A Conversation with Thomas Frank

No matter what kind of liberal or centrist you are, there’s a good chance you’re likely to look to recalcitrant Republicans blocking Obama’s appointment of a Supreme Court Justice or a redfaced fount of colossal stupidity and cartoonish arrogance who is currently running for President as prominent harbingers of our national ills. But in his new book, Listen, Liberal, Thomas Frank, co-founder of The Baffler and author of What’s the Matter With Kansas?, has boldly pinpointed the blame for our growing woes at a Democratic Party that has increasingly turned its back on the working class, cleaves to austere notions of meritocracy, is more likely to serve Wall Street than Main Street (despite campaign rhetoric from years back), and continues to adopt policies popularized under the Clinton Administration that have drastically altered the way seemingly liberal politicians serve the people.

I caught up with Frank as he was racing around the country on a book tour. He was gracious enough to respond to my whirlwind of questions — for his book is very much an argument that begets argument — while adroitly pushing his way through the publicity cyclone. Our lengthy conversation touched on the professional class, progressive Democrats who don’t fit within Frank’s theory, the degree to which one should hold a grudge against a politician, and the kind of bold experimentation that may be necessary to reverse income inequality.

kennedybestEDWARD CHAMPION: Your book opens with an epigraph from David Halberstam’s excellent book, The Best and the Brightest, suggesting that Obama’s capitulation to corporate interests can be likened to some natural trajectory originating from Roosevelt’s Brain Trust to the many technocrats populating John F. Kennedy’s Cabinet who couldn’t handle Vietnam to the current “best and the brightest” Cabinet enforcing a “meritocratic” economy that has left many working-class people in the cold.

You point to Secretary of Defense Ashton Carter calling Russia “unprofessional” when Putin launched airstrikes against Syria in the fall of 2015, as if bombing the bejesus out of another nation was akin to some middle manager throwing a tantrum over the room temperature during a pivotal board meeting.

I’m fascinated by this idea of any remotely dissenting comment being considered “unprofessional.” It seems a close cousin to the outrage culture that has popped up on social media, whereby any group outraged over an “inappropriate” remark proceeds to demand the immediate firing of those who uttered the sentiment. Both developments stifle necessary discourse that is needed to argue out a difficult subject. But I’m wondering how this relates to income inequality. Perhaps many Americans, from Obama on down, have become indoctrinated in a kind of voluntary censure of any remotely disagreeable opinion. And it cuts both ways. Obama did suggest in September that students were too “coddled” for complaining about offensive viewpoints. In all fairness, is this something that we can entirely level at corporate America? I doubt very highly that any brightly painted break room with pinball machines and Guitar Hero in the corner is going to transform workers into Babbitt-like conformists. So where are Americans learning these cues? What accounts for young voters rejecting the Faustian bargain with their support for Bernie Sanders (curiously unmentioned in your book) or, for that matter, mainstream Democrats who often vote against their own interests by endorsing an endless wave of centrist candidates?

THOMAS FRANK: What makes professionals interesting to me is that they are a privileged social class. They are not the billionaire Koch Brothers, but their top ranks include some of the richest people in the nation. Depending on how you define them, certain kinds of investment banking personnel are professionals, as are Silicon Valley CEOs, and most corporate managers, and so on. My goal in Listen, Liberal is to understand what happens when our left party is dominated by this cohort and dedicated to advancing their interests. The answer is: Income inequality grows and grows.

professionalsBasically, professionals are inequality on the hoof. They are inequality walking and breathing and singing little songs to itself about how noble and right it is that the tasteful and deserving people are on top and the boorish stupid ones are on the bottom. And then taking a break to smack their lips over a particularly piquant IPA or a delicately iced artisanal cupcake.

That professionals do these things —- that they sing their own triumph -— in a very nice and polite language really shouldn’t surprise you. The Victorians were the same way. The only thing that’s new is that this slice of our upper class has persuaded itself that their politeness is some kind of left-wing political virtue, that it somehow excuses or inoculates their class privilege, and that the bad manners of the lower orders disqualifies any grievances they might have against the system.

Bernie Sanders isn’t mentioned in Listen, Liberal because it’s a book about Democrats and he didn’t identify as a Democrat until very recently, which (by the way) seems to cause no end of annoyance for Democratic party leaders. I was fully aware of his existence, however, and in 2014 I conducted a long interview with him for Salon —- asking his opinion about Democrats, even.

The young voting for Sanders makes perfect sense to me. They are the new proletariat, saddled with crazy student debt and facing a world where the old middle-class dream is suddenly impossible. They did exactly what they were told to do —- go to college! study hard! —- and look at what happened. Look at what a shitty trick the adult world pulled on them. As soon as they were old enough to sign those student loan papers, we put them in debt.

CHAMPION: Your book spends a great deal of time quibbling with the way in which “the best people” are selected for prominent positions and for more lucrative jobs. But I don’t know if professionals can be entirely blamed for the vagaries that you ascribe to them. They may not be suffering like those who were victimized by lenders during the subprime crisis, but they too are motivated by the need to keep food on the table and must play the game if they hope to survive. If the professionals are being nice and polite, tweaking their LinkedIn profiles and marketing themselves at networking functions as “the best,” aren’t they merely succumbing to the rules and folkways of a ruthless capitalist system that no longer welcomes outliers or innovators? To what extent are professionals responsible for this apparent synthesis (to use a “professional” buzz word) between playing it safe and growing income inequality? When did this impulse start? Would you go out on a limb and call these professionals “willing executioners” (a la Goldhagen) in an altogether different nightmare?

FRANK: This is the biggest question of all, isn’t it, and it needs to be asked because I have sketched out a picture of a country in which invisible and even unmentionable forces like class interest seem to pull people this way and that. It is particularly noticeable because the people I’m describing are the ones we always think of not as being part of a “class” but merely as being “the best”: The highly educated people at the top of our system of status and respect.

I think they do have free will and agency, or else I wouldn’t write books like this one —- which is addressed to the very class I’m criticizing, with a big old index finger pointing at them from the cover of the book.

tedtalksSo I think they are culpable to some degree. They should know better. These are highly educated people we’re talking about and they should understand that much of their worldview is based not on fact but on superstition and prejudice —- their unquestioning attitude toward trade deals, for instance, or their knee-jerk contempt for working-class people. You mention their fixation on creativity and innovation, and it has always intrigued me that the literature of creativity and innovation is complete rubbish and yet they eat it up anyway, tuning in to the TED talks and going about their utterly un-innovative business.

The story has some complications, too. We have a powerful political party given wholeheartedly to the interests of professionals, but it seems not to notice that certain professions are crumbling (journalism, the humanities) and others are in danger of being corrupted altogether (accountancy, medicine, real-estate appraising). The professionals who have seen their livelihoods thus ruined are angry and even sometimes come to identify with blue-collar workers who have seen their cities destroyed by the Democrats’ great god “globalization.” But the party of the professionals doesn’t listen to these unfortunate members of its own precious cohort.

The ones out front keep playing the game, as you put it, weirdly unconcerned while the devil takes the hindmost. The devil will get to them too, eventually, but in the meantime the winners do not show any sign of awareness. That blindness fascinates me.

elizabethwarrenCHAMPION: But the Democratic Party is also the party of Elizabeth Warren, Barbara Lee, John Conyers, Robert Reich, and Donna Edwards, among other progressives. For all the justifiable criticisms leveled against Democrats for hewing too closely to mainstream neoliberalism — or, for that matter, the recent viral videos of Hillary Clinton refusing to address Black Lives Matter’s Ashley Wlliams on mass incarceration or angrily responding to Greenpeace’s Eva Resnick-Day — we are nevertheless dealing with a political climate in which “socialism” is no longer a dirty word. You criticize Reich’s The Work of Nations for endorsing the “symbolic analysts” even as he criticized income inequality and even as you point to his ongoing work against economic injustice. But is this really on the level of Deval Patrick joining the board of leading subprime lender Ameriquest in 2004 after fighting on behalf of the marginalized and the impoverished? Effective political reform is often about compromise. Amy Gutmann and Dennis Thompson have argued that standing doggedly for one’s principles and refusing to compromise is an endorsement for the status quo. Is there an acceptable level of compromise that can reconcile this disparity between an indignant working class that feels left out of the process and what you identify as a lack of awareness from the “party of professionals”?

FRANK: I acknowledge of course that there are exceptions to my theory, and that there are lots of good Democrats out there. There may even be good Republicans out there. Robert Reich is one of the good guys today —- one of the best guys, actually -— but The Work of Nations, which he published way back in 1991, really got the problem of inequality wrong. It heaped praise on what he called “symbolic analysts” (one of many terms of endearment Democrats have made up for white-collar professionals) and announced that, in the future, we would all either have to join their ranks or serve them.

devalpatrickYou ask if that’s as bad as one of the missteps of Deval Patrick. I truly have no idea how I would make such a judgment. One is an influential book of economic theory, the other is a promising Democratic politician signing up with a notorious subprime lender. They are analogous deeds, in a way, but also in different categories.

Nor do I really know what the acceptable level of compromise is in some abstract way. I will say this, however: The entire history I trace is one of ordinary people’s interests being systematically ignored and overruled by a clique of upper-class liberals who are in love with their own virtue. They have no trouble with compromise in one direction. Leading Democrats are forever trying to strike a deal with the Republicans in Congress on Social Security and the budget —- think of Obama and his pursuit of the “grand bargain,” a phrase which was my working title for the book. But when it comes to people on the left, Democrats usually invite them simply to shut up. These are people they can’t stand. On this, see: The works and achievements of Rahm Emanuel.

CHAMPION: How does splitting hairs over a neoliberal position taken twenty-five years ago by someone who you now acknowledge to be a bona-fide progressive help us to understand how the Democratic Party has changed or what we need to do to combat it? Let’s contend with bigger fish. You heavily criticize Bill Clinton in your book. And I would tend to agree with you. Bill Clinton’s alliance with Dick Morris, his signing of the 1996 Welfare Reform Act, his deregulation of telecom and interstate banking, and his willful repeal of Glass-Steagall all feel very much like the actions of a “bad Democrat” and the kind of narrative that gets swept under the rug in these discussions on how many Democrats aren’t terribly dissimilar from Republicans. I’m sure you’re familiar with the infamous story behind Bill and Hillary Clinton’s first date, which involved the pair crossing a picket line and offering themselves as scabs so they could see a Rothko exhibit at the Yale Art Gallery. This aligns neatly with the problems you’re identifying. But it also suggests that the more pernicious qualities of compromise lie dormant inside any politician who aspires to great power. You also observe that Obama’s three great achievements — the 2009 stimulus package, Dodd-Frank, and the Affordable Care Act — are undermined by Democrats who follow up with a professional-minded consensus. If we’re going to call out the “party of professionals,” don’t we need to consider the full narrative of how the more prominent figureheads have stood against the working class instead of singling out comparatively minor indiscretions from those who are now fighting against income inequality?

robertreichFRANK: You’re talking about Robert Reich and The Work of Nations again. My understanding of history is that we are supposed to seek the truth about how the past unfolded regardless of whether historical actors later change their minds or express regret for what they did. Bill Clinton has apologized several times for the 1994 crime bill as well as for many other things; that might make us think more highly of him as a person but it doesn’t undo the crime bill or erase its consequences from history. Similarly, The Work of Nations was an essential document of its time. It was very influential in the early years of the Clinton Administration. Its author was made Secretary of Labor. That Reich has changed his views since then is commendable —- and I think very highly of what he’s doing now -— but his conversion to a different point of view in recent years doesn’t change the political culture of the 1990s.

I most definitely think we need to underscore how prominent Democratic figureheads have stood against the working class, and in particular we need to look at their ideas and their legislative deeds. This is why I go into such detail on the legislative history of the Clinton years, focusing especially on the five items his admirers actually celebrated him for: NAFTA, the crime bill, welfare reform, deregulation of banks and telecoms, and the balanced budget. All of these were disasters for working people, either directly or indirectly.

The issue of compromise and consensus is a fascinating one. Democrats have been far more earnest seekers of consensus than Republicans, and I wanted to know why. This is one of the biggest differences between the two parties, and the “party of the professionals” hypothesis explains it perfectly. The politics of professionalism is technocracy, an ideology in which the solution to every problem is known to educated people and the correct experts. When they look at Washington, technocrats know that politics is just a form of entertainment that gets in the way of the right-minded; it blocks the educated people from doing what everyone knows is the right thing; and therefore technocrats always gravitate to the same answer: try to reach a grand bargain with the smart folks on the other side. Thus Obama on the budget, and thus Clinton on Social Security.

CHAMPION: History is certainly about understanding how powerful figures alter their viewpoints and adjust their positions. But if Reich was willing to change, why then is a putatively liberal government so unwilling to adjust its course? You point to how FDR employed experts — such as Harry Hopkins, Marriner Eccles, Henry Wallace, and Harry Truman — who were all outliers in some way, many with a lack of academic credentials that led to bold ideas and off-kilter policies. But Roosevelt’s response to financial paralysis was also famously guided by the mantra “Above all, try something.”

braintrustIt was certainly “bold, persistent experimentation” that Roosevelt called for in 1932, but some historians have argued that it was both the law of averages and Roosevelt’s centralized authority that allowed for his much needed reform to happen. If we want to repair income inequality, is our only remedy some autocratic figure operating in the FDR/Hamilton mode who is granted supreme authority and willing to employ any tactic to do so? Or are there other remedies that aren’t teetering perilously towards such absolutism? To cite one example of the Beltway dynamics in play here, it remains to be seen whether Republican senators will change their mind on potential Supreme Court Justice Merrick Garland, but the legislative opposition suggests that “bold, persistent experimentation” isn’t going to be allowed anytime soon and that any future Democratic President is fated to be hamstrung by the very technocratic compromise that you’re understandably condemning. On the other hand, “bold, persistent experimentation” — as recently documented by journalist Gabriel Sherman — is precisely what has allowed Trump to sink his talons into the 2016 election as much as he has. Trump is a perfect example of politics as “a form of entertainment that gets in the way of the right-minded” and this didn’t even come from technocratic Democrats. So is there any real hope for repair? Do you feel that there’s any truth to Susan Sarandon’s recent suggestion to Chris Hayes, mired in controversy, that a potential Trump Presidency might inspire more people to take a gamble on a progressive revolution (if that is indeed what is needed here)?

FRANK: As it happens, there was a golden moment for boldness and experimentation in recent years, and it came and went in 2009 after the collapse of Wall Street and its rescue by the Federal government. Many things were possible in that moment that weren’t possible at other times. But that particular crisis went to waste. Obama deliberately steered us back toward the status quo ante, and worked hard to get everything back like it was before. “The Center Held,” to slightly modify the title of Jonathan Alter’s second Obama book.

Regarding Trump: I am a big fan of Franklin Roosevelt, and I don’t think that Trump is comparable in any way. Being willing to go before the cameras and say anything, like Trump, does not really put a politician in the same category as FDR, any more than does being a jazz musician who is a great soloist or a comedian who’s really good at improv.

Your concern about the present situation possibly requiring an autocrat or an absolutist is very intriguing, however, and it’s a common fear. But flip the question around a little bit. The way I see it, autocracy is already here —- economic autocracy, I mean -— and democracy is the solution. It is true what you say about Roosevelt wielding power like few other presidents, but the things that really turned this country around involved economic democracy more than they did the heavy hand of the state. I am thinking in particular here of two things that we identify with FDR, antitrust and organized labor. Both of them involved challenging oligarchy by empowering countervailing forces, either competitors or workers.

Let’s talk about unions for a moment. They are profoundly democratic institutions even when they aren’t full democracies themselves (a common problem) because they extend the idea of democratic rights and voice into the workplace. For decades Americans thought of unions as a normal part of civil society, and yet today they are dying, thanks to the one-sided power of corporate management -— and the indifference of their friends in the Democratic Party. What’s awesome about unions is that they would help enormously to reduce inequality, and they would do it without the heavy hand of the state. No need for massive redistribution by Washington: just allow workers to have a voice, let them negotiate a contract with their employer, and they will take care of it automatically. More democracy will solve the problem.

fightfor15CHAMPION: But is democracy enough to combat economic autocracy? We’re dealing with a strong plutocratic base of mainstream Democratic voters and whatever fallout we’re going to have in this post-Citizens United political landscape. The “fight for $15” battle, arguably labor’s greatest recent development, is part of the conversation only because workers made this happen at the local level. There are also pragmatics to consider. Bernie Sanders gave a recent interview to the New York Daily News Editorial Board that has made the rounds. Aside from the stunning revelation that Sanders is unfamiliar with subway MetroCards (which is understandable), the larger concern was that Sanders appeared unable to pinpoint a precise method for breaking up the banks. At the beginning of the book, you describe a Seattle firefighter asking you if there was any economic savior that would prevent the middle class from sinking into poverty. You write, “I had no good answer for him. Nobody does.” If you’re asking the so-called “symbolic analysts” to jump on board the bus passing through Decatur, they’re going to need an answer. They’re going to need more than a loose theoretical idea of what the Fed can do to rein in JP Morgan Chase and corporate greed. What can you possibly tell them to shake them out of their status quo stupor? Is this a struggle where working and middle class liberals are fated to fight in their respective corners? How might technocrats be persuaded to become more inclusive beyond revisiting the historical record?

FRANK: There are all sorts of practical things that can be done to address inequality and halt the deterioration of the middle class; I mentioned two of the biggest in my last answer. Doing something about runaway financialization is also a good idea, even if Bernie Sanders couldn’t name the exact legal method by which he would do it in that one interview. Inequality is not an insoluble problem. What that firefighter was asking, however, was what kind of band-aid will be tossed to working people under our present course and our existing system. Clearly the answer to that is . . . nothing.

Well, maybe something. Maybe, under President Hillary Clinton, there’ll be microloans for all. Good times.

However, to make something real happen will require a major political reversal, a reversal in which politics once again reflects the interests of the country’s working-class majority. This will only happen if such people themselves demand it, and it heartens me to see that we are moving decisively closer to that this election year.

The main thing required of the comfortable liberal class in such a situation is to take a good long look at themselves and their happy world and understand that they aren’t the bearers of virtue and righteousness that the media constantly assures them they are. They need to understand that a good chunk of their political worldview is based on attitudes that are little more than prejudice toward people who didn’t follow the same university-based career path as them.

What they need is a moment of introspection. What they need is to understand that those people in Decatur are their neighbors, their relatives, their fellow Americans, and that’s why I wrote this book.

The Bat Segundo Show: Timothy Noah

Timothy Noah appeared on The Bat Segundo Show #458. He is most recently the author of The Great Divergence.

Play

Condition of Mr. Segundo: Holding onto the remains of his wallet.

Author: Timothy Noah

Subjects Discussed: The 1984 “Morning in America” ad, why the American public gets suckered into the American Dream panacea, the Kuznets curve, the decline of the bank teller, Obama’s 2012 State of the Union speech, closing the skills gap as the present Democratic position for increasing jobs, the WPA, high school graduation rate decline and skilled labor demand in the 1970s, universal early education, the high school movement, Richard Vedder’s notion of janitors with PhDs, college tuition being priced out of reach for the middle crisis, the 1% vs. the 99%, the American inability to grapple with income inequality, overseas jobs, Germany’s ability to hang onto its manufacturing sector, the decimation of the American labor movement, Alan Blinder’s ideas about an increase in skilled overseas jobs, the Lewis Powell memo, Bryce Harlow, Wal-Mart’s war upon unions, the dismal dregs of union culture in 2012, Occupy Wall Street and anti-activist regulations, Walter Reuther, the gender gap in higher education and with job income, decline of the male median income, closing the gender gap in income, sexism’s strange legacy, how women have exempted themselves from the great divergence, how immigration developments during the 20th century impacted 21st century labor, Paul Samuelson’s views on immigration, the benefits of unskilled labor, high school dropouts and declining wages, the recent Mexican immigration dropoff, checking up on Jim and Ann Marie Blentlinger, Bob Davis and David Wessel’s Prosperity, upward mobility and government jobs, the collapse of the US Postal Service, the brief benefits of computerization, being honest about the decline in upward mobility, and the expiration date of American exceptionalism.

EXCERPT FROM SHOW:

Correspondent: What about overseas jobs? I mean, two-thirds of all the people who made or sold iPods in 2006, as you point out in the book, were located overseas — most in production jobs. One of your solutions in the “What to Do” section at the end is to import more skilled labor. What of these Apple production jobs? I think I’m returning to what we were talking about earlier, about the difference between skilled labor and unskilled labor and moderately skilled labor. Surely, there needs to be some sort of infrastructure in place. Some patch till we actually get to this great skills gap solution which we seem to be talking about. I mean, it just seems to me that we’re trying to fight a very difficult problem with a form of idealism that is just incompatible with that reality.

Noah: Well, it’s very hard to compete globally for low skilled jobs. Because it’s a race to the bottom. You end up engaging in wage competition with some of the poorest countries in the world and that’s not going to make anybody prosper. If you look at a country like Germany, they’ve managed to hang onto their manufacturing sector. But the way they’ve done it is they have gone after the highly skilled manufacturing jobs. Of course, they also have a much more healthy labor movement. Here in the United States, we’ve had the labor movement been decimated or down and out. 7% of all employed workers. So another part of the solution is to rebuild the labor movement. I’m not saying that it’s going to be easy to address these problems. But in talking about ways to address them, I decided there was really very little point in pretending that tiny little solutions were going to do much. I think it’s time to start a discussion about some of the more ambitious things we can do.

Correspondent: But as you also note, “If you have a job that you can perform from home, it’s worth asking yourself whether an English speaker could perform the job tolerably well from halfway around the world at one thirtieth the pay.” Do you think that America has the obligation to give everybody a job? That that might actually be the solution in some way? Or do you think the labor force really needs to revert to its inherent skills? Or skills that they can actually acquire to get those jobs? I think I’m trying to get an answer from you in terms of whether it’s actually the corporations’ fault or whether it’s education’s fault or whether it’s the people who are unskilled — whether it’s their fault.

Noah: Well, I don’t know whose fault it is, per se. I mean, I think our workers need to acquire those skills one way or the other. And anything we can do to encourage that would be good. Because offshoring is a real problem. Although interestingly, the projections from here forward are that offshoring will have a bad impact on our economy. But it won’t continue probably to have a very bad impact on income inequality. And that’s because those other countries are now coming after the skilled jobs. And it will be very interesting politically to see how that plays out. There are a lot of affluent people who, when you talk about other countries eating our lunch in manufacturing, they say, “Well, we need free trade. You have to have capital flow across borders. Otherwise, we won’t have prosperity.” Well, I wonder if they’ll still be saying the same thing when suddenly you have, for example, American radiologists competing with radiologists overseas. You’ve already got a bit of that. And there are any number of very highly paid jobs that could be performed offsite. And Alan Blinder, an economist at Princeton, he says that he actually thinks that slightly more of the offshore jobs of the future will be skilled rather than unskilled.

Correspondent: Wow. Well, in 1971, Lewis Powell wrote a memo: “The American economic system was under attack from Communists, New Leftists, and other revolutionaries,” as well as “perfectly respectable elements of society.” So this memo results in this tremendous flurry of pro-business lobbying from organizations and so forth. Various consumer-oriented laws are killed through this effective lobbying. And that was forty years ago. Now pro-business lobbying today is arguably more pronounced than then. You point out in the book the figure — that the Chamber of Commerce spent $132 million in 2010. As you point out, not a single labor union could be found among the top twenty lobbyists. So how then can any pro-labor organization make a serious dent with these particular states? I mean, what hope is there for a modern day Walter Reuther in this post-Taft-Hartley age?

Noah: Well, it is true that the corporate power in Washington has vastly increased. And it increased not just because of the Powell memo, but really throughout the late ’60s and the 1970s, you had corporations absolutely flipping out at the rise of the regulatory state and counter-culture politics and Ralph Nader. And one person I write about in the book a great deal is Bryce Harlow, who is best known as a White House aide in the Nixon White House, where he was kind of a good guy. He was trying to keep Nixon honest. Failed at that, but he was considered one of the few honorable men in the Nixon White House. That’s all true. But he had a separate role where he spent most of his career post-1960. And that was as the Procter & Gamble representative in Washington DC. In 1961, when he came to work for Procter & Gamble, there were just a handful of corporate representatives in Washington DC. And Harlow looked around and thought, “We need troops here.” And he started going around the country and evangelizing and giving speeches saying, “We need to build up corporate power in Washington.” And one of the things I really like about Harlow is that he didn’t mince words. He identified the enemy as a movement towards greater equality. Sometimes people say, “Well, what does the rise of corporate influence in Washington have to do with equality?” Well, Harlow himself made the connection. And he succeeded. And Lewis Powell wrote that memo in ’71. Succeeded. Over time, corporations were bestirred to increase their presence in Washignton. Increase their lobbying. And they get a lot more done actually through lobbying than they do through campaign contributions. And as a result, you saw a change in our politics. It hurt the consumer movement. And it hurt the general movement towards greater equality. So, yes, that makes the task a lot more difficult. But I don’t think there is a bigger, more important challenge to liberalism right now than to find a way to rebuild the labor movements somehow.

Correspondent: Do you have any ideas on this? Because it’s pretty decimated and gutted. As you point out, the Walmart situation is terrible.

Noah: Yes. In part of the book, I have a narrative about the attempt to unionize a Wal-Mart in Colorado. And the extent to which the deck is stacked against labor is not to be believed. It is literally true that nobody has ever managed to unionize a Wal-Mart, except for once when the meat cutters in some place in Texas managed to get themselves declared a bargaining unit. And they voted to unionize. And what do you know? About a week later, Wal-Mart said, “We’re not going to be cutting meat anymore. We’re just going to be selling prepackaged meat.” So it is very, very difficult. But there’s an interesting idea that’s been put forward by Richard Kahlenberg of the Century Foundation. Part of the underlying problem is simply a matter of law. I mean, laws favor management over unions. And the ultimate source of this is the 1947 Taft-Hartley law. Which was passed right before the peak of the union movement. But it acted as a slow-acting poison on the labor movement. So you need to roll back Taft-Hartley. And you need to revitalize the National Labor Relations Board. And Kahlenberg’s idea is: he says, “Look, nobody seems to really — it’s been multiple generations since anybody got really excited about workers’ rights. So rather than frame this as labor rights, why don’t we frame it as a civil right? Why don’t we pass a law saying that it is a civil right protected by the Civil Rights Act to organize a union?” It is actually illegal for a boss to fire somebody for trying to form a union. But the law is so weak that, as Kahlenberg says, it’s actually economically irrational for bosses to obey that law. But if you were to extend protection of the Civil Rights Act, then workers would be able to take their bosses to court and sue them. And that might change the equation. That might help.

Correspondent: I agree with you. But unfortunately, as we saw with the healthcare debate, framing anything as a civil right creates a protracted battle and constant gridlock and endless concessions. And as you pointed out with the Wal-Mart example, businesses are pretty much free to do whatever they want. If someone’s going ahead and being an irksome worker, well, we’ll go ahead and whack that part of our operations out. So is there any hope for labor when you have legislation against them and you also have this anything goes, unfettered approach from Wal-Mart and the like?

Noah: Sure. There’s always hope. There’s always hope. There was a time. If you go back to 1932, things were looking pretty bleak then too. And we got a government that was pro-labor And really the growth of labor unions was largely a result of the New Deal. So government could make it happen again. It’s very difficult in this environment, I will grant you. There is a huge amount of demonization of labor. I was talking with a liberal economics writer the other day. And he was saying, “The problem with labor unions is that labor unions in America, they have this culture that’s so adversarial.” And I said, “Culture? Culture? They’re down to 7% of the private sector workforce. You can have any culture you want. Because they’re going to be starting from scratch.” So I think there needs to be — as I say, it is the most difficult challenge. But I don’t think you’re going to see any substantial improvement towards equality without empowering workers. There’s just no reason for bosses to pay workers a lot of money if they don’t have to.

Correspondent: Do you think any movement that would actually amend some of these problems is not being adversarial enough? I mean, even Occupy Wall Street has to be careful. Because you have the police issuing all of these crazy regulations, as we saw with Federal Hall. And now you have competing statutes of how they can protest. The world’s most exclusive club at 25, as we saw. So the question is, well, they have to remain calm. Which is totally unprecedented if you look at our history. If you look at bombs going off in Wall Street decades before. So maybe the economics writer who you were talking to might, in fact, be right. That the problem is also cultural as well. Do you think that?

Noah: Well, you just need to be strategic about the proper methods to use. I think there are certain situations where an adversarial approach is called for. There are other situations where a cooperative approach is called for. One thing that distinguishes European — Western European — labor unions from American ones is they are more cooperative. They have a part of a three-part partnership between industry and labor and the government. Walter Reuther, who was I think maybe the greatest labor leader who ever lived, was the president of the United Auto Workers in the 1940s, the 1950s, and the 1960s. And he tried very hard to establish something like that European model here. And it’s fascinating. He was a brilliant man. And he was constantly proposing things to management that would actually help the company. He would say — for example, after World War II, he said, “My workers will sacrifice some pay because we need to worry about postwar inflation. They will sacrifice some pay. But they have to see that management will show some restraint too by not raising the price of cars.” And this was a time when auto sales were oligopolistic in the United States. It didn’t have a lot to do with supply and demand. So you could knock the price down of the car and still have plenty of profit. Reuther would say — there’s actually one instance — I can’t remember if it was that instance or another one — where he was actually told, “You know, Walter, that’s a really good idea. But because it’s your idea, we’re not going to do it.”

The Bat Segundo Show #458: Timothy Noah (Download MP3)

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The History of Verizon, Part Two (August 2000)

[EDITOR’S NOTE: This is a continuation of my ongoing history of Verizon. Part One, which covers the months of April through August 2000, can be found here. Part Three, which covers the months of September through October 2000, can be found here.]

James Earl Jones, the voice of Darth Vader, became the voice of Verizon. Jones had proved popular as the voice of Bell Atlantic and his services were extended to talking up this new brand with his instantly recognizable baritone. But the Baltimore City Paper‘s Joe MacLeod was having none of this. “You never once in your whole entire life said the word, ‘Verizon,’ I’ll bet, unless you knocked back too many highballs or were wacked out on that Special K or Vitamin C or one of those other letters, but now you’re going to say ‘Verizon’ all the time like it’s a real word, and you’re going to write checks to Verizon and call Verizon, and say stuff like, ‘The goddam Verizon’s on the fritz again.’ But it’s not. There’s no such thing as a Verizon. Don’t believe James Earl Jones. It’s a made up bullshit word, and they (and you know who ‘they’ are) probably paid James Earl an ass-load of money to pitch the Verizon on the teevee.”

Whatever “ass-load of money” was paid to Jones, eight years later, Verizon’s name now trickles across the cochlea without cognitive dissonance, thanks in part to Jones’s efforts. The campaign, overseen by Bozell, ensured that the last dregs of Bell Atlantic would be cast asunder for this great leap forward. Jones would later use his position at Verizon to siphon off a hearty combo of Verizon and NEA money for a Magna Carta exhibit, present a $25,000 literary-tech grant to a San Ysidro school, present literary grants, and hand off awards to Russian cinematic talent. In 2002, Jones, testifying before a House Subcommittee on Education Reform, would declare, “I could not be more proud to be associated with an exceptional company like Verizon.” Even when speaking at the 2007 Buffalo Book Fair on literacy, Verizon was indelibly attached to Jones’s words.

In 2007, Jones walked away. While Jones served as a pitchman, Verizon’s contract had restricted Jones from any long-term commitments. Jones’s contract kept him off the Broadway stage until 2005. Jones, in fact, would not appear in any films between 2001 and 2004. In an interview with NWA WorldTraveler, Jones explained, “[Verizon] let me be silly for 15 years on camera — breakdancing and all that. I was as silly as I dared get. They understood that this guy usually is taken as dignified, with a big voice, so they said, ‘Let him be silly,’ and it’s worked!”

But was this really a position for an actor of Jones’s dignified stature to be in? How many dramatic presentations or Broadway performances were lost because Verizon required his services? With a strike heating up in August 2000, the Workers World News Service went further: “Who’s on the board of directors? Not James Earl Jones.” The WWNS proceeded to name names. “Your may not see these folks in the Verizon ads. You may not see their faces on your telephone bill. But these corporate interests are part of the system of exploitation that dominates our lives from telephones to political offices.”

But was Verizon really maintaining a system of exploitation? Or was it just practicing the most ruthless business practices necessary to get ahead?

With the Bell Atlantic-GTE deal receiving FCC approval, Verizon began making quiet payments to ensure its continued expansion. GTE paid $2.7 million to end an inquiry concerning allegations that it had refused to let local phone equipment in GTE offices without the construction of special facilities. Even though the FCC permitted local phone companies to place equipment at their central offices, GTE had insisted upon special equipment cages. The FCC had permitted the local phone companies to place their equipment in COs without the cages, but that hadn’t stopped the phone companies from complaining. Thankfully, money was one of those magical mechanisms that helped end such gripes.

Meanwhile, the forthcoming strike threatened to halt Verizon operations. More than 86,000 telephone workers from Maine to Virginia planned to walk out. On August 4, 2000, Verizon submitted a proposal to the unions. Verizon agreed that it would increase wages by 3 to 4 percent a year for union employees and improve pension plans. But with the income disparity between union and nonunion workers still unaddressed, and the details on job security and very specific demands still unclear, the unions balked. As one particularly prescient Verizon worker said, “Because the company would rather farm out work, this means one company installs the line on the outside of the building, which is us, and another on the inside, which is them. This results in a big headache for the customer, who has to be at home for two days instead of one, and a loss of income to a nonunion company.”

There are other interesting figures to consider here. In 2000, Verizon’s wireless operations generated $532 a year in revenue from each customer. A telephone company customer earned a meager $324 a year. Verizon’s wireless employees were nonunion and its telephone company employees were union, thus resulting in considerably more revenue from its wireless operations. In other words, Verizon had a vested interest in ensuring that its wireless employee basis would remain nonunion. In a competitive market and a declining economy, profit was king. And one Wall Street analyst, speaking to the New York Times under anonymity, suggested that if Verizon’s wireless unit were completely unionized, it would cost the company $300 million a year.

On August 7, 2000, with no negotiations in sight, the workers walked out. Basic services were not affected, but repairs and installations were. Verizon created a stopgap by deploying 30,000 managers — all working 12-hour shifts — to cover services that were normally performed by employees. One technician opined of the managers, “‘I think none of them are qualified to do what we do. Most of [the managers] were educated in college, but they’re not technically inclined.”

The union members were dressed in red, picketing in solidarity. One customer service reporter told the New York Times that she was “tired of being treated like a second-class citizen within the company,” but declined to give her name. Verizon had informed employees that they would be fired if they discussed joining the union at work. Most of the striking workers were former Bell Atlantic workers. The GTE units were not directly involved.

News of the Verizon strike hit many outlets, but some overlooked the company’s considerable expansive efforts. As The Motley Fool‘s Chris Rugaber reported, “While that story is important, investors interested in the telecom sector should pay just as much attention to the company’s announcement yesterday that it has already signed up 1 million long-distance customers in New York.” The company’s goal was to reach the one million mark by the end of 2000, but Verizon was five months ahead of schedule. Verizon pledged to donate $1 million to New York charities to celebrate this achievement.

By August 8, 2000, the strike had gone on for three days, with neither side coming to an agreement. “We continue to frankly plug through some of the more difficult issues that confront us,” said Verizon spokesman Eric Rabe. “It’s become sort of an intense, exhausting sort of a process.” Rabe claimed that there had been 455 acts of vandalism, violence, and harassment of Verizon managers over the previous six days. Eggs and bottles were thrown at those who crossed picket lines. Verizon offered a $250,000 reward. These acts went further. On August 8, 2000, the New York Times reported that vandals had begun slashing telephone cables in New York, causing thousands of New Yorkers to lose service. But Communications Workers of America vice president Al Luzzi declared, “We don’t condone vandalism; we never did, we never well.” Luzzi suggested that Verizon managers might be responsible for the cut cables. Nevertheless, two striking Verizon workers were nearly electrocuted when they confusedly cut through a power cable that they believed to be a phone line.

James Henry, a Bear Stearns analyst, observed that if the company could maintain service without its 85,000 employees, this would be an effective marketing tool. One that would give the company solvency, so long as the strike didn’t last beyond a week. Indeed, in the early days of the strike, Verizon customers did not experience considerable disruptions in phone service.

That same day, Verizon announced that it would be teaming up with NorthPoint to build a new broadband company. The move was on to shift broadband services to DSL. Lawrence T. Babbio, Verizon’s vice chairman and president, boasted that he was putting in 3,000 DSL lines a day. With the new company under NorthPoint’s name, Verizon was looking at a service capacity of 600,000 DSL lines. With Verizon making an $800 million investment in the new company, with $450 million of these funds allocated to network expansion and product development, NorthPoint only needed federal approval, which was expected in mid-2001. NorthPoint was an appealing acquisition because of its business customer base. Business customers could be counted upon to generate more revenue than the garden-variety consumers that Verizon had within the Bell Atlantic network.

But in November, Verizon decided to pull out. Verizon claimed that it terminated the deal because it didn’t care for NorthPoint’s deteriorating business and operating conditions. NorthPoint, counting upon the $800 million, was apoplectic. Said Liz Fetter, NorthPoint’s Communications President and CEO, “I am stunned to get the news after months of conversations with Verizon on the strong business opportunities available to the combined entities. Verizon was not entitled to terminate these agreements, and we are exploring all our options, including funding options and legal remedies.”

There was no breakup fee for terminating the deal.

NorthPoint had seen its stock decline from $39.12 a share to $2.50 a share in just under a year. The Verizon setback caused NorthPoint stock to plunge to a mere 75 cents per share. Verizon’s stock, by contrast, gained 81 cents that same day. Brown analyst Michael Bowen said to CNN, “If they lose Verizon they don’t have much of a future.” Sure enough, Bowen was right. After a round of lawsuits that NorthPoint had filed against Verizon, a NorthPoint shareholder sued NorthPoint about accounting malpractice. Because of these circumstances, 19% of NorthPoint’s workforce was laid off just before Christmas. In March 2001, NorthPoint would eventually file for Chapter 11.

Did Verizon have every intention of backing out of the NorthPoint deal? It is difficult to say with any accuracy, but I do intend to investigate this.

It should be pointed out that NorthPoint enjoyed a great success between 1999-2000, with its stock rising 68% on its first day of trading (like many dot coms) and alliances brokered with the likes of Microsoft. Led by CEO Elizabeth Fetter, a 41-year-old antique collector with a penchant for restoring historic homes, NorthPoint had relied on the Baby Bells to install DSL, but was often dissatisfied with the speed at which it could roll out its service. And although the future looked bright for NorthPoint (and fellow competitor Covad) in light of recent regulatory advantages, NorthPoint had been hit, like many, by the downturn in the economy. Verizon’s cash influx was just the kickstart that would help NorthPoint expand. But NorthPoint, expecting a fair deal, relied on the money instead of questioning it.

So why did Verizon go after NorthPoint? Did it make similar overtures to Covad? Was NorthPoint simply too hungry to expand? And why didn’t NorthPoint’s counsel ensure that the Verizon deal was airtight? Did Verizon see NorthPoint as a competitor it could whittle down? Or did it have even some intention of cooperating with Verizon all along? These questions will require investigation.

On August 9, 2000, the New York Times reported that Verizon and the unions were nearing a negotiation that “might make it easier for the unions to organize workers” at the Verizon Wireless unit. But the strike had heated up. Verizon reported 455 strike-related incidents of assault, harassment, and vandalism to the police in twelve states. With the New York summer heat rising, tempers were too. A Verizon maintenance truck run by a nonunion Verizon contractor was battered and remained stuck under a maintenance gate when a striker gained access to the gate’s remote control. New York State Supreme Court Judge Louis York granted a temporary restraining order that barred picketers from preventing workers and managers from conducting their work. Verizon increased its $10,000 bounty to $25,000.

On August 8, 2000, Verizon’s shares plunged, dropping 14%. It was Verizon’s sharpest one-day freefall since 1987. The NorthPoint deal hadn’t helped. Nor had Verizon’s bid to acquire OnePoint Communications. The terms of the OnePoint sale were not disclosed, but OnePoint was known for the DSL services it provided to apartments and office buildings in nine major U.S. metropolitan markets. Unlike NorthPoint, OnePoint had remained private.

Back on the picket lines, the struggle remained tense. 24 union members had been arrested. Waste and birdshit were tossed upon five Midtown South Precinct officers monitoring picket lines, dumped from the top of Verizon’s 41-story headquarters. The police did not plan to rule out management or strikers. And the 8,000 workers protesting outside Verizon’s headquarters participated in a rally the next day that spilled over into Bryant Park. Even presidential candidate Ralph Nader made an appearance on the Fall Churchs, Virginia picket line. Meanwhile, one advertisement featuring a Verizon worker in a hardhat with the slogan, “Bell Atlantic has a new name,” remained in circulation.

Some commentators, such as the New York Times‘s Mary Williams Walsh, suggested that the customer-service complaints had become a new labor issue. Walsh pointed to Verizon’s requirement by CSRs to ask customers, “Did I provide you with outstanding service today?,” which made at least one feel like an idiot. But if the CSR did not answer the question, then a supervisor listening into the call would deduct points from the performance score. Was the burden of having to be nice all the time something to fight over? Walsh depicted the typical Verizon worker working four hours in the morning, four hours in the afternoon, with an hour off for lunch and two 15-minute breaks. But the stress arose because a supervisor kept track of every workstation using a color-coded grid. In one glance, the multihued squares would reveal whether a CSR was keeping someone on hold for too long and when a CSR signed on and off. One CSR named Patti Egan pointed out that there was only a two-second window between calls, without time to type up the order of the last caller. Often, unfinished orders were set aside, to be presumably completed during one spare two-second moment. Factor in the pressure for CSRs to upsell callers on features and the incentive for a call center to sell $60,000 worth of products a month if the CSRs want to move out of customer service and into jobs without sales duties, and the pressures that the workers were fighting for became all too clear.

By August 14, 2000, Verizon had made a new offer to the unions. But Communications Workers of America spokesman Robert Master declared it “old wine in new bottles.” But the picketeers has started to thin. The thousands of workers who had struck in the previous week had been reduced to 750. Nine days into the strike, employee Danny Marino remarked, “I didn’t think that it would come to this, definitely; I thought this would last only two or three days.” He had been married the previous month. Meanwhile, managers continued to take care of the 80,000 requests Verizon was receiving each day.

On August 16, 2000, the unions declared that they would break off negotiations with Verizon if they could not reach an agreement by midnight the next day. Mandatory overtime and job security remained the two 900 pound gorillas swinging in the room. But the next day, the workers continued talking past this deadline

As the strike took a considerable toll on Verizon’s stock share and federal rules prohibited companies from owning more than one license in a metropolitan market, Verizon unloaded wireless franchises in Chicago and Cincinnati to an investment group led by J.P. Morgan.

Finally, Verizon and the unions reached a tentative agreement. Nonunion wireless employees were permitted to organize. Two-thirds of the strikers settled on a contract two days later. The workers agreed to a three-year contract, procuring a 12% wage increase over three years. And Verizon had imposed a condition upon wireless union organization: if 55% of the employees at a work location agreed to sign cards, they’d have a union. Union telephone workers won the right to conduct more work, such as the installation of high-speed Internet lines. Mandatory overtime would be reduced, but it would still be mandatory. On the work stress issue, the unions were given five 30-minute periods each week whereby the CSRs could perform work that didn’t involve calls. But the two-second window between phone calls had gone unacknowledged.

Three years later, when the contract ran out, there would be another strike. But the next time around, Verizon would not cave. Verizon and the unions would agree to a new contract in September 3, 2003, with a one-year wage freeze, new hires not covered by the job security provisions, and one that would last five years. Five years. The precise length that Verizon had insisted in 2000. The precise length that had worried the unions because of the rapid changes in the telecom industry.

Yesterday, the New York Times reported that the unions were preparing to strike again. The numbers now? 86,000 in 2000. 65,000 in 2008. I will examine how this workforce figure was reduced and go into the 2003 strike in forthcoming installments. But for now, I’ll simply observe that the renegotiated five year contract expires on August 2, 2008. Whether the Communications Workers of America and the International Brotherhood of Electrical Workers will learn a few lessons from these previous two strikes remains to be seen.

The Bat Segundo Show: Steven Greenhouse

Steven Greenhouse appeared on The Bat Segundo Show #213. He is the New York Times labor reporter and the author of The Big Squeeze. My review of the book can be found here.

Condition of the Show: Reporting upon the darker truths of America.

Author: Steven Greenhouse

Subjects Discussed: Whether economic factors of the 1970s or Eleanor Roosevelt’s famous maxim caused the current strife between corporations and workers, the social contract that came from 20th century labor negotiations, why workers settle for less, temps exploited by HP, being treated like dirt, mock memos circulated to cope with downsizing, The Office, why workers aren’t revolting, Bowling Alone, The Pursuit of Loneliness, how what we do for fun has transformed in the past few decades, the worker-friendly company policies of Patagonia, prodigious cafeteria options for workers, the shocking disparity of parental leave policies in different nations, tracking the lunch hours of workers, computers vs. martinet managers, call center workers, workers who slack off vs. a robust economy, Cooperative Home Care Associates and the benefits of workers on the board of directors, independent contractors, job security, the New York Times hiring freeze, Neutron Jack Welch, The Disposable American, companies who display “too much loyalty” to workers, workers who “get used to” hard and immoral company tactics, climbing the Wal-Mart ladder, the workplace as a cult, unrealistic American dreams, billable hours, the allure of promotion, Greenhouse’s proposed solutions, and a living minimum wage.

EXCERPT FROM SHOW:

Correspondent: Look at Jennifer Miller, who is this woman who worked at HP for ten years. She didn’t have to work as a temp for that long. She could have easily cut out. She could have gone and demanded more from the HP managers. So I would argue that the workers who have allowed themselves to be placed in these particular conditions are perhaps just as responsible as these businesses and these corporations that are trying to squeeze out more profits and also trying to combat the influx of low-cost imports.

Greenhouse: Again, Ed, you ask a good question, and it’s hard to say. Jennifer Miller was a worker at HP. High school graduate. Very little college. She started as a McDonald’s worker. She became a McDonald’s manager. She got tired of that. Then she got a permanent job at HP. That job was sent overseas. So she was kind of bought out. Then a few months later, she was approached. “How would you like to return to HP as a temp?” She thought it was going to be a two-month gig. And as I explained in the book, she was there for ten years as a temp. She said that the job was good. It used a lot of advanced skills. She was often treated with respect, but she said the bad thing was she was a temp and didn’t get the same benefits as HP workers. She didn’t quite get the respect. So you ask why didn’t she quit?

Correspondent: And I should point out that she was even barred from the company parties. I mean, this is a key indicator. In my view, I would say, “Well to hell with this. I’m going to find someone who I can be on staff with.”

Greenhouse: It wasn’t just she. But all temps were barred from the company — you know, they might create a wonderful new piece of software, created a wonderful printer, and all the regular permanent employees could go to the party and celebrate and go for the two-day ski holiday to celebrate. But the temps who work alongside the regular workers in a crazy situation, they weren’t invited to the parties. So yeah, for someone like Jennifer, there was some eating humble pie there. So the question is why didn’t she quit? She said, “For me, Jennifer Miller, a mere high-school graduate living in Idaho, that was a terrific job. I was making $30 an hour. I was really using my brain. I was often working alongside terrific people. Sort of semi, somewhat treated as an equal. But on the other hand, no.” And she said, considering what else was out there, going back to McDonald’s working as a manager, which isn’t such a bad job, but she said working at HP as a temp was better. Her argument was HP was good in many ways, but there was this one big negative. That she was treated as a temp.

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