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Capital and inequality

Joseph Joyce, professor of economics at Wellesley College wrote and interesting piece to day on capital liberalization and inequality.

I’m glad to see that so much attention is being fawned on Piketty’s most excellent book, “Capital in the 21sr Century.” It’s sure to go down as a classic in the economics literature, but the debate and discussion surrounding the book couldn’t come at a better time.

I don’t think it’s an accident that Piketty’s book, would top the NYT best seller list just a week after appearing, that a sitting President of the US would mention that inequality is one of the most important issues of our time, or that Christine LaGarde, head of the IMF would make a case that we need to address inequality at a global level.

They (Florence Jaumotte, Subir Lall and Chris Papageorgiou) analyzed the effect of financial globalization and trade as well as technology on income inequality in 51 countries over the period of 1981 to 2003. They reported that technology played a larger role in increasing inequality than globalization. But while trade actually reduced inequality through increased exports of agricultural goods from developing countries, foreign direct investment played a different role. Inward FDI (like technology) favored workers with relatively higher skills and education, while outward FDI reduced employment in lower skill sectors. Consequently, the authors concluded, while financial deepening has been associated with higher growth, a disproportionate share of the gains may go to those who already have higher incomes.

This is a scenario we’re all mostly familiar with, though the broad effects are still debatable. Increasing investment by giants like the US in overseas manufacturing push down wages on domestic unskilled labor, but it’s hard to say whether this had a major effect on overall employment. Unemployment remained steady even after Clinton signed NAFTA, and continues to remain well under European levels today, though the lowest level of workers feel the worst pain. I’m not sure if I can really advocate for protectionist measures to keep capital at home or dissuade foreign investment on principle alone, but it is true that the worst effect of foreign competition has been the erosion of labor’s political power.

Jayati Ghosh of Jawaharlal Nehru University of New Delhi has examined the role of capital inflows in developing countries. She maintains that the inflows appreciate the real exchange rate and encourage investment in non-tradable sectors and domestic asset markets. The resulting rise in asset prices pulls funds away from the financing of agriculture and small firms, hurting farmers and workers in traditional sectors. Eventually, the asset bubbles break, and the poor are usually those most vulnerable to the ensuing crisis.

Well, this is somewhat more interesting. Foreign investment in developing countries appreciates the exchange rate, leading domestic investors to put their money into, say, real estate assets. This is certainly the case all over Africa. Land and building developments are occurring at a breakneck pace, with the hopes that expensive properties will be bought up by foreign companies and individuals. It’s certainly the case that no common African could ever afford some of these places (or would even want to buy them if they could). Nairobi, Dar es Salaam and Luanda, Angola are all in the middle of a real estate bubble. The problem, of course, is that domestic investors are hoping to make a quick buck, rather than attempting to create long term, profitable industries. No wonder Africa imports the lion’s share of it’s manufactured goods. No local will invest in the infrastructure to create it locally since urban real estate is so absurdly profitable right now. This, of course, means that money flows directly into the pockets of the urban elite and then sent back out to bank accounts and retailers in France and England, further entrenching the poorest of the poor.

Without the development of local industries, domestic economies can’t function and opportunities for revenue collections are missed. and countries like Tanzania and Kenya, for example, will continue to be beggar economies which depend on the good graces of the international community to support domestic social programs.

Interview with a warrior: Greg Pratt, homeless advocate

Pratt with the MISSION crew. Pratt is third from the right.

Pratt with the MISSION crew. Pratt is third from the right.

Today’s interview is with my friend, advocate for the poor and downtrodden and purveyor of loudness, Greg Pratt. Greg’s a great guy in just about a billion ways. This interview should tell you why. You can learn more about the group he works with MISSION A2, here.

Who are you and what do you do?

Greg Pratt. I am a social worker by training, an organizer and movement worker by necessity. The two primary foci of my work are material and political support.

I help people with resources for living outside, so propane, water, socks, tents, sleeping bags, batteries etc. I also help them organize politically [internal and external]. Sometimes, that manifests in a camp community [internal] other times that manifests in local ordinances like the Good Neighbor Amendment to the Ann Arbor Parks Ordinance [external]. This amendment waives the fee for organizations handing out free material goods to folks in A2 public parks.

The Camp Take Notice Good Neighbor Subcommittee worked on this from April 2013 until the ordinance passed its 2nd reading on November 18, 2013. The Subcommittee was comprised of 7-8 individuals and I believe everyone but myself was homeless or recently emerging from homelessness.

You have done a lot of work with homeless people in the Ann Arbor area. How did you get started doing that work?

I am an alcoholic. On December 31, 2001, I had my last blackout and was charged with my third DUI.

On July 3, 2001, I was sentenced to six months in Oakland County Jail. The first five days were spent in the middle section of a three-section holding tank area of the Oakland County Jail. Each section was 10’ X 15’, separated by plexiglass, and had anywhere from 10-15 individuals in each section at any given time. There was one toilet per section. We were let out once per day to eat.

After I got out of there I was transferred to the County Barracks across the street for the work release program. This was basically an army style, bunk bed living quarters. We paid weekly rent [I think mine was something like 160-70 per week] and were allowed out of the barracks, at most, 5 days/week. I was only fortunate enough to get out 4 days/week.

After getting out of jail, I spent six months on tether [house arrest]. At the same time, I began my probation which included many hours of community service.

I chose to do my service hours at SOS Community Services at the River St. Location in Ypsilanti, MI. I did their “empathy training” to become a volunteer crisis counselor. At the time, the River Street SOS location served as a place for people to get referrals to other services in the area, food distribution, and a 24-hour crisis hotline which people used for information or just to talk when things were getting a bit to much to handle. I only had one suicide call [fortunately] while we still had the phone lines in place. I continued on in my volunteer capacity at SOS for a year after I got my hours for probation completed. I really enjoyed the work and the community I was a part of as a result of being there two to three times per week.

Anyhow, that is how I became involved. My first social work mentor, from SOS, was Christina Oliver. She still works in the area as a disabled-persons’ advocate.

I haven’t had a drink of alcohol since February 19, 2001. My higher power is the collective consciousness of all living beings. I am not anonymous, but I practice the principles in my daily life.

Do you find that the situation for homeless people in Ann Arbor is getting worse or better? Is Ann Arbor becoming increasingly closed?

I think you may be asking the wrong person on this one.

I am going to give an answer that is the best I can with the information I have from the friends [I don’t use the word client or consumer] with whom I work.

On the one hand Ann Arbor is great because of its manifold set of resources for low-income people struggling with mental/physical health, addiction, and unemployment. On the other, it has very little in the way of low-income housing that is near places of low-income employment. The bus system is ok, but has limited evening hours during the week [M-F] and pretty much zero hours on weekend nights. So, if you live in Ypsilanti and work in Ann Arbor and have no car, your options for hours to work are limited as a result of these limited transportation options. If you talked to the current VP of MISSION, Jimmy Hill, you may get a more comprehensive version of what it is like trying to navigate one’s way out of homelessness in Ann Arbor.

Is is getting better? I hope that in the wake of the forum hosted by the Ann Arbor District Library last week it will. Camp Misfit A2 [one of the groups interdependent with MISSION] has, through their activism and public actions, put the issue of lack of affordable, low-income housing on the radar of local politicos as well as the local human services industry. I am cautiously optimistic right now.

Ann Arbor, as a small and somewhat well to do area, likely does not have the social space or will to accommodate an underclass, but at the same time, would not like to be seen as exclusionary. Do you think that Ann Arbor will ever be able to rectify these competing problems?

Good question. For me, change will have arrived when “our” kids can play with “their” kids.

I don’t think that we will ever correct the problem given the current system of resource distribution in our society, Capitalism.

Capitalism is a system that is framed to encourage economic growth. In this system, there are winners and losers. It is not “survival of the fittest” that determines winners. It is more like a complex gambling system that is weighted toward those with more wealth.

So, I think for Ann Arbor to rectify these problems, we would have to end capitalism as it is practiced now.

Here is another point I want to make. This one is predicated on our capitalist system of resource distribution. Homelessness is not a pond we can drain, but rather a river that flows on beyond our time here on this earth. We can dam up the river and provide bridges at certain sections of the flow, but regardless of our actions to “stop the flow” it continues on just like the wind.

There are people who are “chronically” homeless. But, most folks struggle with this for a matter of months. At our camp out on Wagner Rd [RIP], the average stay was just under three months. The Delonis Center has a similar statistic, although I think stays have been increasing over the last couple of years there.

I’m finding it interesting that Ann Arbor is having discussions about whether to create and improve public spaces, based on a perception that homeless people will use them (like this is a bad thing). How much of these concerns is based on alarmism, and how much is justified?

I think that we need to plan those spaces in an inclusive way, all stakeholders at the table. If we were to take that tack as a community I think we might reduce some of the alarmism. But ultimately, I think the folks with capital to invest in this area would rather see sunshine and lollipops and yellow brick roads, than help people who are struggling to make it in our community.

What do you see ultimately happening?

For the time being, more sunshine and lollipops and yellow-brick roads to nowhere for the poor and to increased wealth for Rick Snyder and his Carpet Bagger Finance Capitalists.

You’ve also done work with the unions, specifically during the push to bring GSRA’s into GEO. What’s your history working with labor?

Ugh. What a nightmare campaign that was. Before that disaster, I helped nontenure track faculty at MSU and EMU build their unions.

Yes, I worked for AFT Michigan [American Federation of Teachers]. I was a member of GEO as a grad student at the UM School of Social Work and was interested in learning labor/political organizing. I became a member of the GEO Organizing Committee just as our 2008 contract campaign was ramping up in December 2007. This was the contract campaign wherein we shut down both the UM Stadium and Business school renovation projects. I was picket captain for the business school site.

That summer, I was hired by AFT to work on a campaign with non tenure track faculty at MSU. After we won that campaign, I was sent to EMU to help bring the part time lecturers into the existing full time lecturer union. EMU has about 120 full time lecturers and about 500-600 [depending upon the semester] part time lecturers. In order to accomplish this, we conducted a few well-attended sit-ins at President Martin’s office. Paul Horvath [Math Lecturer at EMU] was one of the key lecturers involved in that effort. Good times.

After that campaign, I went to work with GEO leaders on bring the GSRAs into the union. In the wake of that Rick Snyder signed a law that prohibited GSRAs from joining a union. I believe this law has since been found unconstitutional and is in some sort of legal limbo on appeal.

That battle was eventually lost. It seemed like a really not so controversial idea. What do you think was going on to make it blow up as big as it did?

I think that conservative anti-union folks in Michigan watched AFT organizing at many of the colleges and some community colleges across the state. Grad Students, Lectures and even some faculty were joining unions in large numbers through the dedicated work of organizers like Jon Curtiss and Lynn Marie Smith between the years 2003-2010. When Rick Snyder was elected, the republicans had every lever of our state’s government under their control. I think they saw an opportunity and put a lot of resources toward blocking this campaign.

That describes what happened on their side. I think it is more telling, what happened on our side [labor]. Our leaders, when planning this campaign, did not listen to the suggestion of leaders on the ground in GEO and in general on campus. We were internally divided. That made it easier for the Mackinac Center to pick us apart and stop the momentum we had while out talking to hundreds of researchers like yourself.

You eventually left. What happened?

Unions are great at the local level. But, as they get bigger, the organizational structure mirrors the organizations they are meant to regulate or keep in check. I didn’t want to compromise my organizing style in order to get a paycheck. I decided that the work needed to be done was the work for which there is no paycheck.

I had been teaching at UM School of Social Work in Winter 2012. I continued on as a lecturer there and at EMU until December 2013.

I am currently unemployed, but doing the work for which there is no paycheck.

What’s up with your radio career? How does radio figure in to your worldview as champion of the poor and marginalized?

You are very kind to call it a career 🙂
How does it figure in? Well, I grew tired of complaining about the media and decided to become a part of it instead. Viva Jello!

What’s up for the future?

1) Kicking ass for the working class!
2) Getting a job with a paycheck.

Are Rising Food Prices Causing Social Unrest?

I have written several posts on the major problem of rising global food prices. Recently, a friend brought up the threat of domestic food riots. I quickly brought up the problem of rising food costs, and theorized that a declining ability for people to feed their families is at least partially to blame for the increasingly bloody labor protests in South Africa.

South Africa is considered the world’s protest capitol. To be sure, the South Africans, used to generations of violent oppression have made a science of political protest. They are certainly within their rights to complain, dealing with massive inequality, political marginalization and a historically violent state.

Using the University of Michigan’s article database, I counted the number of newspaper articles containing the words “South Africa” and “protest” yearly from 1990 to 2012. Only articles written in English were considered. I combined this small database with the FAO’s yearly food price index to discover if there were some correlation between the two. The results of my search are in the graphic to the left.

Assuming that the number of articles on South African protests is correlated with the true number of protests, I found that there is a correlation between the two and that correlation is striking. I think it would be safe to conclude that the unprecedented increase in world food prices is contributing to massive social instability in South Africa.

I find this result frightening.

As a resource exporter dependent on international mineral traders and global pricing, domestic policy and corruption in South Africa are influenced and encouraged by the international community. This failure of policy to provide for the poor and protect the interests of workers (who merely demand fair pay) are likely contributing to violent unrest.

Will Teach for Food: Beggar Faculty in American Academia

As I near the end of my graduate career, I’m filled with anxiety over jobs and money. If an article on Al Jazeera is any indication, those anxieties are entirely founded.

More than 65 percent of all teaching faculty (in terms of credits taught) at American institutions are part time, short term contract workers who are poorly paid and offered little or no benefits at all. Even as tuitions have skyrocketed, full time, fairly compensated job prospects in academia are drying up.

My academic career began when I started teaching math part time at Jackson Community College. Though I was happy to have the opportunity at the time, I worked more than 20 hours a week per course, and was paid the measly sum of $1100 a semester for a 3 credit class. Even if I taught full time for all three semesters (isn’t that a trimester?), I couldn’t reasonably break $14,000 a year, well below the poverty level. Part time instructors had no union representation at the time. We fought for it, but were blocked by both administration (who saw us as an expense) and the current faculty union (who saw us as a threat). I’m not sure what the situation is now.

Eventually, I quit. The poor compensation just wasn’t worth the time put in. Worse, despite poor wages, the school became increasingly intrusive on course design, reporting, management and even whether what we could say in the class room.

There is a direct correlation between freedom on the job and payment. Poorly paid people have little freedom and little respect, well paid people have all the freedom and respect they could ever want. This clearly has vast implications for academic faculty.

The world likes to think that academics live a life of opulence and guaranteed employment. The truth is, that in 2012 most do not. Academics are going the way of just about all employment sectors. Services, even in public institutions, are becoming widely privatized, and the ability of workers to band together and demand improvements in working conditions and compensation undermined. Employer based benefits are disappearing, and compensation is falling. Anti-intellectuals should be rejoicing.

I worry that in 10 years, every university will be taught by robots managing watered down and expensive online courses, geared to giving anybody a fake degree. Academics in the United States is something to be very, very proud of, though the future is very suspect.

Right Wing Advocacy Group Successfully Stifles Democracy

A couple of weeks ago, Gov. Rick Snyder (of Michigan, of course) signed a bill that prevents graduate student research assistants (GSRAs) from having a say in whether they want (as a group) to unionize.

For nearly the past 2 years, the Graduate Employees Organization (GEO) has been attempting to bring GSRAs into the union, which now only represents graduate student instructors (GSIs). GEO has been instrumental in guaranteeing fair wages for graduate employees, insuring that graduate employees receive that same health care package that all UM employees receive, and providing representation when disputes arise. Not many universities offer as generous a support package as the University of Michigan, which makes the U extremely competitive in the market for quality graduate students.

In the early 1980’s, the Michigan Employee Relations Committee (MERC) determined that GSRAs, who were a minority at the time, were not employees of the university (and thus of the state) and thus would not qualify for representation under the union. That situation has vastly changed. Now GSRAs outnumber GSIs and the U has morphed into a research behemoth. GSRAs play a pivotal role in the U’s status as a world class research institution and in Michigan’s fragile economy.

The conservative Mackinac Center, a non-profit public policy group that has made no secret of it’s stance against public employee unions, offered to pay for legal fees to challenge GEOs bid to allow GSRAs to vote whether to enter the union. With this backing, a rag tag group called Students Against GSRA Unionization, took the issue to the state and after months of wrangling, the issue manifested itself as a Republican led bill.

The bill, which Gov. Snyder signed, essentially codifies the MERC decision from the early 1980’s and quashes any arguments that GSRAs should enter GEO. Simply, GSRAs cannot vote to join any union and now have no right at all to collective bargaining or unionization.

Though this post is embarrassingly late, the issue fills me with rage. Certainly, I despise the Mackinac Center so I am biased in this regard. To critics of the decision to unionize GSRAs, I would remind you, that GEO was seeking merely a VOTE. If this isn’t “big government” at work, I’m not sure what is.

If the body of GSRAs decided that it was not in their interest to join the union, the it would not happen. Certainly SAGU and any other group could make the case against unionization and the issue could be put up to discussion. It was very possible that GEO would have lost in a public vote.

That idea seems to have escaped SAGU, which probably feared that they would lose such a vote. (FYI: This was an odd group. Their initial spokesperson, Melinda Day, was filmed snickering and rolling her eyes at a hearing before the Michigan Legislature, apparently oblivious to the presence of adults in the room.)

Gov. Snyder’s and the Republican led state legislature’s decision however, robs GSRAs of the right to vote. Given the current pattern of Republican led efforts to deny the vote to Michigan’s citizenry through the enaction of EMF programs, this should be of absolutely no surprise at all. Republicans in the state of Michigan, who purport to believe in democracy, really only believe in the power of the vote when it suits their own ends. Certainly, this is endemic to political groups under any label, but the heavy handed, and unrestrained, actions of the state in this case make the problem so incredibly obvious as to defy explanation.

So here, I say, fuck you Gov. Snyder. You are an embarrassment not only to the State of Michigan, but to democracy itself, which you obviously don’t care about. I’ll see you in 2014.

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