The Pandemic Economy

About

The economic collapse unfolding before our eyes is much bigger than it appears and the solution isn’t simply to “build back better.” COVID-19 didn’t create the challenges we face. It laid bare flaws that have long existed at the foundation of our system. That is particularly true for Black, Indigenous, and other People of Color. What kind of reconstruction effort would truly reflect the scale of the problem? What should we rebuild and what should we abandon? To answer these questions, Laura interviews Professor Robert Reich, economist Stephanie Kelton, community organizer Esteban Kelly and Service Employees International Union president Mary Kay Henry about their visions for a recovery that will enable us to build a new economy that is equitable, reparative and sustainable.

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Guests

  • Professor Robert Reich, Former US Secretary of Labor
  • Dr. Stephanie Kelton, Author, The Deficit Myth
  • Esteban Kelly, Executive Director, U.S. Federation of Worker Cooperatives
  • Mary Kay Henry, President, Service Employees International Union

Where to Watch

You can watch this episode on your local WORLD channel at 11:30 am ET on Sunday, January 3, or on your local PBS station.
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Click here to watch online on YouTube. The episode will be made available at 11:30 am ET on Sunday, January 3.

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Transcript

– We have lost 22 million. Let me just repeat that, 22 million jobs.

– A lot of people owe a lot of money. The economy is not recovering.

– We have to be old and transformative in how we tackle the crisis for everybody in this nation.

– Normal is not survivable for our planet, for our communities.

– We refuse to go back. We’re gonna use this crisis to create the world that we’ve always dreamed of for our children.

– It’s all coming up on The Laura Flanders Show, the place where the people who say it can’t be done take a backseat to the people who are doing it. The economic collapse unfolding before our eyes is bigger than it appears. And the solution demands way more than simply building back better. If our government’s response to the 2008 financial crisis taught us anything, it’s that what some call a recovery can leave a lot of us behind. That’s particularly true of African American, indigenous and other people of color, as well as everyone who was working poor or just flat out poor. If the goal this time is to make our economy and our people more resilient, healthier and better off, what’s needed? What do we need to rebuild? What do we need to abandon? And what lessons can we learn from the past? In this episode, we hear from visionary economists and labor organizers and others about what is possible and how we get it done. From the bottom up and the top down, we’re talking pandemic economics this week on The Laura Flanders Show. To begin, let’s take in the scale of the problem. Robert Reich was the labor secretary in the administration of Bill Clinton from 1993 to 97. Today he’s a professor of economics at UC Berkeley and the author most recently of “The System, Who Rigged It, How To Fix It”.

– All of the ways in which people were already extremely vulnerable have simply become much more evident. We have lost 22 million, let me just repeat that, 22 million jobs. We’ve regained over the last few months, some of those jobs, but we’re still down about 12 million jobs. So this is hardly a recovery.

– Mary Kay Henry is the president of the Service Employees International Union or FCIU, one of the largest unions in North America.

– The onset of the pandemic and the complete and utter failure of our federal government to think about how to protect every essential worker on the front lines, was the first hit on all of our members. And then the second hit was the economic collapse. And then as you know, in May, there was an escalation of the racial reckoning in this country. And then our members along the West Coast had family members die in the fires because poor and working class people don’t have the resources to evacuate. I hear our members say that they’re holding grief in the same quantity as they are holding a righteous indignation that we are not gonna return to normal. Normal never worked for us.

– Esteban Kelly is executive director of the US Federation of Worker Cooperatives, the nation’s largest network of businesses owned and governed by their workers.

– We were worried. A lot of us are concentrated in service sector jobs, retail jobs, and then also a lot of our members are essential workers, frontline workers, in healthcare, grocery stores, transportation. So while everyone was quarantining and locked indoors, a lot of our members were on the front lines.

– Stephanie Kelton is a professor of economics at Stony Brook University and a leading proponent of something called “Modern Monetary Theory”. She’s the author of “The Deficit Myth”, “Modern Monetary Theory” and “The Birth Of The People’s Economy”.

– The economy is not recovering. Meanwhile, the $600 top up in unemployment benefits has expired, the ability of the government to backstop small business loans through the Paycheck Protection Act, that’s expired. The $1,200 stimulus checks, we got a one-off, but there was promise that there would be more. None of those things are happening, and we have today about 40 million Americans who face the possibility of eviction. We allowed people to not pay mortgage payment for a period of time, not pay rent, but we didn’t cancel those payments. We just told people with respect to student loans and your rent and your mortgage, we would give you forbearance. In other words, you could wait a little while. But all those payments are backing up on you. And the same is true of commercial real estate and other things. So a lot of people owe a lot of money. If Congress doesn’t provide the kind of fiscal support that this economy is going to need, if we don’t support incomes, if don’t support jobs, if we don’t get a full robust economic recovery underway, the financial crisis could well trigger something that puts us in a situation where we’re looking at unemployment levels and a collapse in output. That starts to look a whole lot like the experience in the 1930s.

– We were a discouraged people because we were the first to lose our jobs when old man depression came along and the last to get them back. We struggled vainly to regain our bearings while depression, fear and failure stocked the nation. Tidings from the outside world reached the farmer, but no matter what news he has received, it cannot be as harrowing as the story he has to tell. Straw where there should have been wheat, emptiness where there was hope.

– The Great Depression, black and white photos and grainy old film of long lines of unemployed workers, decimated farmland and shantytowns, could give you the sense that that kind of widespread economic calamity is a thing of the past. That’s what you might’ve thought until you saw 2020.

– The depression of the 1930’s was caused by just a kind of explosion, starting with Wall Street. An explosion of debt that couldn’t be repaid, and it affected almost everybody. By 1933, one out of four working people had lost their jobs. There was massive poverty. Franklin D Roosevelt was elected and took over in 1933, didn’t really know what he was going to do. There was no blueprint. Roosevelt tried everything.

– Without jobs, we had no money, and without money we could not purchase food for the hungry mouths at home. Our only hope lay in charity. Hunger drove our people to the bread lines. Anxiously we waited, waited for some sign of better days. Then came the federal government’s work program. One by one, it took us out of the bread line. It gave us a new chance to take a normal place in the life of our community. It made us self-supporting. It changed the haggard hopeless faces of the bread line into faces filled with hope and happiness. For now, we work again. America, here is a record of it to judge for yourself. City streets bounded by ever increasing traffic are modernized, resurfaced, thousands of blocks, which mean huge savings in local tax money. Vital to the communities which they serve are the thousands of miles of highways constructed and improved by the works program. Each of these projects has been planned to meet a real need in the community which it serves. To take care of the unemployed, as well as to confer real and lasting benefits on the people of the United States, is the object of the WPA. Under this program, work pays American.

– Most historians, and most economic historians, concluded that much of what he did was helpful, but what really got us out of the Great Depression was World War II because it required government spending on such a massive level. And that was the only thing that was almost inevitably going to get us out of recession. Because you see people didn’t have any money. They didn’t have enough money to create the demand for all the goods and services that the economy would be capable of producing if everybody was employed.

– Thousands of young women have gained experience in power selling to meet demand occasioned by the war. Others are being trained in character work, in photography and in postal work. During the training period, they also do productive work for the armed services, for the Red Cross and for Selective Service goals. In many cases, they have released men for active duty in the armed forces. Are there any periods that you compare to this one? That you learn lessons from?

– Well I think we draw from the early 1930s when there was militant action on behalf of working people across race that made transformative change in the condition of working people and labor. The Flint sit-down strikers created a standard of auto work in this country that eliminated poverty wages and started to build a middle-class. I think another touch down that I’ve heard our members talk about is we had the capacity as a nation after World War II to help Europe rebuild. We need to draw on that same capacity and scale to think about how to build a new America that includes everybody. Undocumented immigrants, Black Americans, Asian Pacific Islanders, Native Americans and white working poor people that have always been excluded.

– This isn’t the time that cooperatives, worker-owned co-operatives, consumer co-operatives, have responded to a crisis in the lives of Americans. I’m thinking of Reconstruction era, Depression era. Are there periods that you look back to for a historic parallel that fits or has lessons to teach?

– I think that it’s been really helpful thinking about the history of racial capitalism and anti-Black racism and leaning on the wisdom and organizing from women of color, from Black feminist leaders like Fannie Lou Hamer, like Ella Baker, who use cooperative models as a way to build wealth and just mechanisms for survival. Economic prosperity in especially African American communities.

– People’s movements in response to the Great Depression forced the US government to act and enact many of the reforms we think of as part and parcel of American life today. What could the government do in response to our current crisis? Again, Robert Reich and Stephanie Kelton have some answers. We don’t know what would have happened in the 1930s, if it hadn’t been for World War II, and you say rightly that a lot of what we saw in terms of recovery came on the backs of the war economy created in that time. Massive spending is what a lot of people are calling for right now. Is that what you see as being the primary thing needed?

– Yes, you need two things and there are two levers of macro economic policy. One lever is at the Fed, that’s keeping interest rates low, and Jerome Powell has said that’s exactly what he’s going to do. That’s fine, but that can’t be the only lever. Keeping the stock market going has almost nothing to do with the actual economy that most people live in. So you do need the other side of economic policy, the other lever, which is fiscal policy, that is, Congress and the president have got to stimulate the economy big time. And the third thing you have to do is get some control over this coronavirus. If you don’t get some control of the coronavirus, then items one and two don’t really count very much.

– We just heard Robert Reich describe a whole lot of spending being required in this moment. Where is that money gonna come from?

– Well it’s gonna come from the only place it can come from. And it’s really the place that all government spending comes from. Congress has the power of the purse. So what happened is that Congress got together in the span of a pretty short matter of time and passed four major pieces of legislation. The biggest of which was the CARES Act, $2.2 trillion. So to put it in the simplest possible terms, the money came out of a keyboard at the Federal Reserve.

– But the other thing that we’re told all the time is that the government is kind of like a household and you really can’t spend more than you earn. You look in your pocket book, you see what’s there. You can’t go below the bottom of the purse. You don’t think that’s right?

– No, I know that that’s not right. The federal government can do what all of the rest of us can’t do. It can spend money it doesn’t have. And so the reality is the federal government is the issuer of the US dollar, and the rest of us are merely users of the currency. We have to get it in order to spend it. The federal government can spend it into existence.

– Have we done enough?

– No, not by a long shot. Laura, that’s what’s so tragic in this moment. I think you got a lot of people who recognize that this economy is teetering on the brink, that you’ve got real problems in the months, and possibly years, ahead if Congress doesn’t act with further support.

– Talk a bit about what it will take for any of this to happen. You served in government, and you know it’s not easy to make change.

– I know it’s not easy, and actually Washington is almost the last place where change is going to happen because Washington tends to, even with good people in Washington, tends to reinforce the status quo. You need good people outside Washington who are mobilized and organized and energized to make the kinds of changes that are necessary. But that’s where I’m optimistic. I think that people understand that widening inequality, stagnant wages for most people, that there’s a concentration of wealth and power at the top, is bad for our democracy, it’s bad for the country. And rather than running around screaming, what needs to happen is people need to mobilize and organize and energize everybody else to vote and to be active politically. And that’s really what I’ve been trying to push.

– More than at any time in recent decades, Americans are indeed mobilizing for economic justice and equity and coming to one another’s aid at a community level. The pandemic economy has forced many to recognize that the people we rely on, our essential workers, have long been under compensated, unprotected and downright exploited. To speak about how those essential workers and businesses are responding, I spoke again with Mary Kay Henry and Esteban Kelly.

– How do you update the sit-down strike of the thirties to this moment and to the workers you represent?

– Well, we’ve been doing it, we think, through the fight for 15, for the past eight years when fast food workers had galvanized strikes. Most recently, on July 20th, we did a strike for Black Lives that was cross movement. And so I think we need to combine militant action with mobilization across sector where we unite with the racial justice movement, the immigrant movement, the women’s movement, the LGBTQ, the climate movement, to create a united force for change. And then the third thing we need to do is make a decision as a labor movement that we are gonna rewrite the rules that have been rigged against workers being able to join together and have the power to bargain a better life. And that’s what auto workers did. There was no law that protected GM Ford and Chrysler workers from making common cause with each other. Their militancy forced the companies to a joint table, and the Democratic governor in Michigan decided not to call off the national guard to suppress the strike as has been done in other States. And so it does also require us to open a front in using our political strength to get elected officials to stand with workers as they challenge corporate power.

– A lot of white America is reeling in this period realizing, oh, government’s not there for me, the social safety net is not there for me. But a lot of people of color in this country have been in that situation before historically. And in those moments of crisis, have come up with strategies that are serving you well right now.

– Our members were some of the first businesses to ramp up the personal protective equipment. Some of them actually manufactured it for one another. So in North Carolina, the Carolina Industrial Commons retrofitted their factory, their warehouse, which normally does textiles, and they moved it to making gowns and masks for hospital workers and shipped them up to the Bronx where our largest member, Cooperative Home Care Associates, which does home health care, they were running short on equipment. So because they were all connected through our membership network, they were able to to tap into the community, to do the sourcing and fill in those gaps in the supply chain. I mean, if you are a worker in the United States, you are in the best position possible if you were inside of a worker owned cooperative.

– Are bottom up strategies of mutual aid enough?

– Of course, we know how to snap into formation for the very immediate and acute problems and crises, and that infrastructure always needs partnership to scale. And it’s why we form political coalitions. Even just with the CARES Act, we had a political coalition on the Hill, and we’re able to advocate to make sure that cooperative businesses had access to the Payroll Protection Program, to the economic injury disaster loans that, but for our involvement, would have prohibited cooperative involvement in that. And when I’m saying that grassroots efforts are not enough, it’s why we’re ramping up our legislative agenda. It’s why we’re working with city councils. Not just with progressive mayors, but really with local and regional elected officials.

– So what does the future hold with a new administration on the horizon and a whole lot of work to do to get the economy and society we imagined ahead? I ask our guests about their vision for what’s next on the long march from a pandemic economy to a democratic one. We feel in many ways sort of on the precipice of something, as we’re speaking, we’ve seen a year of the worst. We’re talking about creating, not just a return, but something new. How do you think about elections in this context?

– We think elections matter for making a demand on what we as working people and communities of all races have the right to expect in this nation. We don’t think the election is the only thing, we think of it as a step in how we are gonna achieve the just society that our members organize around and bargain and stay in the streets demanding every day of our lives. We refuse to return to thinking about the past as a measure for what we should expect in the present. And because the depth of the crisis is so beyond anything anybody has ever experienced, we have to be bold and transformative in how we tackle the crisis for everybody in this nation. And our unique contribution is gonna be to make home care jobs the foundation of the next, most inclusive, most racially diverse middle-class that this nation has ever seen.

– Do you want to go back to quote unquote, “normal”? How was normal for your members?

– Oh, give me a break, Laura. You know that we’ve had issues with normal for a long time. And I think that part of the shift at least from the social solidarity economy movement and the cooperative movement is that, for too long we were comfortable adapting to our marginal niche within what normal used to be. That is to say we were like, yeah, normal kind of is not so good, we’re gonna do something alternative over here, have fun with your normal. And for the last decade we have said, actually normal is not survivable for our planet, for our communities, and we can’t take it anymore. And it’s not adequate for some people to enjoy the liberation that comes with our models in an alternative way. We’re going for the mainstream. I think that certainly the leadership of Senator Bernie Sanders has made that clearer how mainstreamable worker ownership is, cooperative economics and even ideas of the solidarity economy. That our communities can own the assets, public land, industries, enterprises, whether as a public commons or as cooperatively owned, community owned, membership owned or worker owned private businesses, which is what cooperatives are. Those things fit together really neatly, especially alongside strong and robust unions. Where there is worker voice and worker power, even when it needs to be embedded in something like public institutions, universities, or to the extent that we’re gonna have to live with private corporations during the transition to adjust sustainable economy. There’s a lot of repair that needs to happen to a country founded on settler colonialism, chattel slavery and stretching out into an international empire the war machine of the United States. So examining all those relationships is incumbent on us. And that’s finally happening, not just in academia, not just in the front lines of social movements, but every day Americans at their kitchen table are like, white supremacy really is a problem, isn’t it? And I think that that’s what’s gonna guide us toward building the new normal as a mainstream and not some return to our so-called normalcy.

– I think the good news is that politicians have changed their minds and in a big way. And I think enough of them recognize now that in fact the deficit is not the problem but that the deficit itself is the solution to the problems that we’re facing, and that there is no other way out. I won’t drop a name here because this isn’t public, but I get phone calls from people and some chair powerful committees in the house. And they have said things to me like I read your book and I used to be a deficit hawk and you’ve completely changed my mind. So we wanna get you in and we wanna start these conversations. So for me that’s pretty good evidence that there’s hope for moving beyond the way we used to approach the federal budgeting process and getting to the point where Congress begins to recognize that not only can they operate the budget differently from a household, but that we desperately need them to.

– I think that we are seeing and about to see something that parallels the progressive era that occurred in the first part of the 20th century right after the gilded age of the late 19th century. We have a new Gilded Age now with the same characteristics as the first Gilded Age in terms of widening inequality and poverty and corruption and bribery and all these other things. And people are outraged. And I would not be surprised if the next 20 years were a period of a fundamental social change toward a democracy that works for most people instead of just for a small number and an economy that works for a large number instead of a small number. I’m reminded of the words of the great justice Louis Brandeis, who said in the 1920s on the cusp of the first Gilded Age, he said, we have a choice in this country. We can either have great wealth in the hands of a few, or we can have a democracy, but we can’t have both. And I think those words are equally applicable today.

– For more on this episode and other forward-thinking content, and to tune into our podcast, visit our website at lauraflanders.org and follow us on social media @TheLFshow.

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1 COMMENT

  1. Interesting to hear the optimism of the speakers both from Boomer and younger generations in regards to a new age of ‘understanding’ between the silos of indifference in America. I am of age to remember similar talk in the mid-sixties in how hippie-like society spoke about a revolution of sorts in building bridges between the differences in wealth, religion, race, and sex. We see where that led. I am a black American male, lived in 22 countries and across the US. I plan to move abroad to enjoy my sunset years. I do not see bridges spanning the gap of greed, angst, distrust between billionaires, multimillionaires, K-Street plutocrats and all the Biggies: Banks, Pharma, Insurance, Military without a purposeful transfer of wealth. One think Euro-Americans won’t give up without violence is money. Nope, they sure won’t.

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