What I Do
IBEW helps build Busch Gardens' newest roller coaster.
IBEW helps build Busch Gardens' newest roller coaster.
Thank you for inviting me to return to speak to you today. It’s an honor. And it’s always good to see my friend Charlie Heeter, my counterpart at the OECD, and to talk with you all and to listen.
It has been awhile since I last spoke to you here, just short of two years, and quite a bit has changed, and yet the debate on jobs and debt remains stuck, both here and around the world.
I point that out, honestly, because I’m almost embarrassed at how little my remarks today have changed from the words I said two years ago. Maybe I’m trying to say that I’m not the only one who’s stuck in a rut. We all are.
The politics of austerity still hold the world in a vise-like grip. The gap between the world’s wealthiest people and the rest of us -- already at a historic high -- continues to grow. Joblessness plagues almost every country on the globe—and is actually rising worldwide, even as we see modest improvements here in the United States.
So what’s the problem?
Two years ago, I said our economies would not recover until our governments and global financial institutions begin to govern -- not just for the banks -- but for the well-being of all of us.
I’ve been thinking hard about that basic idea—the idea that we must govern for the well-being of all of us.
And yet now it occurs to me that all the terrible ideas of the last twenty years—deregulating finance, responding to economic crisis with job-destroying fiscal austerity and attacks on workers’ rights—all of these ideas were pushed by people who claimed those so-called “fixes” would benefit all of us.
This illustrates why the test of what makes good public policy is not a matter of good intentions, but a matter of applying the lessons of history and learning from rigorous analysis of the contemporary world, and, most of all, keeping watch on the interests behind the spin.
Take for example the idea of “expansionary contraction,” as austerity is sometimes called, the idea that drastic cuts to public spending will promote private spending. It sounds great for everybody.
Except it isn’t, and it never has been. History is filled with the economic and political wreckage created by politicians and bankers following the recommendation of Herbert Hoover’s Treasury Secretary—Andrew Mellon, who famously said in response to the Great Depression: “Liquidate everything.”
Turning to the present, if austerity works so well, why does the IMF economic forecast show growth collapsing in Europe? If austerity worked, Greece and Spain and the U.K. should be enjoying gangbusters growth. Obviously, that’s not the case.
In fact, the results of austerity were summed up best by one of its most prominent advocates, OECD Chief Economist Carlo Pier Padoan, who said—and this is a direct quote—“many countries are pursuing the right policies but nonetheless going over the cliff.”
The message of the global labor movement is simple: Please consider this possibility: if your country is going over the cliff, you may not be pursuing the right policies.
Looking at this moment more broadly, the truth is that at a certain level economics is simpler than most people give it credit for. Dollars are dollars. Euros are euros. If working people have fewer dollars or euros, we spend less, and when that happens, our economies contract.
And that gets us to the main topic of this conversation -- jobs.
The economies in America and around the world need jobs. The number of unemployed workers worldwide will likely rise by more than 5 million in 2013, topping more than 202 million.
Wages in the United States and around the world have been flat or falling, and private investment has been socked away rather than used to boost economies.
Why is mass unemployment catastrophic? Think of the hundreds of millions of people who could be creating wealth and building our economies. Think of the millions of young people who live with unemployment rates between 25 and 50 percent, whose dreams of opportunity slowly fade. Those young people live in households where older adults are losing key retirement benefits and good-paying jobs.
Last week in Paris the Secretary General of the OECD, Angel Gurria, gave a great speech about how we need jobs, equality, and trust. And yet the next day, when the OECD presented its Economic Outlook—one of its cornerstone publications—it was the same-old, same-old. More cuts. More austerity. It’ll do what austerity always does: destroy jobs, increase inequality and undermine social trust.
I find all the talk of trust as a justification for austerity to be particularly infuriating.
The fact is that workers everywhere are losing trust in our governments and institutions, and for good reason. Even the most reputable voices and organizations are ignoring their own data to continue to push the same destructive policies.
Instead of fluffy rhetoric and ideas that simply don’t work, it’s time for all of us to demand policies that work -- like investments in education, infrastructure, job training, and the green jobs that come with sustainable development.
And let me just say a few words about trade between the EU and the United States: We have an opportunity before us to create a new trade model -- a high-road model. We need to avoid new deals like the Trans-Pacific-Partnership that follow the low-road model.
Overall, our economies need fewer low roads and more high roads. It’s time for all of us to embrace labor market policies that support and train unemployed people, and help them find jobs, and enforce our right to a collective voice on the job. That’s the best way to raise living standards, improve workplace safety and build broad prosperity, not just for working people but for everybody.
But most of all, it’s time for all of us to stop wishing for a short cut to a prosperous future.
Austerity doesn’t work—under any name or by any measure. Eurozone leaders are beginning to accept this idea, almost as we speak. We should do the same.
It’s not enough for us to end the cuts, though, we need a positive program. We need a global New Deal—a massive effort of investment and jobs whose goal must be the creation of a minimum standard of living for all of us who share this planet. There is no longer any excuse for hundreds of millions of people to live in poverty, cut off from the basics of modern civilization.
And there is no longer any excuse for the race to the bottom in global supply chains whose deadly results we saw in Bangladesh last month and just this week in China.
The global workplace cannot be a deadly trap for the poor and the voiceless. It is time for us to use binding agreements to hold account the governments and global brands that together created these tragic conditions. It is time for us to protect worker rights and improve working conditions.
That accountability starts right here. The United States must enforce our own trade laws by suspending or canceling GSP trade preferences for Bangladesh, until Bangladesh complies with global labor rights standards and enforces fire and building codes.
We have the resources needed to ensure that all workers benefit from a global New Deal. The United Nations has estimated that for an investment of only $800 billion—the amount the U.S. committed in TARP to bail out our banks—every person on earth could earn enough to afford adequate housing, clean water and sewage disposal, electricity and Internet access, primary education, and paved roads.
Imagine the benefits of such an effort—the political benefits, the economic benefits for all of us as newly integrated citizens of the global economy. Imagine the increase in global demand. Imagine the way such policies would spur innovative ideas.
Yet of all the ideas on the drawing boards of our governments today, why is a massive campaign of sustained public investments so conspicuously absent?
For years in the U.S., we have talked and talked and talked about our millions of unemployed construction and manufacturing workers. We have a $2 trillion deficit in basic infrastructure—this is a real deficit which results in bridges falling into rivers and trains going off the rails. And we have proposed another $2 trillion to build the infrastructure of the future—a smart energy grid, nationwide broadband and high speed rail, among other improvements.
Why don’t we see this deficit as the opportunity it is? We could use this investment to build ourselves toward a prosperous future. And to cap it all off, the United States can still borrow money in virtually unlimited amounts at 3% interest or less. It’s crazy not to do it.
Listen. We’re not just telling everyone else to invest in the future. We’re doing it, too, in the American labor movement. We are preparing to re-define what it means to be a union member, and to open the doors of the labor movement to anyone who wants in. We’re building for the future, and we would love to have your input.
In advance of the upcoming AFL-CIO Convention this September, we are working with our members, allies, academics and groups like this one to develop new thinking and momentum behind a variety of solutions, including a global New Deal. We are holding listening sessions at home and abroad to find the best set of proposals to stimulate our economies and get workers back to work. I invite you to join us in some of the conversations. The easiest way to join is to check the AFL-CIO’s web site. Please join us.
My friends, we hope that with strong public support, we can demonstrate the failures of austerity here and abroad, and push back against the politicians who holler against government spending on a sunny day, and then clamor for government spending after a disaster?
We need to put people to work. This tepid, so-called recovery hurts all of us. Our communities are suffering. Families are hurting. Retirees need security. Young people need jobs and a future.
And any student of economics could show you hundreds of examples, not wishful theories based on arcane formulas and counter-intuitive mumbo-jumbo, but real-life and practical examples, of the ways that long-term public investment crowds-in private investments. It works.
Those public and private dollars can and will spark real and sustained growth that will rebalance our economy and put global economies on an upward cycle. It worked before, and it will work again.
As I said two years ago, and I mean it, please join me and America’s working people as we call for large-scale investments to create jobs, to rebuild our middle class and to lead us all forward.
Thank you. I look forward to hearing your thoughts and questions.
