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Bill Clinton Versus Organised Labour

Bill Clinton's neoliberal agenda deliberately gutted social security and facilitated the offshoring of manufacturing — a calculated betrayal of organised labour from which America's working class has never recovered.

137635 01: Presidential candidate Governor Bill Clinton (D-AR) speaks on the final weekend of his campaign October 30, 1992 in Springfield, OH. Clinton defeated four other major contenders for the Democratic nomination and defeated incumbent Republican George Bush in the presidential race. (Photo by Mark Lyons/Liaison)

After 12 years of Republican rule, an air of high anticipation permeated Washington as 46-year-old William Jefferson Clinton, former Arkansas governor and Georgetown graduate, took office in 1993. ‘But it quickly became clear that,’ something many Democrats had been waiting for, ‘a revival and modernisation of New Deal-style liberalism was stillborn at the dawn of the Clinton era.’

So write Nelson Lichtenstein and Judith Stein in A Fabulous Failure: The Clinton Presidency and the Transformation of American Capitalism. In their recently published book, the noted labour historians offer a compelling account of how the Clinton presidency’s initial promises of empowering American workers and encouraging progressive values rapidly turned into failure.

A product of Stein’s (who died in 2017) time studying Clinton’s early political career in Arkansas and developed with this impulse by Lichtenstein, the authors put particular focus on Clinton’s deep roots in right-to-work Arkansas and the cronyism between Clinton and his profoundly anti-union donors.

It was in this state, according to a clothing workers’ organiser quoted in the book, where Clinton acted as ‘an opportunist, sometimes creatively adventuresome’, but simultaneously ‘a cynic and a cad’, always willing to drop friends and promised if his personal political project was ‘faced with the sort of opposition all too common in a state once loyal to the old Confederacy.’ Many, particularly in organised labour, were to face Clinton’s ‘calculated betrayal’.

The Neoliberal Turn

By the end of the 1990s, in the biggest stock market boom the country had ever seen, real wages were rising, the federal budget was actually running a surplus, and high tech and finance were flying high, things would come to a devastating stop, and everything would disintegrate leading to, according to Lichtenstein, the 2008 bubble which caused a near decimation of the global finance world.

Today, Clinton’s presidency wins little respect. Few liberals want to return to the Democratic Party in the 1990s because so many see his presidency as a betrayal of the progressivism that was once the hallmark of the New Deal and the Great Society. According to Lichtenstein and Stein, his presidency was merely ‘an accommodation to an ideology that privileged trade liberalisation, financial deregulation, and privatisation of government services, while tolerating the growth of class inequities.’

In addition to servicing longtime Democratic donors, at the heart of the presidency was a growing belief that America’s high-tech ‘new economy’ was unlike any other that the nation had witnessed. The Silicon Valley high-tech industry — sustained by four decades of large federal subsidies — would come into its own in the stock market during the 1990s. The economy grew for 116 months, with economic growth averaging 4 percent a year and 22 million private sector jobs being created.

But as Lichtenstein and Stein remind readers, much of this was impressive in numbers alone. Most of the job growth was in retail trade, hospitality, care work and so on. These sorts of jobs — which Clinton had often made as Arkansas governor — had no health benefits, pensions or decent working conditions, and would soon morph into the type of ‘gig economy’ work blighting the world today, with workers additionally subject to a growing culture of surveillance and in-work spying. The benefactors were companies such as Wal-Mart, McDonald’s, Amazon and FedEx, not the software engineers and new technical specialists that many anticipated.

In his first administration, a much-touted healthcare reform bill led by Hillary Clinton failed badly. By 1994 it was dead on arrival. As Secretary of Labor Robert Reich finally conceded, ‘The quest for universal healthcare had a rich history, but “managed competition” was something brand new. It was designed to placate all the powerful interest groups…this scheme had few defenders who were both knowledgeable and committed.’  It was a profound failure among those who had long wanted an extension of Medicare, passed in the 1960s by Lyndon B. Johnson in his Great Society program.

What did get passed was the North American Free Trade Agreement (NAFTA). Though it was not the most economically consequential, the authors argue that ‘it remains the most politically and ideologically toxic’ issue pushed by Clinton, an ‘apolitical blunder of the first order’ that opened up the opportunity to the Republicans during the 1994 mid-term elections and alienated large segments of the working class who, as Lichtenstein underscores, eventually became a serious proportion of today’s Trump supporters.

Although Northerners were the most vocal opponents of NAFTA, it hit the South harder than the North. No demographic in the United States shifted more decisively to the GOP in 1994 than Southern whites, particularly those with high school degrees or less. Ironically, NAFTA’s impact on U.S. employment was not great. In the two decades after the trade bill passed just 40,000 jobs were lost each year, a very small fraction of the nation’s larger job churn. In contrast, Mexican employment in agriculture tripled in just four years to 762,000 jobs.

But there was a deeper impact. Blue-collar workers were constantly attacked by threats that their plants would be closed if they tried organising or striking, keeping organised workers very much on the defensive.

From Workers to Wall Street

Peter Edelman, long one of Clinton’s most progressive colleagues, was more than upset when Clinton signed a bill overhauling the country’s welfare system — the Temporary Assistance for Needy Families (TANF). It had attracted many Republican votes in Congress, turning welfare over to states with a huge emphasis on welfare to work — a system predicated on mothers getting back to work no matter how young their children.

‘After all the noise and heat over the past two years about balancing the budget,’ Edelman pointed out, ‘the only deep, multi-year budget cuts actually enacted were those in this bill, affecting low-income people.’ A decade later, around 60 percent of mothers had found some work, but that statistic would deteriorate after the 2008 crisis, when poverty made a serious comeback.

In the 1990s, as Clinton became more dependent on Republicans, Social Security — the nation’s emblematic retirement program — was under severe pressure. A multimillion-dollar public relations program preached that it would soon run out of money and needed to be privatised — run by Wall Street, which was salivating to get its hands on the FDR-mandated fund.

Relatively few realised that social security was severely hampered by a regressive cap, which could and would greatly increase everyone’s benefits if lifted. Yet during the Clinton years, the public was under the belief that social security was close to failure. At no time had it come so close to being taken over by Wall Street, a situation which Clinton reportedly was closely considering.

A strange phenomenon occurred. As the Monica Lewinsky scandal unfolded, Clinton was forced to turn to ‘old-style’ Democrats for votes to help him stay in office. It was their support — at that moment — which pushed the administration away from privatising social security. As Clinton confided to Republican apparatchik William Archer, ‘I’ve stiffed organised labour on trade. I can’t stiff them again.’

Afterwards, he became estranged from the most consequential trade issues his administration would face. ‘That vacuum would be filled by men and women whose ideology, and the deregulatory free market statecraft that flowed from it did much to firmly stamp the label “neoliberal” on the Clinton presidency,’ write Lichtenstein and Stein.

At a Manhattan meeting of the prestigious Council on Foreign Relations, Wall Street insider and constant attacker of Social Security, Pete Peterson, introduced Treasury Secretary Robert Rubin — a former CEO of Goldman Sachs — saying pointedly that ‘people could sleep better because Bob Rubin is Secretary of the Treasury.’ Rubin had become the most powerful Cabinet head by this time, and, by some count, almost a de facto president.

A big part of the neoliberal appeal was that it offered those with the right educational and cultural background a ‘transnational capacity…to build new careers.’ When the ‘average Joe’ really began active trading in the stock market, it was a very strong signal that Wall Street insiders should start cashing out.

The most cataclysmic event during these years was the ‘so-called shock therapy’ applied to Russia, throwing millions into poverty as jobs vanished, the ruble was devalued and life became extremely precarious. Although company seizures and privatisations were propelled by Russian oligarchs, they were, according to Lichtenstein and Stein, ‘offered ideological guidance and support by the same Treasury circles that had played such an influential role in the IMF effort to transform Asian capitalism along the lines more attuned to Wall Street standards.’

The political tone of the late 1990s was captured by columnist Thomas Friedman sneering at anti-globalisation protestors in Seattle as a ‘Noah’s Ark of flat-earth advocates, protectionist trade unions and yuppies looking for their 1960s fix.’ Clinton’s main public relations ploy was that the WTO meeting — which collapsed on multiple fronts, was ‘globalisation with a human face’.

Yet, write Lichtenstein and Stein, globalisation carried on brutally at the American end. Of the 3.5 million jobs lost in America over this period, at least half were from an influx of imported Chinese products. After a while, it became clear that China’s accession to the WTO generated a ‘China shock’, with one academic paper analysing the ‘surprisingly swift’ decline of U.S. manufacturing during the end of the Clinton years.

Although it had taken a decade for Congress to pass legislation clearing China’s entrance to WTO, things happened quickly. Only 35 percent of Democrats voted for the agreement, but the Senate easily passed it. From then on, issues like trade would be handled by the WTO. Within months of passage, more than 80 corporations, from Wal-Mart to Home Depot, announced plans to shift production to China, with retailers telling numerous small and medium-sized US. manufacturers that if they could not meet ‘the China Price’ — a phrase Business Week called ‘the three scariest words in U.S. industry’ — they could either close up or transfer production to China.

By 2006, Wal-Mart was responsible for $27 billion in U.S. imports from China — up from $9.5 billion in 2001. By then, 80 percent of the 6,000 foreign factories in Wal-Mart’s supplier database were located in China. One thing to be learnt from A Fabulous Failure is that, in many ways, Bill Clinton was the best ‘good ol’ boy’ governor the region had ever produced for its leading citizens. It was, and still is, a massive corporate bonanza — certainly not for the many, but for those who really counted.

In the days leading up to his nomination, there was too little look at who Clinton really was. By his ascendancy to power, it was too late. And in writing off decent, well-paid American blue-collar jobs as integral to the economy, the devastation he wrought has not ended — but it has created the end of the Democratic Party as a body naturally supported by the working class, spawning instead the incredible popularity of the Trump presidency.