I’ve been wondering about this, given that the Biden administration’s various fiscal stimulus plans are releasing not only trillions in government money into the economy — but also $435bn in private sector investment. Much of it is in new growth industries such as electric vehicles and other clean technology, but it’s also going towards semiconductors, biomanufacturing and heavy industry. As commerce secretary Gina Raimondo has made clear, this stimulus effort will be judged on how that money gets used, and unions have a crucial role to play as a counterbalance to private industry.
There is a major Teamsters contract negotiation at UPS beginning today. UPS does package delivery, which I would argue is important, but in terms of future economic growth probably not as important as, say, electric vehicle facilities, which I would love to see unionised. Certainly, recent unionisation efforts at places like Starbucks would be less impactful than in such high growth industries.
Indeed, I fear that the use of “domestic” rather than “union” labour in the Inflation Reduction Act provisions may be a missed opportunity, or worse, when it comes to both the capital/labour balance and transatlantic relations.
When EU firms come to the US, they prefer to operate in “right to work” states where it is easier to fire, and harder to unionise. Research shows that European companies had been upping their investments in right to work states in the US even before the IRA rollout. As I wrote back in 2019, “over the past 25 years, multinational firms based in Europe have made 36 investment deals with state governments throughout the US — deals worth $8.5bn in subsidies and tax benefits. Of those, 18 were based in just six ‘right to work’ states in the Deep South”.
Those moves have only increased since the stimulus money began flowing, and the war in Ukraine created supply chain issues for some European groups. The deals with “right to work” states have been good for European companies, but terrible for European labour unions — indeed, some have complained about this aspect of the IRA. (As a side note, I’ve heard that big European groups actually lobbied for the use of “domestic” versus “union” to take advantage of this arbitrage of their own continental standards — I don’t have specific examples yet, but I will be doing some reporting on this topic.)
But whatever the case, this presents an opportunity for labour on both sides of the Atlantic to do something that politicians in the US and Europe aren’t doing so well these days — to work together around how the IRA and other stimulus measures are going to roll out to create a more resilient economy. As I mentioned in my response to Ed’s last note, there have been some tweaks to the IRA already, and there will be more. It would be great to see some strategic thinking on the part of labour about how to leverage those opportunities.
For starters, I’d love to see a really big, public transatlantic push around the unionisation of the clean energy supply chain. This would help to grow unions in the places jobs will grow, and create some much needed US-EU common ground (which totally exists — the interests of labour in both places is to avoid lower standards as corporations look for ways to cut costs). It would give labour access to data about how all the stimulus is rolling out.
That’s crucial, because right now, thanks to federal budget cuts over the past several decades, even the people in the White House who are trying to tally up the economics of the IRA don’t have all the data points they need. As I’ve written, supply chain mapping is becoming a burgeoning industry in the private sector. But in lieu of stronger federal data collection and/or some public mandate to force companies to share supply chain data (which wouldn’t be popular), they are likely to hoard that information. That would make it tough for the administration to police the stimulus money, and for policymakers to better understand the effects of Bidenomics.
Anyway, my take on the political polarisation of our era is that it is largely about globalisation allowing capital to trump labour almost everywhere (which is the nature outcome without tweaks to the system or a stronger union movement). It seems like there’s a real growth opportunity here for unions, if they can think more creatively, and across borders.
Ed, as the IRA money rolls out, I’m curious to know what part of this huge fiscal experiment you will be watching most closely?
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Recommended reading
There were two very good pieces I read this week in the opinion section of The New York Times. First, Tressie McMillan Cottom’s piece on why she’s looking at the south to better understand the future of America. On that note, I was pleased to hear recently that Financial Times reporters plan to spend more time in southern states for our 2024 election coverage.
I also thought that this piece by folk artist Ketch Secor, on how country music can help push gun reform, was kind of brilliant. Ed, this is a solution that neither of us thought about while discussing the topic a few weeks ago!
I recently bought a copy of historian David Cannadine’s The Undivided Past, which looks at how cultures start to define themselves by what they love, and end up defining themselves by what they hate. I can’t think of a better read for our time. I had lunch with Cannadine recently, and he told me that this book didn’t get much attention when it was published in 2013, but it’s his personal favourite.
In the FT, Philip Coggan is quite right that we should buckle up for many more years of turmoil during the great unwinding of monetary policy. And don’t miss investor and artificial intelligence expert Ian Hogarth’s terrific FT magazine piece on why we must slow down the race to AI. I particularly enjoyed how he laid out the development of AI so clearly.
Edward Luce responds
Rana, I’ll be looking at implementation. This applies to the Chips act, the IRA, infrastructure and other projects. As we’ve debated before, I don’t think industrial policy will get a full bang for its buck unless it is single-minded, which very much does not apply to the semiconductor reshoring drive. I expect that to be disappointing as a result. On the IRA, it is possible the volume of green subsidies is so large, they will prove to be a game-changer, as a recent FT survey of surging US manufacturing commitments indicates.
I was interested to see that centre-left commentators, like Ezra Klein, Catherine Rampell and Matt Yglesias clearly share my concerns about the Chips act. Klein writes about “everything bagel liberalism”. You cannot expect companies to solve equity problems in their communities, or be anything other than deterred by the dozens of other conditions with which these subsidies are freighted. I would call it failure by design but it is clearly unintentional. Liberals just can’t help themselves.
As regards blaming inequality on globalisation, I would urge you to widen your lens from the United States. In some countries, such as the US and UK, inequality has become considerably worse since the 1980s. In others, such as Canada, the Nordics and Germany, it is only moderately worse, or hasn’t deteriorated at all. Since most of the latter group are more globalised than the US, I would submit that you are looking in the wrong place.
The right place to look is at the strength of domestic safety nets, the degree of fiscal redistribution and the quality and depth of worker training and apprenticeship schemes. On all of these measures, America and Britain are laggards. The fault lies not in globalisation but in ourselves. In a related matter, I recommend Swampians read this FT column by our former colleague, James Crabtree, on why the west is in the grip of a decoupling delusion. We are simply displacing the assembly of finished products to countries like Vietnam and Mexico, which are seeing corresponding surges in intermediate goods imports from China.
Your feedback
And now a word from our Swampians . . .
In response to “Europe will bend to America’s will on China”:
“There is a great saying going around in diplomatic circles in Washington: Europeans hate US leadership, but they hate the lack of it even more. Looks like Paris has not heard it. Former secretary of state Colin Powell once remarked: this is a 200 years old marriage, and we spent most of that time in the marriage counsellors office. But it is a marriage, and the alternative would be terrible, whether it is just separation or full divorce.” — Andras Simonyi
“I would argue that although there is definitely a thin line between a realisable European policy and a European utopia, Macron is to be commended for voicing his global views without restraint, in the grand tradition of French statesmanship.” — Victor de Serière, Amsterdam, Netherlands
Source: Economy - ft.com
