sensible thing and pulled them out. Now they're back; so far, thankfully, they are unarmed.
I tell you that this is a dangerous situation, and yet, in the wake of September 11--when I grieved as much as if Mexico herself had been attacked--I am mindful of your security concerns. I submit to you that you cannot secure your borders alone. I humbly suggest consultations at the highest levels between the federal law-enforcement agencies of our two countries, a starting point for recognizing that American homeland security is Mexican homeland security and vice versa.
We must re-imagine the border between us. All the money you've poured into "holding the line"--some $4 billion a year for the total INS budget--does nothing of the sort. Yes, it makes it more difficult, and sometimes deadly, to cross. But we still do cross back and forth over that line.
Dear legislators, I watch CNN en Español and have been following your recent debates over immigration policy very carefully. Let us speak frankly here: You've been playing an age-old shell game--appeasing the rabid dogs of nativism but leaving the border open enough to supply labor to big business, which keeps getting you re-elected.
What a great buzz there was in the migrant communities before 9/11! You were speaking (well, some of you) about an amnesty--pardon me, a regularization--of the immigration status of the nearly 9 million estimated "illegals" in your midst. Then for several months you shied away from such discussions. But now your President is on his way to Latin America, and he will meet with my President. It is clear to us, the migrants, that these men want to see some movement on the issue--Bush, to bolster his standing among Latinos and his business cronies, and Fox, to please paisanos like me--but this makes many of you uncomfortable. I know why. It's Al Qaeda and the Taliban. Now, I might look a bit like Caliban (especially in these surroundings), but I'm no Taliban, no terrorist! What are my weapons? Leaf blowers and dishrags?
You must place regularization and some version of a "guestworker" program back on the fast track. Everybody wins with real reform: Your labor-hungry industries will be happy, and you might even get some of that coveted Hispanic vote. But you need to understand one thing: We migrants will not accept any kind of program modeled on the infamous, exploitative Bracero Program. Braceros, my grandfather among them, had no right to leave an abusive boss, had no recourse to better their working conditions and wages, could not join unions. The guestworker program of the new century must give us the rights that all American workers enjoy. And there must be a mechanism for affording those workers who spend, say, six years living and working in your country the opportunity for permanent legal status.
When Vicente Fox rose to power two years ago, he made a statement that caused you much anxiety: He foresaw the border between the United States and Mexico disappearing within a decade. I tell you today that this prophecy will come to pass. There are no lines in nature, dear sirs and madams. The fact that I am here before you today proves that this is so. I thank you for your kind consideration in allowing me to speak before you today. ¡Qué vivan los mojados! Long live the migrants!
In early March, the Bush Administration adopted a policy that the steel industry as well as the United Steelworkers of America (USWA) have long been agitating for--tariffs on steel imports. The official reason is to give the industry some "breathing space," so it can restructure while shielded from foreign competition. It's more likely that Bush wants to carry some important industrial states in 2004.
Thanks to NAFTA, Canada and Mexico are exempted, as are some poorer countries. Imports from elsewhere will face initial duties ranging from 8 percent to 30 percent, though the levels will decline over the next three years as they are gradually phased out. This is less than what labor and management wanted, but it's still striking coming from a professed free-trader. The Clinton Administration never did anything remotely like it--and if it had, Wall Street, which was unfazed by the Bush announcement, would have panicked about the protectionist threat.
Loud complaints did come from abroad, though. Even British Prime Minister Tony Blair, usually found waving the Stars and Stripes with hysterical glee, denounced the move as "unacceptable and wrong." He urged the industry to restructure rather than hide behind trade barriers--exactly the prescription the United States usually gives other countries (with similar indifference to displaced workers). Blair was joined by politicians, businesspeople, unions and pundits around the world--and by Bush's own frequently indiscreet Treasury Secretary, Paul O'Neill, who told the Council on Foreign Relations that the tariffs would cost more jobs in steel-using industries than they could save in steel.
Indeed the industry is in dire shape. It's lost 35,000 jobs in the past two years. Sixteen producers are operating in bankruptcy. Steel employed 1.5 percent of US workers in 1950, 0.6 percent in 1980 and 0.2 percent in 2000, versus 0.1 percent today. It's hard to believe three years of protection can reverse that long slide.
Clearly the Administration structured its tariffs with an eye on the political map. The kinds of steel offered maximum protection happen to be produced in the electoral battlegrounds of Ohio, Pennsylvania and West Virginia. There's a political pattern to the victims too: Turkey, an important factor in the likely war on Iraq, was spared. Brazil, key to any future hemispheric free-trade agreement, got off relatively lightly, as did Russia, key to many things. The most affected producers are in South Korea, Japan, China, Taiwan and the European Union. Most have filed complaints with the World Trade Organization. The EU is also threatening to retaliate against US steel and textiles, which could limit Bush's political gain in steel country and alienate the textile-intensive South.
Defenders of the tariffs--from US Steel to the union-friendly Economic Policy Institute--argue that everyone subsidizes and protects its steel industry except us. As a result, the US steel industry is getting killed. So the tariffs are necessary to defend it.
Not everyone agrees with this picture of America as victimized innocent. According to the EU's count, the United States has imposed more than 150 measures over the years to protect steel. More than subsidized foreign competition, the US steel industry is suffering from the high value of the dollar, recession, global overcapacity and high pension and healthcare costs.
The United States could have filed a complaint with the WTO, but it would have had a hard time proving its case. Another multilateral route was available too--negotiations to reduce world steel capacity by some 12 percent are well under way. But the Administration and its supporters claim that having the tariffs will strengthen Washington's negotiating hand.
The USWA seems to have no idea of how offensive foreign workers find Bush's big stick policy. Most of the affected countries have higher unemployment rates than ours. The EU, Japan and Latin America haven't seen a boom in decades, and Asia is still recovering from its 1997 financial crisis. Gary Hubbard of the Steelworkers' Washington office conceded that the EU and Japanese unions were annoyed but wasn't sure whether the USWA had consulted at all with its counterparts abroad (no one had ever asked the question before). So much for solidarity.
It's nice to imagine another world, where we protect workers, not their jobs. If we had a good system of income support, retraining, job placement and job creation, we wouldn't have to disemploy foreign workers to fight what's probably a losing battle to save jobs here. Sweden has long had such an active labor market policy, as it's called. Workers wouldn't have to fear innovation if they knew they wouldn't end up on the sidewalk. But that's not the way the world works these days. It's all about market solutions--except when George W. Bush is cruising for votes.
Arriving in San Francisco after a ten-hour drive through a snowstorm, Lucas Benitez sounds earnest and exhausted.
On February 21 the California Public Employees Retirement System stunned financial markets in Asia when it said it would withdraw its $450 million investments in publicly traded companies in Indonesia, Thailand, the Philippines and Malaysia to comply with new investment guidelines on human rights, labor standards and other political factors.
But the new guidelines don't apply to the fund's substantial investments in private equity markets, including its $475 million stake in the Carlyle Group--nor does CalPERS, the nation's largest public pension fund, see any reason why it should. "I don't have any moral reservations at all" about Carlyle, said Michael Flaherman, chairman of the investment committee of CalPERS.
The $151 billion CalPERS retirement fund, the largest such fund in the world, is invested on behalf of California's 1.2 million state workers and includes $35 billion invested overseas. The fund's relationship with Carlyle began in 1996; over the next four years it invested $330 million in two Carlyle funds, including $75 million in Carlyle Asia Partners. The relationship deepened last spring when CalPERS invested $175 million to buy a 5.5 percent stake in Carlyle. The relationship--so close that CalPERS owns the elegant office building in Washington, DC, where Carlyle's headquarters are located--is far more important to Carlyle than it is to CalPERS, industry analysts said. "CalPERS is called an anchor investor," explained David Snow, editor of PrivateEquityCentral.net, an industry newsletter. "When Carlyle goes to other investors, they can say CalPERS is in."
Carlyle's experience with CalPERS has apparently whetted its appetite for labor pension money. According to an official close to Carlyle, the bank is raising money for a $750 million fund to invest in "worker-friendly companies." Of that total, Carlyle hopes to attract at least $250 million in labor pension money, the official said. Questions about pension fund investments in private equity have become more relevant since the collapse of Enron, with which CalPERS had extensive private business partnerships. Several unions, including the Service Employees International Union (SEIU), strongly opposed the partnerships as well as CalPERS investments in Enron stocks and bonds. Those concerns included Enron's support for energy privatization, its employment of former government officials to lobby for privatization and its sordid human rights record in India. (CalPERS made $133 million from one Enron partnership and may see a gain on another; it lost $105 million on its stock and bond holdings.)
Within the labor movement, CalPERS is highly respected for its cooperation in challenging managers and corporations suspected of violating human rights or abusing workers. In 1999 CalPERS supported two union-backed candidates for the board of Maxxam during a bitter strike by the United Steelworkers of America (USWA). Two years ago CalPERS joined the AFL-CIO in an investors' boycott when the Chinese government and Goldman Sachs took Petrochina, a state-owned oil company, public. The fund's new standards for public investments in emerging markets are the culmination of more than two years of sometimes fierce internal debate. CalPERS investment managers must now consider a wide range of non-economic factors, including a country's political stability, financial transparency and record on labor standards, workers' rights and building democracy. Based on a review by Wilshire Associates, the CalPERS pension consultant, thirteen emerging markets, including Turkey, South Korea and South Africa, passed the test, compared with four that failed. The fund had already banned its managers from investing in publicly traded companies in China and India. "CalPERS is taking more steps in this direction than any pension fund we know about," said Damon Silvers, the AFL-CIO's associate general counsel who focuses on investment strategy.
In December Carlyle sent its three founding partners to Sacramento to brief the CalPERS investment board. One, David Rubenstein, made passing reference to the budding media interest in Carlyle, noting that Carlyle's activities are "visible and under increasing scrutiny." To protect the Carlyle and CalPERS names, he assured the board that Carlyle is "following the highest ethical standards" by "avoiding investments in industries including tobacco, gambling and firearms."
But Carlyle's deep involvement with the military-industrial complex and its ties to the Bush Administration continue to raise questions. Both the SEIU and the Communications Workers of America are collecting information on Carlyle to provide to their pension trustees.
Down the road, Carlyle's investments in Asian companies facing downsizing, manufacturers in China and military conglomerates in Turkey could present serious dilemmas. It's not hard to find contradictions: Carlyle already has investments in China, which is on the CalPERS blacklist for public stock markets, and it is gearing up for more. Liu Hong-Ru, a former official with China's central bank who sits on Carlyle's Asian Advisory Board, is a senior adviser to Petrochina, the company whose public offering CalPERS boycotted in 2000. Until last year, Carlyle was the official adviser to Saudi Arabia's offset program, which allows buyers of US military hardware to use their purchasing power to pressure companies to transfer technology and jobs to their economies. "In effect, Carlyle was telling another country how to leverage their purchases of military equipment in ways that create the most jobs in that country, not this country," said Randy Barber, an expert on offsets at the Center for Economic Organizing in Washington.
Some trade unionists also know from experience that private equity funds aren't the best judge of what constitutes a worker-friendly environment. In 1998 several unions involved with CalPERS were shocked to learn that CalPERS was a partner with a private restructuring fund for Asia run by New York financier Wilbur Ross that played a key role in the suppression of a strike in South Korea. The strike led to the imprisonment of forty Korean trade unionists.
Investors in Carlyle's equity funds include state pension plans in Delaware, Florida, Louisiana, Michigan, New York and Texas, as well as in Los Angeles County. Others are the Ohio Workers Compensation Bureau and Union Labor Life Insurance, a union-run insurance company. According to industry newsletters, union pension funds with significant holdings in private equity markets include SEIU, the USWA, the Hotel and Restaurant Employees, the United Food and Commercial Workers, and the Union of Needletrades, Industrial and Textile Employees.
There aren't many Democratic Congressional candidates who can claim that they personally thwarted the agenda of organized labor in the most critical legislative battles of the past decade, but former Clinton White House aide Rahm Emanuel can--and does. Northwestern University, where Emanuel has served as an adjunct professor of communications studies, identifies him as the man who "coordinated the passage of NAFTA." In addition to getting the North American Free Trade Agreement "ball across the goal line," as Emanuel likes to put it, Clinton's former senior adviser for policy and strategy was also a point man for the Administration in fights with unions over granting China most-favored-nation trading status and over fast-track negotiation of a hemispheric free-trade-area agreement that union leaders call "NAFTA on steroids."
That résumé might not sound like one that would be a magnet for labor support. Yet, as the millionaire investment banker seeks the Democratic nomination for an open Congressional seat representing blue-collar Chicago neighborhoods hard hit by the loss of industrial jobs, Emanuel is running with the endorsement of the Illinois AFL-CIO. Weirder still is the fact that Emanuel's opponent in the close struggle to win the March 19 primary, former State Representative Nancy Kaszak, is a lifelong backer of union causes who speaks with passion about the devastation wreaked on Illinois by more than 37,000 lost jobs directly linked to the passage of NAFTA.
What gives? The national AFL-CIO defers to state federations on local endorsements. And Illinois AFL-CIO spokesman Bill Looby offers a realpolitik explanation of his federation's stance in the Kaszak-Emanuel race: "She had the good labor record, but he had the record of knowing his way around Washington. The feeling was, he could be more effective in Washington." Illinois politicos argue, however, that the federation's endorsement resulted more from the machinations of the Daley political machine, for which Emanuel has been a fundraiser, strategist and well-connected ally.
Emanuel is just one of a number of Democrats who, despite playing premiere roles in pushing a trade agenda that AFL-CIO president John Sweeney has referred to as "an assault on American workers, their families and their communities," enjoy AFL-CIO support in tight primary contests with Democrats who oppose unrestricted free trade. As in the 2000 presidential race, when the national federation went all out for Al Gore--who had consistently opposed it on trade issues--several state and local federations this year have made endorsements that are causing a lot of head-scratching among union members who embrace the "fair trade, not free trade" line.
In Texas, for instance, Representative Ken Bentsen, a Houston Democrat who helped the Bush White House secure its one-vote victory in December for fast track, won a dual endorsement just weeks later for an open US Senate seat--even though the man he shares the endorsement with, former Dallas Mayor Ron Kirk, clearly positioned himself on the opposite side of the issue. And divided labor loyalties in a freshly drawn Ohio Congressional district may well allow Representative Tom Sawyer, a frequent supporter of free-trade initiatives, to prevail over Ohio legislators with strong pro-labor records in a race to represent Youngstown and other steel-mill communities ravaged by the opening of US borders to cheap foreign steel.
When it's losing key Congressional battles over trade by a single vote, can labor really afford to send more Wall Street, not Main Street, Democrats to Congress? Paul Waterhouse, a top official with Teamsters Local 705 in Chicago, doesn't think so. "Unions begin to lose faith with their members when you tell them year after year after year that trade is the central issue and then at election time say never mind," says Waterhouse, whose 21,000-member local is backing Kaszak over Emanuel. Trade was a critical issue in convincing the Teamsters, the Machinists and a number of other blue-collar unions to break ranks with the state labor federation and endorse Kaszak. Indeed, to the extent that there is union "street heat" working the district, it appears mostly to be for Kaszak, who is described by Chicago Sun-Times columnist Steve Neal as having a record as "a genuine populist and community activist" that contrasts with Emanuel's "dubious claim that he has spent his life fighting for working families."
Intriguingly, the group that has placed an estimated $400,000 in advertisements on Chicago television complaining about Emanuel's support of NAFTA is not the labor federation that led opposition to the trade deal. It is EMILY's List, the national donors' network that backs pro-choice women candidates. EMILY's List was looking for an issue that would allow it to clearly distinguish Kaszak's Chicago roots from Emanuel's Washington-insider status. The Teamsters' Waterhouse says the group was wise to focus on trade policy. "Trade is an important election issue for working people in places where jobs are disappearing," says Waterhouse, who argues that unions need to recognize the power of the issue, as well as the importance of remaining consistent on it. "It really is a matter of credibility. We need to be the ones standing strong on these issues. If we say that trade is a central issue and then back people at election time who are on exactly the wrong side of the issue, we might as well say to politicians, Go ahead, screw us again."
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