Countervailing Power

When I was growing up in Anderson, Indiana, both my parents were passionately anti-union. There was a reason: my father had a small auto-parts business, and frequent strikes in Anderson’s then-dominant automotive plants meant fewer customers. Furthermore, there was a considerable amount of what can only be described as union “thuggery” that occasionally erupted. So I grew up with a very dim view of unionization.

Let’s just say I’ve developed a more nuanced perspective.

What my parents and I failed to recognize “back in the day” was that it’s not good when either unions or management holds vastly superior power. The ideal is balance, or what has been described by scholars as “countervailing power.”

The phrase “countervailing power” was coined in the 1952 book American Capitalism: The Concept of Countervailing Power by the economist and social thinker John Kenneth Galbraith. Galbraith argued that, in a modern technological society, most important markets would be dominated by a few large firms. Their market power and political influence could be checked, however, by countervailing power—both public, in the form of a strong regulatory state, and private, in the form of labor unions and consumer cooperatives. Arguing that measures to strengthen the bargaining power of unions and farmer groups were “among the most important legislative acts of the New Deal, all designed to give a group a marketing power it did not have before,” Galbraith asserted that “the support of countervailing power has become…perhaps the major peacetime function of the Federal Government.”

The equation of the New Deal with government-supported checks and balances in the market may seem surprising today, when many associate the New Deal with social insurance programs like Social Security or Keynesian deficit spending in downturns. But this view was the conventional wisdom (another phrase coined by Galbraith) of many New Dealers. For example, in 1940, the journalist John Chamberlain wrote: “The labor union, the consumers’ or producers’ cooperative, the ‘institute,’ the syndicate—these are the important things in a democracy. If their power is evenly spread, if there are economic checks and balances to parallel the political checks and balances, then society will be democratic.”

When there is no countervailing power–when those sitting on one side of the bargaining table are easily able to dominate or intimidate those on the other side– the result is inevitably negative. The longtime imbalance between management and workers in the auto industry has enriched  managers–obscenely– at the expense of those who make their companies profitable: CEO compensation for 2022 is reportedly  $29 million for GM’s Mary Barra, $21 million for Ford’s Jim Farley and $24.8 million for the CEO of Stellantis (and as the Free Press recently noted,  those weren’t even the highest payouts to an individual last year at the companies).

It’s not difficult to understand why union members– who had agreed to reduced wages and benefits in 2009 when the economy tanked and who still haven’t caught up– would be resentful.

In the more than half century since I left Anderson, the precipitous decline in the power and influence of organized labor has led to a number of unfortunate consequences. As the linked essay notes, one of those consequences has been an “upward shift of political power on the center-left to college-educated progressives,” and a politics that is more   technocratic and top-down. Another has been the captivity of the GOP  to the anti-labor agenda of the party’s libertarian donors.

Technocratic neoliberalism ignores the values and interests of the two core constituencies of the New Deal—the working class and rural Americans. Unrepresented in either party, these groups are drawn to outsider populists, including maverick old-school New Dealers like Sanders and right-wing demagogues like Trump.

I think the above paragraph oversimplifies the reason working and rural folks have flocked to Trump –it overlooks the extent to which his appeal is to a still-potent, still widespread racism. The racist element of his appeal been repeatedly documented.

But it’s also true that when people feel powerless or abandoned, racism that might otherwise be latent rises to the surface, so the observation isn’t entirely wrong.

The bottom line is that bargains made by unions composed of the laborers whose prospects are on the line–the people with “skin in the game”– are infinitely preferable to laws passed by well-meaning elected officials. The parties to any negotiation are privy to the issues particular to that workplace, and an agreement hammered out between employers and workers is unlikely to stoke the same level of resentment as a measure imposed by lawmakers.

The recent rise in union activity may be disruptive, but it’s long overdue.


Why Knowledge Actually Matters….

I’m constantly amazed by the number of Americans who look askance at candidates for public office if they have government experience and/or training– the voters who express their preference for electing “outsiders” who will not be “disadvantaged” by actually knowing how government works.

I’m pretty sure those same voters wouldn’t choose a doctor who had never been to medical school, or a mechanic who didn’t know where their car’s engine was located.

Doctrinaire libertarians and “small government” conservatives may be nostalgic for the days of the Vermont Town Hall meetings, but this country is not going to get rid of the agencies that inspect our food and drugs, ensure that airplanes don’t crash into each other, keep businesses from colluding to fix prices, corporations from lying to prospective shareholders, and more. (Nor–despite the fantasies of this Administration and the real harm it can do–are we going to get rid of environmental rules and regulations, enforcement of civil rights laws, or public schools.)

Voting in a “management team” that doesn’t understand what government agencies do or how they do it, a team that is unfamiliar with constitutional checks and balances, and ignorant of settled U.S. foreign policy, diplomatic norms, and the definition of the national interest is like asking the company janitor to assume control of a multi-national corporation.

Even if he was a really good janitor, it isn’t going to go well. If he was an unstable and intellectually limited janitor with very spotty cleaning skills , he’s going to do a lot of damage to the company.

A couple of examples may illustrate the problem.

During the Presidential campaign, Donald Trump confidently asserted that he would bring back jobs in the coal industry. He argued that “burdensome” regulatory activity–like keeping miners safe and coal ash out of Americans’ drinking water–had caused the industry’s declining employment.

But as this article and several others explain, what’s killing coal is the market, not regulation.

The U.S. coal industry basically imploded as Chinese demand slipped. Peabody Energy, Arch Coal, Alpha Natural Resources, Patriot Coal and Walter Energy have all filed for bankruptcy over the past two years. (Peabody Coal is nearing a plan to pull itself out of bankruptcy.) The number of people who work in coal has tanked, too. In 1985, the industry employed 177,000 people. At the end of 2008, that number fell to 86,000. It was at 56,000 by last year.

“The market is telling coal that it’s a dying fuel source because we have abundant supplies of natural gas that are indigenous to the country,” Pete Fontaine, a veteran environmental lawyer who works for fossil fuel companies, told HuffPost. “You can scrap rules that make coal mining more expensive, you can scrap the Clean Power Plan, but ultimately coal is on the way out.”

Over at Dispatches from the Culture Wars, Ed Brayton points to another example:

Like virtually every other environmental measure, Trump is trying to roll back the CAFE standards for efficient engines in cars and trucks, on the premise that such regulations increase the price of cars. But in reality, doing so would actually cost consumers more money.

Trump’s misguided move to appease the ever-myopic U.S. auto industry would undo efficiency gains that will provide consumers $98 billion in total net benefits, primarily from reduced fuel use. Individual car buyers would lose “a net savings of $1,650” (even after accounting for the higher vehicle cost) as the EPA concluded in its final January “Determination on the Appropriateness” of the standards.

The savings from the new standards are so significant that the EPA calculates “consumers who finance their vehicle with a 5-year loan would see payback within the first year.”

Rolling back the standards would also boost U.S. oil consumption by 1.2 billion gallons and increase U.S. carbon pollution by 540 billion tons over the lifetime of the model-year 2022–2025 cars.

When managers–private or public–don’t know what they don’t know, and are unwilling to educate themselves or consult people who do understand the way things work, they advocate “solutions” that make matters worse.

When experts are scorned as “elitists” and scores of knowledgable agency employees are told to pack their bags, what comes next won’t be pretty.

Isaac Asimov, the brilliant scientist and science-fiction author, said it best:

“There is a cult of ignorance in the United States, and there has always been. The strain of anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that ‘my ignorance is just as good as your knowledge.”

That cult of ignorance has given us an Administration that rejects science and subject-matter expertise in favor of conspiracy theories and authoritarian ideologies.

I wonder–if America survives this, what lessons–if any–will we learn?


Sorry, Ericka–It Isn’t Change Indy Is Spurning

I generally like Ericka Smith’s columns–indeed, she and Matt Tully generally write the only things worth reading in what used to be a real newspaper. But she got this one really, really wrong.

I know a fair number of police officers, and a significantly larger number of politicians. I also have several colleagues who work closely with IMPD as consultants and researchers. I have not heard any of them criticize Frank Straub’s ideas for change. What I have heard–frequently–is criticism of Straub himself.

I have never personally met the man, but the picture painted by those who do is consistent: he came to Indianapolis with an “attitude.” He gave  orders but never listened. He let everyone know that he was from a real city, and knew lots more than the “rubes” here in India-no-place. As willing as he was to dish out criticism, he was incredibly thin-skinned and defensive if anyone dared question or criticize him.

Think about your own job: how likely would you be to accept changes initiated by a boss who acted like that?

We teach public and nonprofit management at the School of Public and Environmental Affairs. One of the central points we make is the importance of “owning” change. Most people–not just in Indianapolis–are uncomfortable with change; in order to effectively shift an organization, a manager must create an atmosphere of trust, must obtain not just the acquiescence, but the understanding and “buy in” of the employees who must implement that change.

If a manager doesn’t do that, it doesn’t matter how great the ideas are. (Remember Steve Goldsmith?)

Indianapolis isn’t rejecting Straub’s changes, Ericka. It’s rejecting Straub.


Crime and Promises

When Greg Ballard ran for mayor, we were treated to a lot of rhetoric about crime. Public Safety was going to be “job one” in a Ballard administration. Well, if crime has been job one, I shudder to think of how we are doing with jobs two through ten.

The media have reported on our distressing rates of violent crime; it seems as if there’s a murder every day or so. But there are fewer reports of the so-called nonviolent and “petty” crimes: thefts from cars parked on city streets, burglaries and house break-ins, etc. And those have grown alarmingly.

I live in the Old Northside now, but my husband and I have lived in downtown neighborhoods for 30 years. We were part of the Hudnut Administration that jump-started the renaissance of the city’s core. In that thirty-year period, I have never seen the rate of what police call “household invasions” anywhere near this high. Just in the past month, I’ve had three neighbors I know personally burgled, and the neighborhood listserv has circulated reports of several others. One friend was in his house, in bed with his wife, when intruders broke in and took computers and other electronics. (Talk about shaking your sense of security!)

My friends in IMPD report significant issues of morale and management in the department. Whether those issues affect the crime rate, I don’t know. What I DO know is that crime is increasingly a topic of concern among my friends and neighbors, and that there is a perception of a significant increase in criminal activity. That’s troubling enough, but what is even more troubling is that the Mayor does not seem to recognize either the problem or the challenge that the growing concern about crime poses to other important city goals.

Promises, promises………