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Mr. President, You’ve Asked Nicely. Now What?

Stephen Herrington, The Monday Morning Economist

Posted: February 8, 2011 04:20 PM

The notion of 9 percent unemployment and 17 percent underemployment and hardcore unemployed as the new structural normal is just simply not acceptable. The U.S. Chamber of Commerce not only doesn’t care, it seems they consider deep structural unemployment to be a success for their agenda of breaking the power of labor completely. A simpleton’s analysis tells the Chamber that profits rise as the cost of labor declines. But how long can the Chamber of Commerce mission of scuttling the labor market be based on this false conservative truism? Until everyone on Earth is so poor that nobody can buy anything that the Chamber companies produce? Then the Chamber may change their minds.

The Chamber’s position now relies on someone other than business creating the high-paying jobs that created the economic colossus of America. Unions are Chamber enemy number one and Democrats are number two because they, traditionally at least, support fair labor practices. In this view, the Chamber perfects the art, for it surely can’t be science, of short-term thinking. Profits must be had now, and anything that produces them right now is good, even if it’s suicidal in the long run. Rather than work hard to create better product and win markets with it, making things cheaply is the new entrepreneurial genius. In reality, it’s lazy and stupid, two terms that now define American business.

Perhaps the president is resigned to the notion that you can’t argue with lazy and stupid businessmen. Or he may be one of them now, having risen to the most powerful office in the world where the temptations are commensurate with the stature of the office. But then why would he go, hat in hand, to the Chamber to ask them nicely to help save the damned country from a generation, or worse, of depression level jobs? Or was he warning them that should they not trickle down a bit, that the U.S.A., over which they wax patriotic, may not be there for them to exploit much longer if they don’t help resuscitate it?

If this Obama Chamber address was as much warning as supplication, it was the right tone to set. Warn of consequences and ask for compliance. Behavior modification’s earliest stage.

Conservatives and the Chamber have an alternate reality based in a shrill and desperate revisionist history of what the Roosevelt presidents did to and for them. For the 65 years that followed the last Roosevelt’s presidency, the conservatives have harbored hatred for the New Deal and nurtured an industry of alternate reality. Lost in the conservative reality is the role of the American middle class in creating the giant consumer economy on which the fortunes of countless American companies were built. More lost still is the fact that unions and the satisfied wage ambitions of labor are indispensable to the prosperity of any and every business built since 1940. To work to force declines in wages is to destroy the hull of the craft that buoyed American business as well as American workers. What is good for workers is good for business, and only after that is what is good for business good for America.

Wage concessions extorted from labor may increase short-term profits on a per company instance but reduce business in the macro economy in the same economic moment. The Chamber would argue that Friedman was right and that production creates demand. Cheap labor creates demand by making goods more cheaply until goods can’t be made at all. They can’t constitutionally admit the obvious, that demand precedes production. The fact that American business is, right this very minute in response to the Great Recession, acting on the certainty that demand must precede production is lost on the Chamber in it’s entirety. You have to ask how anyone can be that obtuse.

So to modify the behavior of Chamber members and business, you must break through over half a century of denial and free-market fantasy that has been nurtured by a free-market clergy as if it were a mystical Holy Grail. It may not be possible to change conservative minds without letting the whole conservative business leadership fantasy play out to its logical conclusion, the utter forfeiture of U.S.A. status as a world power. You must assume by their behavior that the Chamber really, really, wants that to happen. Some intervention will be required to prevent their fantasy from becoming reality, and it’s not likely to be achieved voluntarily.

Now, we must ask Obama, what now? With Congress gridlocked at the worst time in history for it to be gridlocked, the entire burden falls to the persuasive powers of the Executive to move the public to recognize what is in their interest. To engage and expose the decrepitude of conservative thought is easy. To get people to care about having that conversation is hard, given that media doesn’t think it sells. Cat-fight controversy sells. No involved story about the inadvertent conspiracy of stupidity and shortsightedness of America’s Chamber of Commerce will sell. At least it hasn’t sold yet. Maybe after another two years of double digit unemployment the public will develop an appetite for it. People have the hunger, they just don’t know which item on the menu will feed them rather than starve them.

It seems Obama’s intent is to be patient and set the table for such an appetite. The passivity of the American electorate keeps us in the middle of the road. The expectation, born of generations of New Deal economic stewardship, is that the economy will right itself in due time. The problem is that faith in the economy is based in competent governance of the economy that wasn’t noticed because it worked time and again. That competence is gone, replaced by free-market ideology in federal and state governments, and the middle of the road now leads down into a deepening ditch of poverty for working Americans. You can’t shout down passivity though. And patience is hard.

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