Trumka says a worldwide New Deal is needed

WASHINGTON – Europe’s present experience, past U.S. and world history, and U.S. federal budget cutting show that “austerity doesn’t work” as a way to pull the U.S. and the world out of the Great Recession and its aftereffects, AFL-CIO President Richard Trumka says. Instead, what the nation and the world need is a massive new New Deal to put the Earth’s 202 million unemployed back to work.

Trumka blasted budget cutting and proposed a jobs program – with infrastructure construction as one centerpiece – in a June 6 speech here to the Executive Council on Diplomacy. He ruefully noted he gave almost the same exact speech to the same group almost two years ago. “Quite a bit has changed, and yet the debate on jobs and debt remains stuck, both here and around the world,” he said.

“Maybe I’m trying to say that I’m not the only one who’s stuck in a rut. We all are. The politics of austerity still hold the world in a vice-like grip. The gap between the world’s wealthiest people and the rest of us — already at a historic high — continues to grow. Joblessness plagues almost every country on the globe and is actually rising worldwide, even as we see modest improvements here in the U.S.

“So what’s the problem? Two years ago, I said our economies would not recover until our governments and global financial institutions begin to govern, not just for the banks but for the well-being of all of us.” That hasn’t happened, he added.

“All the terrible ideas of the last 20 years — deregulating finance, responding to economic crisis with job-destroying fiscal austerity and attacks on workers’ rights — all of these ideas were pushed by people who claimed those so-called ‘fixes’ would benefit all of us.” But those policies only benefited “the interests behind the spin,” he added.

Trumka particularly lit into the idea that cutting budgets and government spending would produce prosperity. “It sounds great for everybody. Except it isn’t, and it never has been. History is filled with the economic and political wreckage created by politicians and bankers following the recommendation of Herbert Hoover’s Treasury Secretary, Andrew Mellon, who famously said in response to the Great Depression: ‘Liquidate everything.'”

Europe is now Exhibit A that austerity doesn’t work, Trumka added. The International Monetary Fund forecasts European growth is collapsing and “if austerity worked, Greece and Spain and the United Kingdom would be enjoying gangbusters growth. Obviously, that’s not the case.”

Backing his point, a key bond rating agency the following week downgraded Greece from being a developed country, the first such action in history. Greek unemployment is above 25 percent and output is shrinking.

“In fact, the results of austerity were summed up best by one of its most prominent advocates, Organization for Economic Cooperation and Development (OECD) chief economist Carlo Pier Padoan, who said — and this is a direct quote – “Many countries are pursuing the right policies but nonetheless going over the cliff.”

“The message of the global labor movement is simple — Please consider this possibility: If your country is going over the cliff, you may not be pursuing the right policies…Dollars are dollars. Euros are euros. If working people have fewer dollars or euros, we spend less, and when that happens, our economies contract.”

Worldwide jobs creation is the solution to the problem, instead, Trumka declared. That would not only put the 202 million jobless to work, but would also boost wages, which have been flat or declining for years.

And mass unemployment not only hurts hundreds of millions people now and in the future, but also massively erodes trust in government and other institutions, Trumka warned. That leads to upheavals, he added. But even OECD didn’t listen, he said.

“When the OECD,” the group representing the world’s top 20 national economies, “presented its Economic Outlook, it was the same-old, same-old. More cuts. More austerity. It’ll do what austerity always does: Destroy jobs, increase inequality and undermine social trust.

“Workers everywhere are losing trust in our governments and institutions, and for good reason. Even the most reputable voices and organizations are ignoring their own data to continue to push the same destructive policies.

“Instead of fluffy rhetoric and ideas that simply don’t work, it’s time for all of us to demand policies that work — like investments in education, infrastructure, job training, and the green jobs that come with sustainable development,” he said. It also means writing trade pacts that take a high-road model guaranteeing worker rights and living standards, not the low-road model of the proposed Trans-Pacific Partnership between the U.S. and 10 Pacific Rim nations, including Mexico and Japan.

“Overall, our economies need fewer low roads and more high roads. It’s time for all of us to embrace labor market policies that support and train unemployed people, and help them find jobs, and enforce our right to a collective voice on the job. That’s the best way to raise living standards, improve workplace safety and build broad prosperity, not just for working people but for everybody. But most of all, it’s time for all of us to stop wishing for a short cut to a prosperous future.

“Austerity doesn’t work-under any name or by any measure. Eurozone leaders are beginning to accept this idea, almost as we speak. We should do the same.”

Photo: Richard Trumka. AP