Obama Tilt Toward Rubinomics Stirs Warning From Organized Labor

[Earth Bound Misfit]

Source: Bloomberg

Aug. 18 (Bloomberg) -- AFL-CIO Secretary-Treasurer Richard Trumka delivers a slap at former Treasury Secretary Robert Rubin in a slide show exhorting union members to back Democrat Barack Obama for president.

Blaming unfettered global trade and inadequate government regulation for lost manufacturing jobs and a staggering economy, Trumka's presentation cautions that ``it will do us little good if, when the next Democrat moves into the White House, Wall Street takes command of our country's economic policy.''

Trumka leaves no doubt that the rebuke is aimed at Rubin, Wall Street's most prominent Democrat. It's ``hard to tell the difference'' between Rubin and Republican Treasury Secretary Henry Paulson, the presentation says. Trumka's critique reflects the concern among organized-labor officials that Rubin and like- minded Democrats may win the behind-the-scenes battle to shape Obama's economic thinking.

``I'm hearing Rubin's name more and more associated with the campaign's economic policy,'' says James Torrey, a top Obama fundraiser and chief executive officer of New York-based Torrey Associates LLC, a hedge-fund investor.

Rubin, who became chairman of Citigroup Inc.'s executive committee after leaving President Bill Clinton's Cabinet, represents policy priorities that would favor free trade and more emphasis on deficit-cutting budget discipline if Obama beats Republican John McCain on Nov. 4. Meanwhile, Trumka and his boss, AFL-CIO President John Sweeney, are pushing trade policies that would protect U.S. industries, universal health care, and spending on highway construction and other projects that would create union jobs.

--snip--

Still, the Wall Street contingent's clout has grown within the Obama camp in the two months since Rubin's first-choice candidate, New York Senator Hillary Clinton, conceded the nomination.

A Rubin protege, Jason Furman, is now the economic-policy director of Obama's campaign.

--snip--

Labor's apprehensions surfaced after the June 9 appointment of Furman, a Brookings Institution scholar and former Clinton White House aide. One reason: In 2005, Furman published a paper saying Wal-Mart Stores Inc. creates productivity gains and consumer savings that outweigh the low wages it pays workers.

--snip--

Trumka, 59, says the AFL-CIO began months ago to look for candidates for Cabinet posts, including the Treasury and Energy Departments, as well as the Federal Reserve.

``This will not be business as usual for us,'' Trumka says in an interview. ``They're not going to be able to pat us on the head and say, we'll let you give us three names for the secretary of labor, and think that we'll be happy.''

Getting Out the Vote

Obama, 47, can't afford to alienate organized labor. Union households account for almost one in four U.S. voters, and labor is crucial to turning out the vote. The 10.5 million-member AFL- CIO, the nation's largest labor organization, plans to use 250,000 volunteers to contact 13 million voters in 24 states; the Steelworkers plan to deploy 250 paid election workers across 27 states.

One of Obama's biggest challenges, in fact, may be winning a significant share of rank-and-file union voters, who backed Clinton by large margins in Ohio and other industrial swing states.

Read More at Link: http://www.bloomberg.com/apps/news?pid=20601070&sid=aJ.pKsYB_DfU&refer=home

[Somawas]

1. Good for Trumka.

I've been very concerned about Obama's economic advisers for a while. After the 20 years of increasingly corpocratic whoring we've had, we can't afford much longer to give it to Wall Street.

[AdHocSolver]

2. "Productivity gains" and "consumer savings" are another way of saying longer hours at low wages.

Since productivity is measured in terms of cost per unit of output, you can achieve productivity gains by making workers work longer hours at lower pay.

Consumers don't really save anything as businesses do not pass along the savings to the consumer. In a previous post, I told about the time I shopped for socks at a department store. The first pair of socks came in a package of two for $4.00. The label said made in the U.S. of A.

They looked good so I took another package, but hesitated when the label on the second package said "Made in China". The price was the same although I have no doubt that the Chinese worker was paid a fraction of what the U.S. worker was paid. There was NO reduction in price. I put the second package back.

Even when the price is reduced on imported goods, it is ususlly because the quality of the product is lower.

Another problem with imported goods produced for a particular price is that the variety of goods, that is the design and quality of goods of a specific type, is reduced to a common denominator. It used to be that companies had distinctive features to differentiate themselves, or they aimed their products at a certain level of quality. Now with all the apparent variety with different brands, they are all basically the same design and mediocrity. The products all come out of the same Chinese factory with just a different brand on the box. The companies differentiate themselves by the meaningless hype in their advertising.

Moreover, by importing everything, the companies run up a huge trade deficit, which devalues the dollar (also known as inflation), so the American consumer winds up spending relatively more for poorer quality goods. Furman's statements about Wal-Mart are pure nonsense. He either doesn't understand the real economics in play here, or he is acting as a tool for Wal-Mart.