The Common Good
September-October 1999

Becoming Evangelists of Justice

by Richard Parker | September-October 1999

What will it take to build a humane global economy?

The conventional wisdom of today says we can’t shape the future, that we don’t have choices, that there is only one path defined by the following "laws": First, that we live in a new era—and thus old rules and models no longer apply. Second, that the new rules are these: Ours is a global economy, governed by a competitive logic that constantly seeks out lower and lower production costs. Those cost savings lie in utilizing Third World labor and in being the company that dominates a given global industry with the most efficient production and distribution system possible.

But this corporate race for domination has perversely created a new, civilian version of the wasteful "arms race" situation of the old Cold War. Now, instead of the United States and the USSR overbuilding bombers, tanks, and nuclear submarines, General Motors, Toyota, and Volkswagen—to pick one indicative industry—are in a modern arms race of plant-building and car production around the world that has already created a glut of excess global capacity equal to the entire U.S. market for new vehicles.

Moreover, this excess capacity in vehicles is true as well in dozens of other key industries—from chemicals to microchips, from TV sets to home appliances, from athletic shoes to heavy construction equipment, from aluminum to children’s toys.

This dense global tendency toward overcapacity—and the need for deep pockets and powerful sales networks to dominate an industry and thereby shift overcapacity onto the other guy’s shoulders—lies at the heart of the second feature of the present and next two or three decades, as we can expect to see a system of globally linked oligopolies emerge to dominate global markets.

Two years ago, annual U.S. corporate mergers passed $1 trillion—and will exceed $2 trillion in the next year. Worldwide merger and acquisition rates are going on at twice that level, fed by "opportunities" created in large part by the Asian financial crisis and its effects on Latin America, Russia, and other regions.

But mergers mean layoffs—last year U.S. mergers peaked, as did U.S. layoffs, despite the tightest job market in 20 years. And that constant stream of layoffs—in the midst of tight labor markets—acts to hold down wage growth among anxious employees who wonder whether they’re next.

So the second feature of the economy—if we do nothing—will be global industry consolidation.

The third feature of our current and future world is financial market explosion, encompassing both enormous and inequitable financial windfalls as well as profound and recurrent financial market volatility. We have been told over and over again that deregulated financial markets work better than the regulated markets that characterized the long period of stable growth we had from 1945 to 1975—and then found ourselves as taxpayers picking up hundreds of billions in costs for deregulated U.S. savings and loans. Globally, deregulated financial markets have proved enormously volatile—subject to herd-like behavior, inadequate oversight, or transparency. That volatility has worsened, not improved, the lives of hundreds of millions of people in recent years—in 100 countries around the world, people’s incomes are lower in real terms than they were a decade ago, in 70 of those countries lower than a quarter century ago.

Consider the following realities:

  • In Indonesia and Thailand, as many as a third of school-aged children have dropped out of school in the wake of the Asian financial crisis, their parents unable to pay even minimal school fees and desperate for the labor the children can provide.
  • In Russia, the average life span has fallen by six years since the collapse of communism and the advent of "market reforms."
  • In dozens of the poorest countries in Africa and Asia, public spending for health, primary education, and rural development has been slashed by 50 percent or more to meet U.S. and International Monetary Fund (IMF) demands for economic restructuring.
  • Globally, the number of people living on a dollar a day or less has risen from 1 billion to 1.5 billion in the past five years alone.

Yet, even so, the IMF has had to pour more than $200 billion in the last two years into a handful of countries—Russia, Brazil, Indonesia, Thailand, South Korea—to prevent a global economic meltdown.

Now measure this morally against the following facts: the wealthiest 400 Americans, as identified by Forbes magazine, are together worth nearly $800 billion. Out of the one-year, 1998 increase in their wealth alone (not their total wealth), these 400 Americans could have funded—according to the U.N. Human Development Report—the cost of universal basic education for all children, reproductive health care for all women, and adequate food, safe water, and sanitation for the entire "developing" world. And the wealth of those 400 families would still have increased by more than $80 billion in that one year!

The Darker Side

THE IMPACT OF these three central features of our "new global economy" are, broadly speaking, not good news for the poor, the working classes, the middle classes here in the United States—let alone the developing world.

On the one hand, many economists believe that at least in part as one consequence of the new global economy, here in the United States we’ve had little price inflation—and so can buy a wide array of goods at stable or lower prices, thanks to a flood of goods from low-wage countries. But if we honestly evaluate the much darker side of this new global economy and the ferocious competition it has engendered, we see that we’ve faced simultaneously practical and dramatic ceilings on wage and income growth for nearly three-quarters of American families.

That in turn represents a problem not just in the present, but for the future—a quite fundamental problem of balancing supply and demand—because for the last 25 years, American families have adapted both to new competitive requirements and to the absence of price inflation by working longer hours and by putting a second worker in the paid workforce.

But as we enter the 21st century, both strategies are reaching a breaking point. Given physical exhaustion, individuals’ productive working hours can’t rise much. Barring the legalization of polygamy or child labor, the family doesn’t have more workers to put into the labor force.

Yet if we stand back from our current crises for a moment, what’s so very striking to me as an economist about the situation we face today—in this vaunted "new global economy"—is that the issues aren’t very different from those our grandparents and great-grandparents faced a century ago.

Just as today, America began the 20th century facing the central economic problems I’ve outlined:

  • Overproduction and overcapacity in critical industries abounded, but then the industries ranged from steel and oil to electricity and railroads.
  • The 1890s, like the 1990s, were a period of unprecedented mergers and acquisitions—although the language of the times spoke of "trusts" and "combinations." This was the era when giant corporations such as Standard Oil, U.S. Steel, and the railroad, sugar, and tobacco trusts all emerged to try to tame the problem of oversupply, just as is happening today but on an even vaster scale.
  • So, too, this was the period of unalloyed financial market growth, of dizzying rises in stock market values, with revolutionary new "high-tech" industries such as the telephone and electric lighting watching their stocks soar as we see Internet stocks soar today.
  • Finally, too, it was an era when income and wealth inequality soared unbelievably, arguably to levels that haven’t been replicated until the present.

A Community of Reformers

WHAT’S IMPORTANT TO grasp about that era a century ago is that then, just as today, the conventional wisdom spoke of economics as if it were natural law, as inalterable as the rule of gravity. And yet, in defiance of "natural" laws, at the beginning of this century a dedicated community of reformers—many inspired by the Social Gospel movement—set out to show that the cruel Social Darwinism of the times, the 70- and 80-hour workweek, the tenements, the sweatshops, the tainted food and medicines, the crooked stock manipulators, and the corporate oligarchs of Robber Baron fame, all could be brought to heel by a citizenry committed to building a nation that would be both democratic and economically successful at once.

Under Teddy Roosevelt and Woodrow Wilson, the FDA was created to monitor food and drugs, child labor was abolished, and sweatshop conditions constrained. Income and inheritance taxes were passed; unions burgeoned; strong new regulatory oversight was brought to bear on transportation, communications, natural resources, and finance; and dozens of gigantic trusts were broken up, while corruption in government itself was severely curtailed.

What’s so striking about this earlier period are three things:

1) It began not as a part of the electoral process, led by elected officials (who were all too often captives of "the moneyed interests" of the time), but as an often inchoate welter of citizen groups, many initially focused on one or two aspects of the larger problem, who gradually came to find common interest in the democratic transformation of their economy and government alike.

2) It was a movement drawn not just from the poor and working classes, but from a middle class as well that had come to see that it too must act, not just to help "the less fortunate" but themselves as well. United, it was this multi-class movement that remade America—and spared us the starker choice between living as pawns in an economic oligarchy on the one hand, and the risk of a brutal revolution on the other.

3) It is the case that throughout this period key elements in America’s religious community played central roles—just as they had in abolition, suffrage, and the temperance movements before and would later in the civil rights and anti-Vietnam struggles of the ‘60s, and in the 1980s over Central America and nuclear weapons.

Catholic figures such as Father John Ryan first wrote of "A Living Wage" in this period, and built upon Pope Leo’s powerful encyclical Rerum Novarum, which laid the foundations for modern Catholic teachings on social and economic justice.

Jewish leaders stepped forward—names such as Brandeis, Frankfurter, Lippmann, and Filene quickly come to mind—to argue the legal and moral responsibility of government to protect its citizens from the Darwinian consequences of a capitalism as unfettered as some would have it again today.

And then there were the mainline Protestants—not just presidents such as Roosevelt and Wilson but social reformers and social scientists alike—as well as an extraordinary range of thousands and thousands of church members, drawn from a host of denominations. To pick one example, economists such as Richard Ely, an Episcopalian, founded the American Economic Association specifically to provide the best in economic reasoning and research in order to show that only when economic forces are tamed by, and channeled into, the interests of a democratic majority could Americans hope to sustain their vision of achieving "the city on the hill."

Building a Foundation

I SET OUT this history with three purposes. First, to dispel the idea that the conditions we face in the so-called "new global economy" are new. They are new only in the sense that our generation has failed Santayana’s test—by forgetting our history, we are now reliving it.

Second, to underscore that for us to build again a movement that can truly transform America, we must build a coalition that seeks not only to end the suffering of the poor but the impoverishment of America’s middle classes as well. In this campaign for a living wage, we can construct a floor of economic security—and so we must build it.

But atop that floor we must build an entire structure that promises as our goal for the 21st century that we achieve the largest, most secure, most generous middle-class country the world has ever seen. And we must be prepared to carry forward that achievement and replicate that success around the world.

Such a campaign will address the material constraints that most Americans—not just the poor—have faced in the past two decades. Remember, although in the last two years incomes have finally begun to rise, 70 percent of American families saw no such real income improvements for nearly 20 years, even as the top 10 percent have captured 85 percent of the nation’s stock market gains over the same period. But more than their material constraints, we need to recognize—and relieve—the moral and civic impoverishment a majority of Americans have shared as well.

Forced to work longer and longer hours, middle- and working-class parents—not just poor parents—have found marriages disintegrating, children left without the nurture only healthy and whole families can provide, faced the destruction of alcohol and drugs invading our homes, and watched the mindless diversion of TV, movies, and music cascading over us with their endless parade of sex, violence, and nihilist emptiness.

Robbed of time, these same families have given up the church and community service that once made up the backbone of thriving neighborhoods and towns. And robbed of a vision that America could be cohesive, bold, and generous once again, those families, millions and millions of them, have given up on not just politics itself, but on an uncynical faith that democracy—and not the endless search for profit and ambitious advantage—is what unites us as a people.

Evangelists of Justice

WHAT COULD A VIBRANT and rededicated religious community mean to America? In a country where more than 90 percent say they believe in God, where more than 70 percent still affiliate with some organized faith, where more than 45 percent say they worship weekly, there are today more Catholics than registered Democrats, more mainline Protestants than registered Republicans.

We are in short the largest voluntary community in America—and have proved ourselves time and again, from abolition and suffrage through Vietnam to living wage campaigns today—capable of great good for this country and ourselves when we set to work to bring God’s vision to a suffering world.

On the eve of a new millennium, we have the opportunity once again to claim that role—and I think we are ready to do so. What we are recovering is the central message of our faith: that we are not merely children of God, but evangelists of justice. That we are not alone, but rather stand in an onflowing stream that has shaped this country from John Winthrop’s "City on a Hill" to Martin Luther King’s Letter From the Birmingham Jail and beyond. And more deeply still we stand in a stream that stretches back not just to Christ but to the prophets themselves and to Exodus, a River Jordan flowing ever in our hearts and spirit.

We as religiously committed people have moved this country forward time and again—for one simple reason: Because we had faith. It is time we move our country again.

RICHARD PARKER is a senior fellow at the Joan Shorenstein Center on Press, Politics, and Public Policy at the Kennedy School of Government at Harvard University. This article is adapted from a speech he gave in April at the conference "Work, Economics and Theology," organized by the Task Force on the Theology of Work of the Episcopal Diocese of Los Angeles.

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