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The Age of Inequality


ISSUE:  Fall 2010

Pivotal Decade: How the United States Traded Factories for Finance in the Seventies, by Judith Stein. Yale, $32.50

Stayin’ Alive: The 1970s and the Last Days of the Working Class, by Jefferson Cowie. The New Press, $27.95

The cover of the book, Pivotal Decade, with a photo of cars in the decade of the 1970's

Long before Thomas Frank puzzled over middle America’s switch from progressive to conservative politics in his best-selling book What’s the Matter with Kansas?—his examination of why people would vote for politicians whose platforms clearly hurt their household budgets—Richard Nixon had already figured it out. Referring to the upcoming 1972 presidential race, Nixon told his advisers “The real issues of the election are the ones like patriotism, morality, religion—not the material issues,” adding that if “the issues were prices and taxes, they’d vote for McGovern.”

The “they” was working-class America. Nixon, as astute and cunning as ever, had come up with a scheme to transform the New Deal’s backbone—unionized and non-unionized white American workers, from regions as culturally and ethnically diverse from each other as the Northeast and the South—into the ramrod-straight spine of a New American Majority. (Unsurprisingly, he made clear this strategy offered “no promise with Jews and Negroes.”) His election pitch would have nothing to do with making sure construction and steel workers had more disposable income to spend on goods or services. It would, in fact, do nothing to address traditional economic concerns such as growth and attaining full employment—standard policy issues since the FDR years. But it would have everything to do with affirming the values and the self-worth of the blue-collar man (and “man” is the right word), casting the Democrats and its cadres of newly empowered supporters—students, African Americans, Mexican Americans, gays and lesbians, feminists, and anti-war proponents—as the antithesis of everything that made the country great.

The cover of the book, Stayin’ Alive: The 1970s and the Last Days of the Working Class by Jefferson Cowie, with a photo of a working class man holding a wrench

As Jefferson Cowie puts it in his engrossing, illuminating book, Stayin’ Alive: The 1970s and the Last Days of the Working Class, a vast swath of Americans, namely middle-class liberals, many of whom shared the same bread-and-butter interests of good jobs and secure futures, would be demonized. The country music of the era—epitomized by Merle Haggard’s anthem glorifying church-going, pot-abstaining America, “Okie from Muskogee” (which was written as a joke, Cowie points out)—crystallized the flattering portrayal held of themselves by Nixon’s New Majority, versus their contemptuous view of the denizens of Woodstock. “One was real, the other surreal; one worked, the other played; one did the labor, the other did the criticism; one smoked dope, the other drank whisky; one built, the other destroyed; one was for survival, the other was for the revolution; one died in wars, the other protested wars …”

What’s stunning is that Nixon’s landslide win in 1972, thanks to this New Majority, serves as something of a highlight for economic justice in this country over the past thirty-eight years. To ensure his strategy, Nixon called off the hounds on Big Labor (the AFL-CIO, the United Auto Workers, etc.), a shocking tactic for a Republican. Part of the GOP’s very identity during the post-war years rested in antagonizing unions. Nixon, however, wasn’t going to further the progressiveness of the New Deal reforms, especially when it came to using the government to regulate the economy in favor of the working class. But he wasn’t going to undermine them altogether, either. (In 1970, as an early enticement for the labor vote, he signed into law the Occupational Safety and Health Act; he was also floating around an idea for redistributing wealth in the form of tax breaks.) He was a pragmatist. He needed the votes. Besides, it would have been unthinkable to abandon the Keynesian economic model. The US had grown incredibly rich off it.

Judith Stein, in her elegant, pinpoint dissection of the economic mistakes and far-reaching policy decisions of the seventies, warns us to not make too much of Nixon’s nifty bit of judo. There’s a temptation to cast the radical shift of blue-collar (and a lot of other variously colored collars) support from the Democrats to the Republicans during this era as a cultural phenomenon, beginning with Nixon’s win in 1968, when he squeaked into the White House, and culminating with Ronald Reagan’s landslide win in 1980, thanks to the votes of millions of Democrats. But that division wasn’t due solely to Nixon’s rhetoric or a backlash to the counterculture. It wasn’t simply about an enlightened common man rejecting government intervention in the free market, doing away with corrupt organized labor, and eventually electing a beaming, optimistic leader to pierce the malaise Jimmy Carter couldn’t do anything about. “The Pivotal Decade,” which is the telling label US historians now apply to an era mostly seen as a pop culture joke, was a time in which unions, Democrats, Republicans, and a stun-gunned economy (Stein emphasizes that the seventies “was the only decade other than the 1930s wherein Americans ended up poorer than they began.”) all played a role in transforming the working class—and eventually dividing the entire country—into the cultural warriors of today.

In their complementary books, Cowie and Stein show us how this came to be and why an inability among Democrats and labor to address economic concerns eventually led to the US, in Stein’s words, replacing “the assumptions that capital and labor should prosper together with an ethic claiming that the promotion of capital will eventually benefit labor—trading factories for finance …” That shift has made it possible for 1 percent of the population to own 25 percent of the wealth. It cleared the way for globalization and left in the rubble the idea of making economic common cause among middle- and lower-class Americans.

 

Until the heartache, times were mostly good. Back in 1945, only 54 percent of Americans, according to Stein, owned cars and only 44 percent owned homes. By 1970, there were “as many private cars as families,” and 63 percent of us owned homes. Between 1947 and 1973, the income of the lowest fifth grew 116 percent, the top fifth’s income grew by 85 percent, “and the middle gained more than the top.” This “Great Compression” of wealth was thanks to the New Deal and its embrace of Keynesian economics. (Keynes, Stein writes, “discovered that governments could either spend money or reduce taxes to increase the demand that would generate more private investment, leading to full employment. Keynes was no radical, but he believed that mass unemployment was unjust and a threat to free society.”) But cracks were already showing, financially and culturally. The superiority of the US economy after World War II was so unimpeachable that in the fifties the nation “stepped back from requiring Cold War allies to implement free trade and even permitted discrimination against American goods because of Europe and Japan’s fragile economic and political circumstances.” These rules made it attractive for US corporations to set up plants and offices overseas to avoid the disadvantage of importing goods from the States. By the late sixties, US productivity had dropped. Real wages for manufacturing workers fell 82 cents an hour from 1965 to 1969. Lopsided foreign competition, though politically necessary, was taking a toll. “These tell-tale economic signs were buried,” Stein writes, under the tumult that defined the late sixties: assassinations, rioting, Vietnam, to name a few of the earthquakes rattling the land.

There were much more visible signs, though, flaring from the conflagration of upheaval, that the official working class—defined at the time as white ethnic (Poles, Irish, Italian, etc.) union men—and the larger unofficial one were not happy with their lot. In 1970, Cowie notes, there were “more than 2.4 million workers engaged in large scale work stoppages, 34 massive stoppages of ten thousand workers or more, and a raft of wildcats, slowdowns, and aggressive stands in contract negotiations.” It was also when Jock Yablonski and his wife and daughter were murdered in their home at the behest of the head of the United Mine Workers of America. The work stoppages and that family massacre were, ultimately, about the same thing: the obvious struggle to get unions to improve the quality of life of their members. In Lordstown, Ohio, young workers who identified with the burgeoning counterculture shut down the GM plant after they were expected to crank out 100 Chevy Vegas an hour; before that they had been producing cars at a just-as-mind-boggling rate of one per minute. The crushing rate of production and management’s “zero-tolerance, get-tough policy with regard to any form of dissent against regulations or production requirements” were too much to bear, no matter how good the pay. Meanwhile, textile workers in Texas and grape pickers in California (many nonwhite and female) were struggling to get a decent wage at all. 1970 was also the year Bureau of Labor statistics showed that 60 percent of working-class families were poor or hovering between poor and adequate income levels.

The rank-and-file under the umbrella of the AFL-CIO, the rich industrial and craft union, were trying to get their leadership to see that there’s not much point to wage increases and hefty pensions if you have to spend thirty years of your life feeling like a cog and eventually getting worn down to nothing by the time you retire. It was important to stop cozying up with factory owners and working with them solely on ways to increase profits for both sides. But power-brokers like George Meany, the head of the AFL-CIO at the time, couldn’t fathom this shift in culture— to the idea that how you made your nice living was as important as being able to make a nice living. As far as Meany and his fellow Depression-scarred peers were concerned, Cowie writes, the unions’ only goal was “to support and grow, often quite vigorously, the promise of the existing Keynesian dream of full employment and broad-based consumption and, more often than not, fight off quite vigorously anyone or anything that challenged its basic structure—including at times the unions’ own members.”

The bosses were unable to share their power or to appreciate the progressive aspect of unions—their ability to improve the lot of the afflicted and to produce a more just society. Herein lay the seeds of labor’s destruction. Appalled by a reform-minded Democratic Party that moved important decision-making (like the nominating of presidential candidates) out of the smoke-filled backrooms full of men like Meany and out onto the convention floor peopled by women, the young, and brown and black Americans, and aghast at a rank-and-file that demanded transparency from their leadership, Big Labor focused all its attention on squashing dissent instead of figuring out the working class’s future. A “former plumber from the Bronx, New York,” Meany “represented everything young activists derided—calculation, self-interest, compromise,” Stein writes. “The young,” which is to say the influential counterculture, “valued morality, selflessness, confrontation.” These long-haired activists agitating for gay rights and the plight of African Americans and other people of color—these college types—earned Meany’s contempt.

Instead of formulating a plan to unify a great cross-section of Americans working in a variety of new clerical and service industries (among them, those very college kids, being produced by campuses in record numbers), instead of redefining the working class so it wasn’t just about white steelworkers and coal miners but encompassed clock-punchers from all walks of life, labor’s leadership did nothing—or worse than nothing. Cesar Chavez’s nascent United Farm Workers was viciously and violently undermined by the Teamsters, who came to Delano, California, to snatch away contracts from the UFW. More notoriously, the AFL-CIO did what it could to swing the 1972 presidential election from pro-labor, anti-Vietnam George McGovern to the incumbent in the White House whose rating for voting “right” on important labor issues was somewhere in the 20th percentile. McGovern’s rating was 93.5. It chose to endorse neither man for president, an act of spite stemming from the loss of Big Labor’s unassailable clout within the Democratic Party. So in a way, Nixon was wrong. The election would indeed be about material issues.

 

Still, there was a flicker of hope. After Nixon’s re-election, labor saw what a mistake it had made. The AFL-CIO fell out with his administration over wage freezes. Labor leadership needed to get the rank and file to vote for its economic interest again. Nixon was determined to keep the votes of the working class, making their material needs, if not a priority, then consequential. Then two things happened: Watergate and OPEC. With Nixon’s disgraceful exit from office, he became, Cowie writes, “the last president to work within the logic of the New Deal political framework of material politics, … and the last to seriously court labor.” The harsh economic realities ushered in with OPEC first raising the price on oil, then embargoing oil because of US support of Israel in the Yom Kippur War, left the economy reeling. Inflation climbed to 8 percent in 1973. This, according to Stein, was the end of the Great Compression, as “wages began to stagnate, largely because of the sharp drop in productivity.” By January of 1974, inflation reached 11 percent. Throughout that year, Stein writes, “the automobile and construction industries had been in a slump. The former because of high gasoline prices, the latter because of high interest rates … Unemployment among construction workers was double the national average.” Texas Instruments, “the nation’s largest semiconductor maker,” would announce the layoff of at least 2,000 employees. Suddenly, the nation couldn’t afford to acknowledge the working class. This became the pattern for the rest of the decade.

 

It was one thing for economic turmoil to happen under Nixon’s watch, then Gerald Ford’s, but it was another entirely for the working class to suffer under a Democratic White House and Congress. When Carter was elected in 1976, unemployment was at 8 percent, and his victory indicated, Stein writes, “a return to the class voting that had been temporarily suspended in 1972,” despite still simmering disagreement over social issues. But a Democratic Congress that didn’t identify with the priorities of the New Deal focused more on race and gender issues, foreign policy, and the environment (what Stein calls “post-economic” issues), instead of addressing problems with the economy, such as what to do about competition from Europe and Japan, which was now throttling US manufacturing. At the same time, Carter and his advisers could not find a traditional Keynesian approach to solving the downward-spiraling economy.

 

Stein gives all the bloody details on the frustrating missteps and best efforts of the Carter Administration. Yet one event in 1978 could neatly sum up what a debacle those four years were. By then, as Carter was vacillating between tax reform and stimulus spending, “[f]inanical interests and Wall Street filled the policy void, convincing a Democratic Congress to pass tax legislation that discarded historic principles of interclass equity and methods of promoting business investment by simply sending money to the rich. Not only was the reduction of the capital gains tax a wasteful method of increasing investment, it was also paid for by increasing the middle-class tax burden …” Unionized industrial workers, and all those service and clerical workers with whom labor leadership should have made meaningful alliances with back in 1970, were thus further alienated from the Democrats.

Stein calls this era after 1973 the Age of Inequality—the age we live in now. Its vitality was boosted by the coming of Reagan, who embodied both the divisive cultural politics formulated by Nixon and the GOP’s true loathing of the New Deal. His “new recipe for economic growth prescribed freeing capital from taxes and unions and liberating markets from government rules.” When he fired thousands of strikers from the Professional Air Traffic Controllers Organization in 1981, he set a lasting tone of disdain toward organized labor. And when the economy started to grow again after 1982—GDP rose from a negative 2.2 percent in 1982 to 7.2 percent by 1984, and averaged between 3 and 4 percent growth through the rest of the eighties—he promoted a kind of non-Keynesian economy seemingly capable of great things. Yet this recovery wasn’t what it seemed. “Reagan stated that the tax cuts would increase savings and thus investment to improve productivity and growth,” Stein notes. “But the recovery was led by consumption, not investment, and radically altered the composition of the economy, promoting nontradable sectors like real estate, financial services, and defense and hobbling tradable manufacturing and agriculture.” It’s hard to argue with success. The recovery, abetted by the alienating politics of the Cold War and the cynical courting of the Christian Right, made it difficult to defend the practices of the New Deal. Reagan’s “new principles took hold.” This is how we wound up trading factories for finance. This is how the unions—whose power once created better work conditions and higher pay for all laborers—came to die.

Reading Cowie’s and Stein’s books, one cannot help but be struck by the awful familiarity of the cultural and economic crises they describe. Then as now, what sparks our passion are questions of gay marriage, abortion rights, and affirmative action; material concerns like comprehensive national health coverage and progressive taxation, even after the financial meltdown of nearly two years ago, are painted as Communist plots or dreams bound to fail. The state has become either an outright enemy or a bumbling idiot, incapable of improving the common welfare. We now define ourselves by how we perceive our government (as malevolent or incompetent) not by whether we see ourselves as part of the vast majority of Americans. Most of us—from the lower- to the middle-class, from GED-holding blue-collar dry-wallers to college-grad white-collar cubicle-dwellers— can’t meaningfully improve our lot simply by being employed full time, and for that reason we need the government to help us make life equitable again. If bell bottoms and disco were the entire legacy bequeathed by the seventies, we would have been lucky.

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