Tariff Follies

To its credit, the United Steelworkers union (USW) has lifted the living standards and working conditions of millions of workers. Birthed from the militant 1930s Steel Workers Organizing Committee and midwifed by hundreds of Communist and socialist organizers, the USW became a strong advocate of industrial unionism and one of the more progressive forces in US political life. 

But with the Cold War and the purging or repression of its most militant members, the USW abandoned the class-confrontation approach of its early years for a partnership with capital. In place of exercising the strength and power of a united membership, the union leadership chose a partnership approach, negotiating contracts based upon the notion that the worker and the boss had a common interest.

In the contest of the early Cold war, capital accepted some concessions to labor to guarantee US labor’s loyalty to US foreign policy objectives. In return for US labor leaders policing domestic radicalism in the workplace and for international collaboration in fighting Communism, the bosses tacitly agreed to accept wage and benefit growth commensurate with rising productivity. 

With the onset of the economic crisis in the 1970s and with the ruling class turning toward market fundamentalism, capital reneged on its part of the partnership, attacking labor with vengeance. The implicit partnership was dissolved by one side.

Unfortunately, the other side-- organized labor (in this case, the USW)-- clung to the partnership. Despite restructuring, downsizing, plant closures, and concession demands, the USW stood by the philosophy of cooperation, what their critics called “class collaboration.” 

Since we can remember, one expression of this affinity with corporate bosses has taken the form of seeking protection from foreign competitors. From inviting workers to sledgehammer Toyotas to advocating for steel tariffs, the USW leadership has maintained that what is good for steel corporations doing business in the USA is good for USW members. 

In recent years, the protectionist demand was at odds with the political mainstream, including the union’s putative ally, the Democratic Party. Since the rise of Thatcher/Carter/Reagan/Clintonism, unfettered free markets have been an ideological fixation of all the bourgeois parties and their policy makers, placing tariffs and other protectionist policies beyond the pale. 

But in 2016, the USW leadership found their savior. Donald Trump rudely arrived to occupy the White House. 

Moreover, he kept his promise in 2018 to impose restrictive tariffs on all the imported steel coming into the United States. Unfortunately for the USW and their bet on protectionism, the Trump tariffs failed to meet their expectations. As The Wall Street Journal reports: “With the expanded production, about 6,000 jobs were added to the U.S. steel industry’s workforce after tariffs started in 2018, according to the Census Bureau. By the end of 2019, though, those gains evaporated as steel demand and prices sank.” [my emphasis]

Authors Bob Tita and William Mauldin (Tariffs Didn’t Fuel Revival for American Steel, WSJ, 10-28-2020) add that: “Higher prices [initially] also made steel more expensive for manufacturers that buy it, leading to the loss of about 75,000 U.S. manufacturing jobs, according to a study released late last year by the Federal Reserve Board of Governors.”

In addition, foreign steel makers secured punitive export tariffs in retaliation, further hurting domestic US manufacturing.

The lack of growth in demand for steel in the USA has forced domestic producers to seek exports of steel to markets outside the USA in search of profits, the same strategy practiced by the "foreign" competition. 

A major component of Trump's 2016 victorious campaign message which helped him secure votes in the Rust Belt was his promise of major investment to rebuild infrastructure and create jobs. It never got off the ground because it was based on the false notion that capitalists will invest in the public good. Things like fixing public schools, hospitals, water systems, pollution control, and building mass transit systems simply don't offer returns to investors even though they will provide for the public good, boost steel production, and create tens of thousands of steelworker jobs. 

 Instead, Trump, true to his real, big-business agenda, pushed a major tax cut that actually reduced the revenue available for any public investment. Rather than drain the swamp, Trump drained the public coffers and offered the syrup of "public private partnerships" that were supposed to entice capitalists to invest. They never did. 

Not to be outdone, The Pittsburgh Post Gazette reports that the Republican-controlled legislature of Pennsylvania has now taken this phony concept to its practical conclusion which will result in the proposed tolling of many bridges in Pennsylvania as a way of making the "partnership" work to increase state revenues. Rather than tax the wealth of billionaires and corporations to obtain necessary revenues to rebuild in the public interest, we instead have tax cuts for the rich and privatization of necessary networks and services. 

Understandably, the US-based steel industry sought to garner greater market share through the tariff program. However, the USW leadership failed to acknowledge one of the more basic laws of capitalism: with tariff-induced prices soaring and foreign competition locked out, domestic capitalist enterprises were incentivized to engage in an orgy of expansion and production. As a result of this classic overproduction-induced crisis, prices collapsed and the industry withdrew, with layoffs and closed facilities. Prices for hot-rolled coiled sheet steel increased by nearly half to $920 a ton after the tariffs were imposed, but are now below their pre-tariff level. 

The advocates of tariffs as a remedy for layoffs and stagnant or declining wages and benefits forget that capitalism runs on profits and not sharing the wealth. The Communist, socialist, and other militant trade unionists who founded the union understood this truth. They sought a union that would fight the corporations for a greater portion of those profits for the workers. 

Today’s leadership of the USW mistakenly believes that workers will benefit if “our'' corporations are favored over “theirs.” They fantasize a world where foreigners are rapacious cheaters and US producers are inspired by the greater good. “Theirs” are driven by ruthless competition, while “ours” are committed to fairness and partnership. Lurking beneath the rhetoric is a not-too-subtle national chauvinism.

Surely, the experience with the Trump tariffs reveals that the protectionist approach not only slanders foreigners, but fails to protect domestic production, jobs, and compensation. Domestic producers, like their foreign counterparts, are ruled by the laws of motion of the capitalist system. Bust follows boom, whether it applies to a protected national market or a global unfettered market. 

The union's reliance on this cooperative approach with the steel corporations defangs it for the necessary independent political action program that could unite the membership and the general public in a fight for jobs and investment in decaying infrastructure. All research shows that this is a real path forward to create steel demand and union jobs. It's plain to see and many studies document that America's infrastructure is in horrible shape. Tariffs have not increased domestic demand for steel. The only way to increase domestic steel production is through a massive reinvestment program that not only rebuilds the decaying American infrastructure in the public interest but creates steelworker jobs.

Rather than casting their fate with their privately owned corporate rivals for the wealth created by the workers, unions should fight those rivals for a greater share. If they want to guarantee jobs, security, and compensation, they should struggle to eliminate the private corporations altogether. A real fighting union would be for public ownership of the steel industry.

Greg Godels  zzsblogml@gmail.com

Ed Grystar egrystar@aol.com

Labor at the Crossroads?

Does the labor movement in the US have a pulse? Given the unrelenting drop in union density (the percentage of workers organized into unions), many have concluded that labor is in decline both as an effective weapon for workers and as a social force in US politics.

It is easy to forget that some of the largest industrial unions arose from small, but determined organizing committees that faced brutal company resistance. Despite these obstacles, they grew into powerful forces shaping the political and social agenda both in industrial cities and on the national scene within little more than a decade. Unions birthed by the modest Committee for Industrial Organization in the mid-1930s sprung into powerful instruments for social change. It was a long standing tenet of labor advocacy that workers could not be organized and gains made during a period of high unemployment and diminished profits. And yet some of the US’s most militant unions came into being and won in the throes of the Great Depression. In the period immediately after World War II, labor was often the decisive factor in approving and electing officials, largely through its pervasive influence on the Democratic Party.

Today, the labor movement remains yet the most resource-laden, influential element in a progressive movement itself relatively powerless and adrift owing to the failing strength and near-dormant militancy of labor.

The United Autoworkers Union (UAW), one of the pillars of the industrial union movement of the 1930s, dramatically reflects this failing. Autoworkers today at one of Detroit's big-three auto companies can start at a wage as low as $14 an hour, an hourly rate conceded in 2007. At that time, the UAW agreed to a two-tier wage and benefit system that left new employees with roughly half of the package earned by existing workers. Today, over 30,000 UAW big-three employees are stuck in low wage hell (tier 2) out of a unionized work force of roughly 80,000 unionized employees (Bloomberg Businessweek). At Chrysler, a new hire makes a bit more ($15.78/hour), but more than half the workers are stuck at tier 2. At the same time, Bloomberg reports that Chrysler earned an adjusted net profit of $2.4 billion in 2014 and GM and Ford are expected to earn $7 billion and $6 billion this year, respectively. Profits are robust, but wages are dismal.

But matters are even worse with the UAW-represented auto parts companies. According to the Wall Street Journal, new hires at American Axle and Manufacturing Holdings Inc make as little as $10/hour, reportedly comparable to what a local Wal-Mart pays in Three Rivers, Michigan. It is not uncommon for UAW workers at parts manufacturers to make in the $11-12/hour range.

In the last decade, the average hourly wage for parts-manufacture workers was down 23%; the average hourly wage for auto-manufacture workers was down 22%.

For the most part, UAW workers' compensation is on a par or little better than non-union auto workers in the US.

Given this bleak recounting of the UAW's failure to deliver for workers, two questions rush to mind:

1. How did a once militant, democratic, independent, and socially engaged union-- a model of class awareness and struggle-- reach a point where it can deliver a contract leaving workers with little more income than workers at the local Wal-Mart?

2. How will such a union maintain and grow in size and influence if it can promise to achieve no more than declining wages and benefits and parity with non-union shops?

For those of us who see a strong, fighting labor movement as necessary for developing any kind of vibrant and effective progressive movement, answering these questions is unpleasant, but essential.

The decline of militancy began with the purges, the legal restraint, and the raiding of the most powerful industrial unions, a blow inflicted in the early Cold War. And the UAW was at the cutting edge of class collaboration, redbaiting, and the expulsion and raiding of militant unions, beginning with the election of the social-democrat, Walter Reuther as president in 1946.

The vanguard of the trade union movement lost its most militant, class-conscious leaders to anti-Communist inquisitions, at the same time it was battered by the constraints of Taft-Hartley legislation, and met corporate power with a fragmented movement.

In its place, a careerist, bureaucratic leadership faced the future with an historic compromise: a Cold War compact that traded labor peace and support of imperialism for wage and benefit increases roughly commensurate with the rise in productivity. The US ruling class gladly conceded this policy in order to receive US labor's blessings in its brutal assault on class-oriented workers' organizations throughout the rest of the world. The crass, opportunistic labor leaders guiding much of organized labor enthusiastically retired the strike weapon and replaced it with a lame notion of “bargaining” that appropriately fit the naive embrace of labor-management collaboration. Accordingly, be-suited labor negotiators sat across tables from be-suited corporate negotiators in a friendly ritual of trading minor concessions and counter-concessions.

Into the last quarter of the twentieth century, US corporations faced dramatic challenges to profitability. Unsuccessful military adventures and rampant inflation from profligate military spending and competition from lower wage rivals employing cutting-edge technologies drove the ruling class to sever its unspoken deal with US labor leaders. The rulers unilaterally reneged on their commitment to “sharing” the fruits of labor. Instead, they launched an all-out war on labor while insisting that labor must surrender its previous gains to improve US competitiveness. Even today, few labor leaders will acknowledge that they have been betrayed by their former partners. With no imagination, no ideology, US labor leaders continue to plead with their “partners” for some accommodation, some willingness to return to benign bargaining.

The excellent labor historian, Roger Keeran, explains this development in the UAW as follows:

The peak of the red-baiting assault on labor occurred in 1947 with Taft-Hartley and the 1948-49 CIO expulsion of the so-called red unions.   So, what happened between then and the first significant concessions by the UAW at the bargaining table in the 1980s? Of course the losses of the Cold War expulsions and anticommunism was the main explanation, but there were a couple of other things.  For nearly 30 years, the Big Three did not face serious competition, and thus could raise wages and increase benefits by passing the cost to consumers.  This changed with the rise of competition from Japanese and European auto makers, who by the late 70s had rebuilt their factories devastated by World War II and were beginning to make inroads in the American market.  Secondly, for years the UAW and others were able to live on the reputation and the gains produced by the militant years. But the earlier militants, even the non-Communist ones, were eventually superseded by leaders with no experience and no stomach for struggle.  For awhile, these leaders were able to pull some rabbits out of hats by trading previous gains in some areas for small wage gains.  

Soon they ran out of hats.

Many commentators acknowledge this one-sided class war, but few place its cause in the sell-out of class struggle prompted by Cold War perfidy.

The Other Side of the Coin

The class collaboration spawned by the McCarthyite purges created another toxic byproduct: the unrequited fealty of the labor movement to the Democratic Party. Before the purges, the left core of industrial unionism had a close, but critical relationship with the Democratic Party. The new born industrial unions played a large role in revitalizing the Democratic Party in urban areas, providing the troops and organization for Democrats to return to power given an opportunity afforded under the banner of the New Deal. To some extent, New Deal Democrats recognized the debt owed to organized labor and very often responded with a generally pro-labor agenda.

But with the ruling class betrayal of the unspoken post-war pact came a similar betrayal of labor on the part of the Democratic Party. By the election of Barack Obama only a handful in the Democratic Party leadership carried forward the New Deal perspective. Nor does the Party pay more than lip service to labor and its agenda.

Yet top labor leaders continue the charade of a partnership with capital and the Democratic Party. They defend the imperative of corporate “competitiveness” by generously sacrificing the membership's wages and benefits; they donate millions of the membership's collective resources to re-elect Democrats who scorn labor's needs.

We desperately need a fighting union movement, larger and more militant than what we have inherited. Clearly the “partnerships” that have been fostered only result in a toothless, shrinking, and aimless movement. Without a new direction, there will be no need for a union like the UAW that can promise workers no more than what comparable workers make in the non-union sector, that forge no radical alliances, that provide no independent leadership, that offer no hope for real change.

But history shows that there are alternatives. The history of the UAW, the CIO and its predecessors show what a few dedicated organizers and leaders can accomplish. And history shows what a militant, class-conscious, class-partisan union movement can mean to the fight for change.

Many thanks to Roger Keeran for his helpful comments on an earlier draft.

Zoltan Zigedy

zoltanzigedy@gmail.com