President Barack Obama did an interview with Vox.com.
At one point he was asked what he thought was leading to growing income inequality in the US.
Here’s what he said:
“Some of it has to do with technology and entire job sectors being eliminated — travel agents, bank tellers, a lot of middle management — because of efficiencies with the internet and a paperless office.”
“A lot of it has to do with globalization and the rest of the world catching up. Post-World War II, we just had some enormous structural advantages because our competitors had been devastated by war, and we had also made investments that put us ahead of the curve, whether in education or infrastructure or research and development. And around the ’70s and ’80s and then accelerating beyond that, those advantages went away at the same time as, because of technology, companies are getting a lot more efficient.”
“One last component of this is that workers increasingly had less leverage because of changes in labor laws and the ability for capital to move and labor not to move.”
Add all that up, and Obama says workers are in a tougher position. He was then asked about taxes, and he gave this additional reason for pressure on wages:
I think that part of what’s changed is that a lot of that burden for making sure that the pie was broadly shared took place before government even got involved. If you had stronger unions, you had higher wages. If you had a corporate culture that felt a sense of place and commitment so that the CEO was in Pittsburgh or was in Detroit and felt obliged, partly because of social pressure but partly because they felt a real affinity toward the community, to reinvest in that community and to be seen as a good corporate citizen. Today what you have is quarterly earning reports, compensation levels for CEOs that are tied directly to those quarterly earnings. You’ve got international capital that is demanding maximizing short-term profits. And so what happens is that a lot of the distributional questions that used to be handled in the marketplace through decent wages or healthcare or defined benefit pension plans — those things all are eliminated. And the average employee, the average worker, doesn’t feel any benefit.
I know Obama is constrained by the realities of the limitations of power to pass legislation. But it is quite striking to me that while he well understands the problems of income inequality and stagnating wages, his trade policies are so counter to the interests of American workers. The promoters of the Trans-Pacific Partnership, which Obama is trying to convince Congress to give him fast-track authority for, say that the problems of NAFTA won’t be repeated here and that the TPP will create American jobs. There is simply no reason to believe this. The TPP will just continue the process of the worldwide race to the bottom while protecting corporations from lawsuits and giving workers even less power than they do now to live a dignified life. It’s very difficult for me to believe that someone who supports the TPP and hires advisors like Larry Summers and Tim Geithner really has the interests of American workers in mind. Or maybe Obama does have their interests in mind, but is so under the control of the dominant ideologies of neoliberalism and global capitalism that he can’t see beyond his limited horizons to understand that a significant departure from current economic orthodoxies is necessary to reverse these trends. It’s certainly true that some of these problems are bigger than anything any president could do; the U.S. isn’t going to be in a position where so many of the world’s nations are either recovering from war or opting out of the global economy again. But Obama’s plans for the TPP are certainly not going to help.
I’m glad my president understand the roots of these problems. I just wish he could articulate better solutions.