In These Times: National weekly newspaper, based in Chicago, run by socialist historian James Weinstein, the best labor coverage anywhere, the grass-roots conflicts you read about here show up a year later in the New York Times with a shallower understanding of the subject.
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SOME OF THE snarpest prickles from the Cactus Leftists have come from the Exploratory Project on Economic Alternatives, a D.C.-based, foundation-sponsored research operation. EPEA is headed by Gar Alperovitz, a highly-respected leftist economist who was even mentioned for Jimmy Carter's Council of Economic Advisers. Alperovitz's response to the wishful-thinkers was, "Thanks but no thanks."
EPEA's latest project was a feasibility study on the re-opening, under community and worker control, of the shut-down Youngstown, Ohio, steel mill. Alperovitz's analysis of the much-ballyhoed "steel crisis" last year shows that corporate greed was the core of the problem, the catalyst for throwing Youngstown out of work. Youngstown Sheet and Tube, locally-owned and highly-profitable in the '60s, was 1969's Ripe Takeover of the Year. Lykes Steamship Company, based in New Orleans and one-seventh the size of Youngstown, borrowed the buy-out capital from Wall Street and elsewhere, using Youngstown's positive cash flow as collateral. Since 1969, Lykes invested next to nothing in modernizing the Youngstown plant--profits went to pay off the buy-out debt. Meanwhile, Japanese and some American plants switched to the more efficient oxygen furnaces, at I when the down cycle in steel came last year, Lykes closed the plant rather than operate at a profit less than it could get from investing elsewhere.
As for the alleged "steel crisis," the Wall St. Journal noted this past July 15 that the industry was operating at full capacity. Alperovitz even predicts the steel equivalent of a "refinery shortage" in the '80s, in which an artificially reduced number of steel plants will make a killing. The Carter Administration is doing its best to bring this about: Attorney-General Griffin Bell approved Lykes' salvage plan of merging with LTV Corporation, despite the ruling by his own Antitrust Division that the merger was illegal because LTV operates Jones and Laughlin Steel.
Alperovitz's scenario in the feasibility study removes corporate clutches altogether. With federal loan guarantees similar to New York City's and with several million dollars of federal seed money, the Youngstown workers and community could buy, re-open, and gradually modernize the plant. The government's other choice is to pay the estimated $75 million in unemployment and increased welfare benefits over the next three years in Youngstown alone. Alperovitz puts it this way: A corporation would never be satisfied with a 3 per cent return because it could make 8 or 10 per cent elsewhere. But owners from the community or workforce mainly want the jobs--profits matter only in so far as they help pay for modernizing. It's the classic case of the counter-productive profit motive.
ALPEROVITZ's other major research project also concerns counter-productive profit motives, in regards to inflation. Contrary to Keynesian and neoclassical theory, Alperovitz believes government budget deficits have had little to do with the inflation of the past six years. The four necessities--food, housing, energy, and health care--account for over 80 per cent of inflation, he maintains. In health care, for instance, there is no check on greed--third parties, the insurance companies, pay for most treatment, and doctors and hospitals charge whatever the "market" will bear. The result: spiraling insurance premiums and profits, soaring medical costs, and inflation. The only possible solution is national health insurance, to remove the profit motive, to ensure adequate medical care for all.
The consumer is a double victim of the energy problem. First, we are victims of the oil companies with their rigged prices, artificial shortages, bookkeeping juggles, and growing control of all sources of energy. Second, we are victims of the U.S. government, with its blind reliance on the price mechanism (import taxes, natural gas deregulation) to force conservation. Vast amounts of energy consumption are simply built into the system, with interstates, suburbs, glass buildings, etc. The only way to force conservation without penalizing the poor or adding to the corporate coffers is to ration energy.
The analysis is similar concerning food. The processing and packaging middlemen take three-fifths of the consumer dollar. Giant agribusiness is forcing out the family farm. Farmers leave land fallow while people starve. The government needs to break down the monopolization of the food sector, encourage production, establish grain and other reserves to assure a steady supply, and provide mechanisms for distributing the surplus to the world. Then prices would stabilize.
The answer to the housing crisis is simple: The Federal Reserve Bank has to give up the notion of combatting inflation by contracting the money supply. Since inflation is primarily structural, the supply of money has little effect on prices. But it has tremendous effects on the construction industry and the housing market. When the Fed tightens money, interest rates zoom (up to 10 per cent at present), and people can't afford to borrow money to build or buy housing. Construction workers go on welfare, real estate values skyrocket, and you just get more inflation.
THESE ANALYSES and proposals by Alperovitz and other Cactus Leftists are eminently reasonable and practical; yet, because they would represent fundamental change in the status quo, the flight to institute them will be Sisyphean.
Tom Hayden, co-founder of SDS and veteran of the '60s, tells a story about his chat with Jimmy Carter last year. Hayden had five minutes with Carter, and what with the picture taking, there wasn't much time for hardnosed rapping. But finally Hayden felt the urge, tilted his head over at Carter, pointed his "steely brown eyes" straight at him, and said, "You know, you don't have as much power as some heads of giant corporations, who are unelected and unaccountable to the public."
Carter "looked right back at me with his steely blue eyes and said, 'I believe you're right, I've learned that in the last 12 months.' Sure makes you feel good, huh, we're not alone in thinking we don't count for much."