On TAP: Kuttner + Meyerson

Kuttner

Where Are the Virtuous CEOs? Five years ago, a regional supermarket chain called Market Basket acted out a drama that was one part Shakespeare and one part Marx. The family-owned company, famed for low prices, well-compensated employees, and fiercely loyal customers, was consumed by a vicious split.

The grandfather, an immigrant from Greece named Athanasios (Arthur) Demoulas, founded his first grocery in Lowell, Massachusetts, a century ago. The current chief executive, Arthur T. Demoulas, continued the model of benign paternalism. At Market Basket, a lowly cashier can still retire with several hundred thousand dollars in profit sharing.

But the other family faction wanted more dividend payouts. A near namesake cousin, Arthur S. Demoulas, wrested control and fired Arthur T.

The majority faction prepared to extract hundreds of millions of dollars and sell the chain to a private equity company. Then something extraordinary happened. The managers, employees, vendors, and customers banded together and boycotted Market Basket, all demanding the return of Arthur T.

It was a strike on behalf of the boss. Soon, the company was worthless. The “value” of Market Basket was not its nominal valuation based on sales or profits. All the value was the creation of loyal workers and customers. (Call it the labor-and-customer-and-benign-CEO theory of value.)

The Arthur S. faction caved and agreed to sell to Arthur T., who was reinstated to tumultuous cheers. The customers returned and the chain is more profitable than ever.

The media depicted the story as a personal struggle between the Good Arthur and the Bad Arthur.

But there’s a lot more to it. Outside of a few family- or employee-owned companies, the structure of American capitalism, with its quest for rapacious profits and expendable workers, makes it almost impossible for high-road CEOs like Arthur T. to rise to the top.

This could be a moment to scrap the cult of the CEO in favor of deep structural reform, so that “stakeholder capitalism” becomes a reality and not just a slogan of Business Roundtable executives suddenly fearing pitchforks.

That’s another of the plans of one Elizabeth Warren.

Meyerson

Anyone who understands the need for the United States to reduce its stratospheric levels of economic inequality and to give its workers a boost into the middle class has to be rooting for the United Auto Workers members on strike now at General Motors. Those workers sacrificed a good share of their incomes to help GM weather the 2008 financial collapse, as Mike Elk reported yesterday at prospect.org, and now that the company has record profits, totaling more than $30 billion during the past three years, their demands—to reopen factories whose work GM has offshored; to provide full pay, hours, and benefits to the workers whom GM has relegated to a second tier or to the status of temp—are more than just.

Perhaps even more important to the nation at large, though, a successful strike at GM would continue to signal the return of the most important income equalization tool in American history: the strike. Over the past 18 months, teachers, hotel workers, and telephone company workers have waged and won major strikes, after decades in which the strike had almost disappeared from the nation’s economic landscape. Low unemployment rates embolden workers, but there’s nothing like a string of successful strikes to embolden them more. (And all praise to the telecom workers’ union—the Communications Workers of America—for persisting in waging, and winning, strikes over the past decades when most other unions hadn’t done the work required to strike and win.)

When GM was the nation’s largest employer, and when unionization rates were so high that even non-union workers got raises so their employers could keep them from defecting to unionized firms, the UAW’s strikes at GM had far greater impact on the nation’s economy than today’s strike can have. America’s mid-20th-century middle-class majority was largely the creation of the more than 300 major strikes the nation experienced every year during the 1950s. We’re a long way from that level of broadly shared prosperity now, but one indispensable way to begin to re-create it is to roll the union on. Ergo: Go, UAW!

Kuttner

The Working Families Party has endorsed Elizabeth Warren for the Democratic nomination and for president. This is something of a stunner, since the WFP endorsed Bernie Sanders last time.

The endorsement was made via a poll of the membership and leadership, in which Warren received 61 percent to Sanders’s 36 percent. It came several days after Warren astutely endorsed two high-priority candidates backed by the Working Families Party, one running for the Philadelphia City Council, the other being Stephen Smith, who is running a populist campaign for governor of West Virginia.

Warren also recently endorsed two progressive candidates backed by Justice Democrats, who are challenging center-right Democratic House incumbents, Henry Cuellar in Texas and Dan Lipinski in Chicago.

The Working Families Party is active in some 14 states, most notably in the Northeast. The fact that Warren could win handily among some of the most savvy progressive grassroots activists is another sign that she is gaining on Sanders as the champion of the party’s left.

“Senator Warren strikes fear into the hearts of the robber barons who rigged the system,” said Maurice Mitchell, national director of the Working Families Party, which pledged its organizing resources to help Warren become the nominee.

The endorsement and the astute politicking that led to it is a reminder that Warren is very deft at the inside game as well as the outside game. There was some grumbling, via tweets, from the Sanders camp that the Warren people and the WFP had played dirty.

This is a win for Warren—but also a warning that sooner or later, Sanders and Warren will inevitably have to shelve their tacit non-aggression pact, since only one of them can win.

Dayen

Maybe it’s just me, but one of the few times I perked up in what I considered a forgettable debate last night was when Bernie Sanders started in with a detailed discussion of Senate procedure. The nation couldn’t care less about how the Senate conducts its business, but we’re simultaneously held hostage by it, because with the filibuster and its 60-vote threshold in place, legislative progress will be scant.

Sanders has said he does not support ending the legislative filibuster, and he reiterated that last night. This is a point of contrast to Elizabeth Warren, and a big one. But Sanders did say that he “will not wait for 60 votes” to pass Medicare for All, climate crisis legislation, or gun safety laws. He said there were a “variety of ways” to get this done, and he started with budget reconciliation. This is a once-a-year process whereby the Senate can pass budget-related items with a simple majority. But Sanders added this:

“You have a vice president who will, in fact, tell the Senate what is appropriate and what is not, what is in order and what is not.”

Allow me to translate from Senate to English. The budget reconciliation process includes something called the “Byrd rule,” named for longtime Democratic Senator Robert Byrd. Under this rule, everything in a reconciliation bill must be germane to the budget. This makes regulations on carbon emissions or an assault weapons ban typically “out of order.” The Senate parliamentarian, an obscure job, rules on what fits in reconciliation and what does not under the Byrd rule.

What Sanders is saying here is that his vice president, who serves as the president of the Senate, would overrule the parliamentarian, if he tried to rule an assault weapons ban or a health care or climate regulation out of order. This would allow anything, in theory, to go through reconciliation on a majority rule.

I say “in theory” because Mitch McConnell or some other Republican would certainly object to the ruling of the vice president, and there would have to be a vote on it, which would have to get 50 votes. So put aside that Sanders is saying he would kludge together all his policies into one bill every year, the only bill that gets a majority vote. It would still require a majority of the Senate to agree to this scheme.

That’s what I find so odd about the way the media addresses the filibuster. Whether Bernie Sanders or Elizabeth Warren or Joe Biden supports ending the filibuster as president is rather less important than whether Joe Manchin or Chris Coons or Kyrsten Sinema supports it. You’d need their support, and I really don’t think Manchin is all that movable on something that would, say, enable a vote to cap carbon emissions. But at the least, he should be asked! Swing votes on Senate procedure are in the Senate, not the White House.

My pessimism on filibuster changes doesn’t mean there’s no hope for progress in a future Warren or Sanders administration—we’ll have much more on that at the Prospect in the weeks to come. It does mean that the pressure points should be identified correctly—and they weren’t on the debate stage last night.

 

LINKS TO MY STORIES

Congress could pass some health care bills this fall, and special interests are throwing money at stopping that from happening. (Read the story)

The Equifax settlement puts in another bait and switch. (Read the story)

Trump’s Justice Department seems to be trying to discredit all antitrust enforcement. (Read the story)

Elizabeth Warren proposes the biggest increase in Social Security benefits in 50 years. (Read the story)

The Warren plan would close a tax loophole that Joe Biden has used to shelter $13 million in earnings over the past two years. (Read the story)

I interviewed Gavin Hood, director of the terrific new film Official Secrets, about a whistleblower at the outset of the Iraq War. (Read the story)

 

ALSO AT THE PROSPECT

A Fall issue preview from former Rep. Brad Miller on William Barr’s bid for an imperial presidency.

Eileen Appelbaum and Rosemary Batt on private equity’s role in surprise health care billing.

Jonathan Guyer’s fiery takedown of the new Bari Weiss book on anti-Semitism.

Alan Greenblatt on democracy dying in North Carolina.

Alex Sammon on Uber’s announcement to reject the law.

 

APPEARANCES

Daily Kos interviewed me about private prisons, finance, and foreclosures. Watch here.

 

SHARING THE WEALTH

The House has none of the filibuster restrictions of the Senate, yet they’re backing off an assault weapons ban. Jeez. (NY Times)

Democrats also might block the Trump farm bailout, which seems like bad politics to me. (Washington Post)

Jeet Heer on the timidity of left-leaning think tanks. (The Nation)

Related: Alex Pareene on the death of ThinkProgress. (The New Republic)

The FTC is playing catch-up trying to understand Amazon’s business. (Bloomberg)

(Note: they could read the Prospect!)

I have no love for Amazon, but there’s a monopoly called Surescripts that manages prescription drug patient data, and it just ruined Amazon’s pharmacy business. (CNBC)

Meanwhile the states start an investigation into the tech platforms. (Politico)

The Supreme Court backing the Trump asylum rule is insane. (NY Times)

An ugly story about Kamala Harris prosecuting a mentally ill woman while DA of San Francisco. (CalMatters)

Trump considering a bailout for Iran? (Daily Beast)

Jon Schwarz obliterates Samantha Power’s memoir. (The Intercept)

Juul gave presentations in school to kids, while Trump preps a ban on flavored e-cigarettes. (Ars Technica)

Looks like Purdue Pharma will become a public benefit company in a tentative settlement. (NY Times)

Meyerson

In a desperate display of legal legerdemain, Uber general counsel Tony West responded yesterday to the California legislature’s passage of a bill compelling companies to stop misclassifying their employees as independent contractors—as Uber does its drivers—with the novel legal theory that the drivers and the rides they provide aren’t part of Uber’s central business mission, and thus, the law doesn’t apply to the company. As Prospect staff writer Alex Sammon reports, the company contends that “Uber’s business is not providing rides but, West said, ‘serving as a technology platform for several different types of digital marketplaces.’” Accordingly, in plain violation of the law, West said the company would refuse to reclassify its drivers.

West’s brainstorm may compel other businesses and even government agencies to redefine their core mission. Herewith, a modest example of how that might go:

 

THE SCENE: The San Francisco street and sidewalk directly outside Uber’s corporate headquarters. The building is engulfed in flames, and its fleeing employees stand on the sidewalk gaping at the blaze as fire engines pull up and firefighters jump off the trucks and join the employees on the sidewalk. There, they stand, motionless.

One Uber Manager, to a firefighter: Thank God you’re here!

Firefighter: Yep. That’s some fire. [He cocks his head, admiring it from several angles.]

Uber Manager: Umm—aren’t you going to put it out? We could lose the whole building.

Firefighter: Well, here’s our mission. [He pulls out his iPhone and shows it to the manager.] It says, “Respond to fire at Uber HQ”—see? We’ve responded. Doesn’t say anything about putting the fire out.

Uber Manager: But that’s your job! Your core mission!

Firefighter: Nope. Our core mission is to respond to fires. That’s all. [A long silence while Uber manager stands with mouth agape. Then, the firefighter continues.] Is everyone out of the building?

Uber Manager: Everyone but Tony West, our general counsel. He said he had to collect his legal briefs on our real core mission.

Look—there he is! That second-story window!

Tony West: I can’t get out! I’ll have to jump!

West jumps to the sidewalk, awkwardly, since he’s holding reams of legal briefs. He lands off balance and apparently breaks his ankle. As he writhes in pain on the sidewalk, the firefighters gather round and look at him.

Uber Manager, to firefighters: Well—respond!

Firefighters: Great jump! [They applaud.]

Kuttner

I noticed a large American flag outside the home of a neighbor, marking this fateful anniversary. My first reaction, I am ashamed to admit, was to wonder if there might be a Trump voter in my nice liberal neighborhood. But then I thought, hey it’s my flag, too.

As we head into 2020, it’s time for a serious game of capture the flag. Patriotism is too valuable to leave to Donald Trump and the far right. But let’s define it properly.

Patriotism today means an America that is once again a beacon to the world, and not the world’s laughingstock. Economic patriotism means operating trade and industrial policies to reclaim jobs and industries using technologies invented here, and to develop new ones.

Republicans have allowed multinational corporations to give away those industries and jobs, abetted by trade policies supported by too many Democrats. (Corporations may be “citizens,” but it’s hard to find less of a patriot than a U.S.-based multinational.)

Patriotism, progressive style, means massive investment in our public systems, so we can be proud once again of American infrastructure. Instead, our public facilities are museum pieces.

After World War II, everyone was a patriot. Not only had American military might defeated the Axis, but the war effort had modernized the U.S. economy. The great public works of the Roosevelt era were a wonder.

During the Vietnam protests, when some radicals were burning flags, the venerable socialist leader Norman Thomas objected: Don’t burn the flag, wash it. Amen.

Progressive patriotism has some catch-up work—to extend the idealistic promises of the Constitution to Americans of all races once and for all. Then we can be fully proud of America with no asterisks or footnotes. We might even make America great again.

Meyerson

According to a front-page story in today’s New York Times, last Friday Commerce Secretary Wilbur Ross threatened to fire officials of the National Oceanic and Atmospheric Administration (NOAA), which oversees the National Weather Service (NWS), if they didn’t affirm President Trump’s fantastical claim that Alabama had been threatened by Hurricane Dorian. When Trump had initially tweeted that out, the Birmingham, Alabama, office of the NWS rightly and responsibly issued a statement that the hurricane posed no threat to the state. (Indeed, the only part of the continental United States that Dorian affected was the Outer Banks islands of North Carolina.)

Trump, as is his wont, won’t let the issue drop, which is surely why Ross threatened NOAA’s scientists with losing their jobs unless they posted a “correction” to the NWS’s completely accurate and empirically grounded weather report. Ross is among the most Trump-compliant of administration officials; it was he who made the argument that the 2020 census, which also comes under his purview, include a question on citizenship status. The question, plainly intended to undercount likely Democrats, required Ross to cook up a reason for its inclusion (he said it was to yield data that would somehow help in the enforcement of the Voting Rights Act, which Trump & Co. plainly despise)—a reason that the Supreme Court found totally implausible. Ross’s problem is that the Commerce Department oversees multiple agencies whose task is to collect and publicize empirically verified and verifiable data, even when those data contradict Trump’s whims.

Ross’s conduct is an issue with political legs. While Americans hold a wide range of views about the federal government, they trust and rely upon the weather service. The prospect of screwing up the census for partisan ends upset a relatively small fraction of the public, but falsifying weather reports to comport with Trump’s fantasies is likely to upset a far wider range of our compatriots. The Judiciary Committee should certainly investigate and highlight Ross’s firing efforts, but the real hanging curveball here is simply requiring weather scientists to concoct spurious reports to satisfy the president. Put that issue squarely before the public and even Fox & Friends would have trouble defending Trump. And the fastest way to put it before the public is to initiate impeachment hearings of Ross.

So, Jerry: What say?

Kuttner

The story went by so fast that you may have missed it in the welter of other Trump outrages and mishaps. Republican parties in four states—Nevada, Arizona, South Carolina, and Kansas—are on track to cancel the 2020 primaries.

Why would they do such a thing? Because Trump is facing some primary opposition. The crazier he gets, the more the chances increase that he could face more than token opposition in his own party.

The fact that four state parties are moving in tandem and others may follow is no coincidence. This is all orchestrated by the Trump machine.

But can they do this? Canceling elections is the very hallmark of a dictatorship. In principle, yes. Supposedly, this is an internal Republican Party affair, and not a general election. In past years, when an incumbent was running for re-election, primaries were occasionally canceled.

On the other hand, when Dixiecrats tried to preserve an all-white Democratic primary, the Supreme Court intervened in the 1944 decision Smith v. Allwright, holding that the Democratic Party in the South in that era was the only game in town; that even though this was ostensibly an internal party affair, it effectively denied black citizens voting rights.

Of course, that was a very different Supreme Court. Between Trump’s cavalier treatment of canceling elections and increasingly captive courts, we are well on the road to dictatorship.

But one election not likely to be canceled is the 2020 presidential. Not this time anyway. That’s what makes it so urgent.

For more on that, here is my basic talk on my new book, The Stakes.

~

Available now: The Stakes: 2020 and the Survival of American Democracy by Robert Kuttner

Teixeira

Dan Balz’s lengthy article in The Washington Post is a useful summary of the 2020 electoral map. He identifies four states as being key to the upcoming contest: Florida and, quite properly, the Rust-Belt trio of Michigan, Pennsylvania and Wisconsin.

Let me focus here on that trio of states and run down some of the key demographic differences between them which are perhaps harder to see than their obvious similarities.

Start with the white noncollege population. It is high in all three but in Wisconsin it is highest. States of Change data predict this demographic will make up 59 percent of Wisconsin eligible voters in 2020. Michigan will have 56 percent white noncollege eligibles in 2020 and Pennsylvania 54 percent.

In 2016, States of Change analysis indicates that Pennsylvania had the largest white noncollege deficit for the Democrats, 29 points. The white noncollege Democratic deficit was 21 points in Michigan and just (!) 19 points in Wisconsin.

In terms of white college eligibles, they will be highest in Wisconsin and Pennsylvania (26 percent) and lowest in Michigan (22 percent). In all three states the share of white college voters will likely be significantly higher than these figures because of this group’s high turnout.

In 2016, we find interestingly, that Wisconsin had the largest white college advantage for the Democrats—15 points. Pennsylvania had a 9 point white college Democratic advantage and Michigan actually had a slight deficit of 2 points.

Turning to nonwhites, Wisconsin should have the lowest share of this demographic segment in 2020—only 15 percent of eligibles. Pennsylvania will have 20 percent nonwhite eligibles and Michigan 22 percent.

In Wisconsin, the shares of eligible voters in 2020 should be fairly close to one another between blacks (6 percent), Hispanics (5 percent) and Asian/other race (4 percent). In the other two states, black eligible voters will dominate: 13 percent black eligibles in Michigan to 3 percent Hispanic and 4 percent Asian/other; 10 percent black eligibles in Pennsylvania to 5 percent Hispanic and 4 percent Asian/other.

In 2016, black turnout was down slightly in Michigan and Pennsylvania and strongly in Wisconsin. If black turnout in 2016 had matched 2012 levels in these states, Michigan and Wisconsin probably would have gone Democratic. But Pennsylvania probably wouldn’t have.

Dayen

Here’s the true test of this age of corporate power: You can throw a dart at a board (one that includes all sectors of the economy, so a pretty big board) and inevitably hit a concentrated, exploitative industry. Today I toss a bull’s-eye toward … mixed martial arts!

Not that you’d know this but there’s a consequential lawsuit going on between practitioners of the sport and the Ultimate Fighting Championship (UFC), the world’s largest MMA promotion company. A company named Zuffa owns UFC; Zuffa itself is a wholly owned subsidiary of William Morris Endeavor, one of the big three Hollywood talent agencies, which itself enjoys billions in private equity investments.

That Russian nesting doll aside, here’s the deal: Back in 2014, MMA athletes alleged that UFC is a monopoly, which controls the market for fights and suppresses wages for fighters. If you want to get paid to beat someone up using various martial arts disciplines, you need to sign an exclusive long-term contract with UFC.

According to plaintiff expert witness (and sometime Prospect contributor) Hal Singer, the fighters’ share of event revenues fell from 26 percent in 2007 to around 20 percent today, lower than what they might command in a competitive market. For context, boxers get 60 to70 percent of revenues from top promoters. UFC argues that the wage levels have risen moderately, so no foul.

UFC contracts come with stringent noncompete clauses, as well as a yearlong “right to match” provision. Even if a fighter left UFC and found another promoter, UFC could match the offer, locking the fighter back into a long-term contract. In other words, MMA is like the rest of the economy, where workers have seen competition for their services narrow and subsequently lost bargaining power to set terms for their employment.

UFC has dragged this case out. But last week, during evidentiary hearings to determine class action certification, Singer and Dr. Robert Topel, a University of Chicago professor and the UFC’s expert, each gave testimony. As is typical for antitrust cases, it came down to competing economic questions: Are wage levels or wage shares the more appropriate measure in this market? A Chick-fil-A fry cook couldn’t demand nine times as much in salary as a Subway sandwich artist if their store made nine times as much in sales, Topel contended. But Singer responded that in sports, where the workers are the product people pay to watch, the share of revenue means more.

The consensus was that Singer won the bout, meaning we could see an actual trial soon. And that matters, not just for athletes being paid what they deserve, but as a potential blow against corporate power’s impact on labor. If you had MMA fighters in the “who will break the iron grip of monopsony” raffle, come collect your prize.

 

LINKS TO MY STORIES

With Mike Elk, the largest strike since 1997 could happen at Kaiser, the hospital network that was once a paragon of labor-management relations.

Google gets the FTC to censor its own commissioner.

 

ALSO AT THE PROSPECT

Harold Meyerson on sectoral bargaining, part of our huge Labor Day package.

An excerpt from pollster Stan Greenberg’s new book.

David Pettinicchio on the crisis of long-term care.

Max Sawicky on progressive trade.

Alex Sammon on the war on the capital gains tax.

 

BOOK CHAT

For those who don’t know, I authored a book a few years ago called Chain of Title, and something called Book Authority named it the 8th-best eBook about government of all time. They named the Kindle edition of the Declaration of Independence and Constitution 11th, so take that, Jefferson and Madison!

By the way, I have a new book coming next year called Monopolized: Life in the Age of Corporate Power, and while I am reluctant to link to one such monopoly, the pre-order page is up at Amazon, where you can at least see the cover and read the synopsis.

 

YES, I KNOW

Sharpies. Also seven hours of climate talk, which I missed because I had a thing.

 

SHARING THE WEALTH

U.S. job growth is noticeably weaker in 2019, and manufacturing numbers showed a contraction in August. (EPI; Trading Economics)

Are index funds the next bubble? Michael Burry, who saw the subprime crash before anyone, thinks so. (Yahoo News)

North Carolina must redraw its legislative districts. (HuffPost)

Elisabeth Rosenthal is the best messenger for the idea that it’s hospitals, hospitals, hospitals driving up health care costs. (NY Times)

The public option already exists, in Los Angeles. (The Atlantic)

Public-service student loan forgiveness program rejects almost everyone, again. (LA Times)

William Dalrymple on the original bad corporation, the East India Company. (NY Times)

CEO calls Google search ads that block his listing a “shakedown.” (CNBC)

Amazon says Ring doorbells don’t use facial recognition, but Ring has a “head of face recognition research.” (Buzzfeed)

Apple copies everyone’s apps. (WaPo)

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