’50s Policies in the Modern Economy
As I recall, it was during America’s discovery of FoxNews, just after 9/11, that I saw Robert Reich on Hannity and Colmes, and Hannity made a comment to the effect that Reich’s ability to talent for promoting detrimental economic policies was frightening. That memory came to mind while reading Reich’s recent essay promoting the “Employee Free Choice Act” as a form of economic stimulus:
WHY IS THIS recession so deep, and what can be done to reverse it?
Hint: Go back about 50 years, when America’s middle class was expanding and the economy was soaring. Paychecks were big enough to let us buy all the goods and services we produced. It was a virtuous circle. Good pay meant more purchases, and more purchases meant more jobs.
At the center of this virtuous circle were unions. In 1955, more than a third of working Americans belonged to one. Unions gave them the bargaining leverage they needed to get the paychecks that kept the economy going. So many Americans were unionized that wage agreements spilled over to non-unionized workplaces as well. Employers knew they had to match union wages to compete for workers and to recruit the best ones.
Cast your mind back, dear reader, to the time of fuzzy bunnies and economic prosperity — all the way before technology booms and Reagan, back to a time that relatively few of you remember with an adult’s clarity. What was responsible for that technicolor past of prosperity? Unions! Ignore that those were days of pre-globalization innocence; ask not what happens when labor becomes more expensive in the United States in an environment already characterized by companies’ looking for less-expensive nations in which to operate.