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One of the penalties for refusing to participate in politics is that you end up being governed by your inferiors. -- Plato (429-347 BC)

Monday, July 11, 2016

Former SEIU President Andy Stern Wants Me To Send You $10,000/Year Tax Free

Andy Stern
by Ralph Benko, Contributing Author: Are good Middle Class jobs an endangered species? If so is the solution to send almost everyone $10,000/year tax free?

The formerly most powerful union leader in our lifetime, Andy Stern, in Raising The Floor: How A Universal Basic Income Can Renew Our Economy and Rebuild The American Dream, has written (to paraphrase Dickens) the best of books, the worst of books, a book of wisdom, a book of foolishness, containing epic belief, containing epic incredulity….

Herein Stern tackles the intriguing topic of a Universal Basic Income. This is a policy proposal with theoretical support both from the left and the right. What could possibly go wrong?

Andy Stern, during his career, was the most interesting, creative, and, arguably, effective labor union leader in an epoch of the decline and fall of private sector labor unions. A master strategist, he helped build the SEIU (“Justice For Janitors!”) to over 2 million members, seceding from the AFL-CIO to create CHANGE TO WIN … which did not prove a great success.

He was beloved by millions of rank-and-file workers. He was hated by many union boss rivals, corporate managers and anti-unionists. Stern is never boring.

Stern, who I met personally twice, did not seem to mind that I myself am a card-carrying AFL-CIO member. He and SEIU's secretary-treasurer Eliseo Medina arguably are the greatest labor leaders since John L. Lewis, head of the United Mine Workers, creator of the CIO, left the scene.

Stern is an iconoclast. He may be the most endlessly inquisitive character since the Kipling’s Elephant’s Child and he is a seeker of unconventional wisdom. So it was with keen interest that I read, and with a mixture of marvel and incredulity reread, his and Lee Kravitz’s Raising The Floor.

Among the marvels herein Stern directly addresses a paradoxical phenomenon. We as a society get richer through productivity. In practice this means automation and fewer jobs, fewer ways to participate in those riches. Think robots.

Technology allows one person to produce what it used to take two, ten, or even hundreds, to do. Think software. This unequivocally makes us, collectively, much richer.

It is free-market doctrine that this will create new, better, jobs. And I am nothing if not doctrinaire. That said, it is not obvious that the economy is creating new, better jobs. To further confuse matters productivity growth has badly declined in the past five to ten years.

America’s greatest philosopher, Yogi Berra, once observed: “In theory there is no difference between theory and practice but in practice there is.” So, what gives?

The empirical data aren’t reassuring. Job creation has been terrible for the past 16 years through two terms of a Republican and two terms of a Democratic administration (neither Supply Siders). My own belief is that this stagnation has been caused, above all, by bad monetary policy compounded by bad regulatory policy. The Fed, in part, inadvertently torpedoed two presidents.

If we transform monetary and regulatory policies we are likely to reignite the kind of sizzling job growth we saw under Reagan and Clinton. Increased demand for workers is the only organic, sustainable, way to raise the floor. Anything else is, at best, a patch and likely to make matters worse.

My theory is as far from trickle down as it gets. Yet it’s insufficient to be theoretically right when people’s livelihoods, and lives, are on the line. Work has to work. When will the better jobs arise for those such as the “Marias?”

The "Marias" are what Stern in another context affectionately called the hotel chambermaids. They in due course likely will be replaced by SuperRoombas. Handing them a copy of John Tamny’s excellent Who Needs The Fed? with their pink slips represents cold comfort indeed.

Where are the new, better, jobs? Where will they come from in the future? These are legitimate questions and Andy Stern raises them unflinchingly. This is where Raising the Floor represents the best of books. And Stern, in his hallmark style, makes his quest for the answers personal, vivid, and moving.

Stern shocked the world by resigning the SEIU presidency at the height of his power. He, in concert with SEIU’s then executive vice president Eliseo Medina, had devoted his life to building SEIU from a tiny entity into the dominant labor union in America. Why did he so unexpectedly and abruptly hit the ejection button?In 2010, I seemed to be at the top of my game…. Despite this, I stepped down that year as president of the Service Employees International Union (SEIU). … From the mainstream Washington Post to the conservative Wall Street Journal, the media speculated as to why I had decided to leave SEIU at the height of my power and influence. Redstate, a conservative journal, claimed that I was resigning because I was bored with having to spend time on the day-to-day contract battles that are a union’s bread and butter. ‘You’d probably be bored, too, if you had taken a relatively obscure union of janitors and doormen and turned it into the largest and most powerful private-sector union in America…put a president of the United States into the oval office…and fulfilled one of the union movement’s main objectives: nationalized healthcare. …

Redstate couldn’t have been more wrong. Those janitors and window cleaners, those doormen and security guards, and those nurses aides and home- and child-care workers were the people I care about most: nothing motivates them more than the American Dream – the promise, to anyone who works hard and plays by the rules, of a good and secure livelihood and a better future for their children. …I didn’t resign from SEIU because I was bored. Rather, after nearly fifteen years at the helm of SEIU, I had lost my ability to predict labor’s future. …[B]y 2010, the economy was changing and fragmenting at such warp speed that I couldn’t see where it—or labor—was headed. Without a clearer vision of the future—of the world in 2025 or 2040—I couldn’t develop the inner compass needed by a leader who seeks to bring about major social change, and I was out of good ideas.
Stern then takes us along with him on a multi-year odyssey in quest of a better understanding of what is going on, how and why, and “good ideas.” Stern, insatiably curious, shares with us his interactions with Intel co-founder Andy Grove; seminars with celebrity left wing economists such as Thomas Picketty, Joseph Stiglitz, Paul Krugman; a virtual tour of some of the thinking of futurist Ray Kurzweil; to MIT to explore the implications for job creation of Big (960,000 petabytes; noting that 200 petabytes would store all the printed information in the world) Data.

Stern’s most consistently incisive character — playing Cheshire Cat to his Alice — is investment banker Steven Berkenfeld. Berkenfeld helps Stern -- and us -- grasp the inexorably dwindling importance of, and value attributed to, workers in the grand scheme of business. In addition, Stern has an ear for the telling detail. Consider his quote from Terry Gou, the founder of Foxconn Technology Group: “Hon Hai has a workforce of over one million worldwide and as human beings are also animals, to manage one million animals gives me a headache.”

Stern proves himself no Luddite. "In 1972," he writes,

when I graduated from college, the price of the fastest supercomputers on earth was between $5 and $8.8 million (the equivalent of almost $30 and $43 million today). Forty years later, I could buy an iPhone 4 with equal performance for less than $400. What a thrill to be alive in the wonder-filled world of Moore’s Law…. And yet, there is a dark side to all this change that will improve our lives: the loss of millions of middle-class jobs, perhaps forever, but definitely for the foreseeable future.He takes us into his conversation with Carl Camden, the CEO of Kelly Services, $6 billion/year – 550,000 temps in 80 countries –- “the voice of disorganized labor.” He shows us the realities of contract employees. Stern takes us into Upwork, which he himself uses for transcription services, far more affordable than American labor.

He vicariously walks us through the Dantesque aftermath of Hurricane Katrina, where Uncle Sam was paying $2980 to $3500 to tarp a roof that ordinarily would have cost $300. The Big Government money got absorbed by about six layers of contractors, not the workers who actually tarped the roof. Most of the actual workers got the shaft.

Stern also gives us a glimpse of Amazon’s Mechanical Turk, people doing “cognitive piecework on demand” for peanuts.

It’s a fascinating, eclectic, odyssey with visits to some authentic Big Thinkers. Most heartrending of all of these conversations may be those he had with Geoff Canada. Canada, the man immortalized in Waiting For Superman, turned the performance of Harlem’s schools around, one block at a time, through 97 blocks: “Not one of my kids is in jail. We have 881 kids in college and not single kid in jail.”

The Divine Tragedy of this? College no longer is the reliable ticket to a good job. It is, too often, a ticket to penury.

Stern's Raising The Floor gives us a thoughtful, multi-perspective, look at The Big Problem: no jobs. He does so in a vivid and compelling way. Therein he has written the best of books.

Then Stern presents his Big Reveal, a universal basic income: $10,000/year, tax free, to everyone between the age of 18 and 64. Thereafter, without seeming to recognize it, he inadvertently makes an airtight case for why the Universal Basic Income, at least as here configured, is a recipe for disaster.

This is a real heart breaker. An agonizing disconnect turns Raising The Floor into the worst of books while moreover overlooking what could be the real solution hiding in plain sight.

To be continued….
Ralph Benko is senior advisor, economics, to American Principles in Action's Gold Standard 2012 Initiative, and a contributor to the ARRA News Service. Founder of The Prosperity Caucus, he was a member of the Jack Kemp supply-side team, served in an unrelated area as a deputy general counsel in the Reagan White House. The article which first appeared in Forbes.

Tags: Ralph Benko, former SEIU President, Andy Stern To share or post to your site, click on "Post Link". Please mention / link to the ARRA News Service. and "Like" Facebook Page - Thanks!
Posted by Bill Smith at 3:30 PM - Post Link


Anonymous SJ Reidhead said...

That would save my home. Don't you love liberals?


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