Rising up out of the South Waterfront in Portland, Oregon are two gleaming condominiums that make a perfect metaphor for the New Economy that has been promoted by urban planners since the 90s. Beneath the foundations of those condos, buried underneath several layers of concrete, is the sediment and debris of the past. Where those condos now stand ships for war were made and dispatched. Nothing better represents the Old Economy.
A few miles to the north sit Chapman and Lownsdale squares, which only became known because Occupy Portland inhabited those squares for approximately a month. There is nothing that better represents the resistance to both of these economies than the expression of protest by the Occupy Movement. The years of people being kept out of government participation that represented the old economy was replaced with the phony carefully manicured public participation of the new economy where people were anointed as leaders.
The interplay between the two economies and the protest movement are essential to understanding the trajectory that we are now on.
The Old Economy
Portland, like many towns in the post World War II economy, was built on exporting and manufacturing. As the biggest city in Oregon, Portland was a vital midpoint both nautically and for trucking between Seattle and California. Companies like Freightliner, Consolidated Freightways and Montgomery Ward resided in the northern part of the city.
All of this was built on the powerful need for American industry in the post World War II era, since the barbarism of that war destroyed the lives of 80 million people and left much of the industrial capacity of the globe in ruins. Portland, like many other cities, benefited from having ready-made labor and industry to participate in the post World War II boom.
This rapid expansion, combined with a general fear of a vibrant labor movement, led the capitalists to make peace and subdue labor. This social peace was purchased not primarily through changes in laws; rather it was purchased through the elevation of living standards for the majority of people in America. There was a belief in liberalism and its ability to resolve the world’s problems through social programs that addressed ailments of the Old Economy while leaving the basic tenets and cruelties of capitalism in place. And there was little global competition that might have pushed wages down in this country.
The New Economy
With the end of the war, countries began to invest in their infrastructure. Soon, factories were built and U.S. capitalists, who are never loyal to their own country in times of prosperity and certainly never miss an opportunity to drive down labor costs, began to invest in these countries and move their operations overseas.
There was a time when this type of movement was prevented by laws and treaties aimed at protecting the capitalists of each country. During the Great Depression, countries around the world erected tariffs in order to protect their own industries from foreign competition with the vain hope of escaping the worst effects of the depression. In the 1960s, however, countries began to take the first steps to dismantle these barriers. More recently, treaties such as the North American Free Trade Agreement, negotiated in the 1990s, continued this trend of removing obstacles to free trade and free movement of capital. Since then, other similar treaties, including CAFTA, the Korean agreement, treaties with Colombia, Peru, and others, have done the same.
In an ideal world free trade is in everyone’s interests. If one country has an abundance of an important metal but much of its land is infertile while another country has fertile land but lacks minerals, they both can benefit by trading metals for wheat, for example.
However, under capitalism free trade undermines the living standards of the working class while enriching the most ruthless capitalists. U.S. workers must compete against the workers of other countries, and whoever is prepared to accept the lowest wages is hired.
Take for instance, the story of Nike. Nike was and still is built off of the foreign exploitation of labor. Why do they operate abroad? Because they can get their labor costs far cheaper and sell their shoes more profitably. This is what treaties like NAFTA have encouraged. The workers in America lose jobs, and the foreign worker is exploited. Phil Knight is rewarded with a surging stock portfolio and the University of Oregon has essentially been annexed by him. Now cities like Portland need to create their own power to attract investment.
The plan put forward by Portland urban planners was surprisingly simple. Use urban renewal dollars to change “blighted” areas into magnet hubs for so-called upper middle class investment. That investment would trickle down to the residents of Portland who would experience the benefits of this new capital flowing into the area.
But Portland is in competition with every other city in the nation that is utilizing a similar approach, and it all equals a race to the bottom. In order to attract “upper middle class” people to Portland, grants and tax breaks are provided to businesses that might hire them. Urban Renewal Bonds provide deep incentives for Portland business owners to both develop areas of the City and provide massive tax breaks to transplants like former Secretary of the Treasury Henry Paulson’s son Merit Paulson to relocate and bring the Portland Timbers soccer team with him. The approximately 20 investment firms in Portland received in 2009 a five year pilot retention tax credit.
Iberdola, a wind farm company was provided with a 1.15 million-dollar grant to stay in Portland. If another city offers Iberdola an even bigger tax break, it will be gone. Companies engage in a form of legal blackmail: they demand tax breaks and threaten to leave if they don’t get them. And the race to the bottom takes yet another step.
This is what life is like in the new economy. Meanwhile, with all the tax breaks being awarded to private companies, city revenues are down and layoffs of public workers are the consequence. The Portland Department of Transportation workers are facing potential cuts of 60 workers. In Parks, workers are facing cuts of 40 positions. Over at Legacy Emanuel Hospital massive cuts are being made at the same time that the hospital is opening up a new wing. The state is expected to take huge budget cuts as well. The list goes on and on. The war on workers has been declared and is being executed.
This is the rebound effect of the New Economy. While Nike utilizes foreign workers to lower their labor costs, wages are dropping in America to become more “competitive” with foreign wage levels. Thus low wages provided in China (though no longer limited to China) rebound back to America with a decrease in wages and benefits.
The fact that it was American capitalists who engineered much of this must not be overlooked.
Two final points must be made concerning the New Economy. First, in each city where applicable there is a carefully manicured public process that is in play. For example, the budget process in Portland has the period from October to January in which key stakeholders are brought together to weigh in on a variety of budget proposals that are largely precooked. Many bureaus were told not to look for additional revenue.
The purpose of such meetings is to instill a sense of despair in people who may be more inclined to take a principled stand on the barricade than in the meeting room. Thus, the answer to the age-old question, “Why aren’t people in the streets?” is temporarily answered. Thankfully, the Occupy movement helped begin to end that coziness of neighborhood leaders with this corrupt process.
A second issue that must be understood is the decline in labor union power. People join and create unions for one reason only. That is to improve their standard of living. They do not join unions to support the Democrats, they do not join to thank congressman or to get out the vote. They join for better wages, hours and working conditions.
Labor unions have been a dismal failure during this economic crisis in defending their members and providing real leadership to working people. This lack of leadership is a driving reason why union density is either declining or only having marginal gains. Despite this critique, labor unions and specifically their membership provide the best hope for workers against the race to the bottom. It is for this very reason that the Democrats and Republicans of the New Economy are either betraying or outright attacking labor unions.
Where is it all heading?
It is difficult to tell the future, but if we look at the transition from the Old Economy to the New Economy, we see a major structural change. One economy was built on the idea that “it’s going to get better.” The other economy is built on the degradation of living standards for 99 percent of the population in order to cater to the 1 percent. The fact that there are splits in the ranks of the 99 percent does not change this essential fact.
The race to the bottom will continue until it is confronted. It can only be confronted by workers armed not just with an analysis of what is wrong but also armed with a solution. A program of taxing the rich and using that money to address budget shortfalls in each state is a great place to start.
History teaches us that America’s prosperity was wrapped up in the war’s destruction of the global industrial capacity. This means some think a world war would be needed to restore America to the boom in the post World War II era. For the rich, who will not have to fight this war, it remains a viable option. But in war, there are no guarantees and certainly in a time of nukes, there is no safety. And working people are tired of war.
For workers, though, there is an alternative. Just as workers in a factory begin to understand that they will be much better off if they quit competing against one another and form a union in order to act collectively to demand higher wages, workers internationally will come to realize that they must stop competing against one another and instead join forces and act in solidarity. This means that if workers in one country strike a particular industry to demand higher wages, workers in all the other countries where this industry operates must engage in sympathy strikes in support of those workers. In this way wages can be brought up to the same level all over the world and companies will no longer benefit by leaving one country for another.
Already, the Occupy Movement has been having these conversations. People are talking about rejecting the mantra of individualism and adopting a perspective of collective activity. The development of a program that unites workers and lights the pathway forward is badly needed. To that end, on April 7 in Portland a Community Assembly will be held to begin addressing the discussion on what such a program would look like.