Paul Krugman's Fairy Tale - The American Spectator | USA News and Politics
Paul Krugman’s Fairy Tale
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Beware of newspaper columns that begin, “Once upon a time.” That’s how Paul Krugman opened his Christmas Eve New York Times op-ed. “[B]ack when America had a strong middle class, it also had a strong union movement. These two facts were connected,” he argued.

Continuing his liberal bedtime story, Krugman wrote, “Unions negotiated good wages and benefits for their workers, gains that often ended up being matched even by nonunion employers. They also provided an important counterbalance to the political influence of corporations and the economic elite.”

The fascinating thing about Krugman’s argument is that all of his premises can be ceded without accepting his conclusion that “a strong union movement” was the cause and “a strong middle class” the effect.

Any conservative who dared make such a straightforward cause-and-effect claim — about gun control and the District of Columbia’s crime rate, say — would be accused of being “simplistic.” In fact, Krugman’s crude claim of causation reveals the dishonesty of liberal objections to simplistic argument. So long as one is arguing on behalf of liberal agendas and Democratic constituencies, no such objection is ever heard.

Krugman reduces decades of economic history to a single-factor analysis that hinges on a fight for “political influence” between (a) the “union movement” and (b) “corporations and the economic elite.”

Well, once upon a time, such arguments tended to end with “Workers of the world unite!” Krugman is, after all, setting up the classic proletariat-vs.-capital showdown that inspired the fevered dreams of Marxism. Whereas Marx and his followers saw downtrodden industrial toilers as the world-historical force destined to rise up in revolutionary fury, however, Krugman’s sloganeering conscripts the middle class to the task.

He is a thoroughly bourgeois revolutionary, and it is therefore not surprising that Krugman’s Christmas Eve manifesto was issued on behalf of John Edwards, the multimillionaire trial lawyer and Democratic presidential candidate whose “populist message resonates with labor.”

ASSISTED BY UNION-controlled political groups, Edwards is reprising his famous “two Americas” 2004 campaign theme, premised on the same sort of simplistic single-factor argument that Krugman made. In this populist fairy tale, Americans can be divided neatly into two groups, the villainous “rich” and everybody else. It is the political influence of the rich, embodied in the Republican Party, that explains whatever woe afflicts everybody else.

Implicit in this myth is the existence of a lost postwar Golden Age of middle-class comfort, to which we may return by electing Democrats and enacting their preferred economic policies (which, not coincidentally, are those endorsed by Big Labor).

There are three chief problems with this liberal fantasy. The first is that the Golden Age wasn’t really so golden. This point was most persuasively argued by David Frum in his book How We Got Here: The ’70s: The Decade That Brought You Modern Life — For Better or Worse.

For all the hazy nostalgia attached to the Ozzie-and-Harriet era, Frum points out, the quarter-century following the end of World War II was typified by a level of regimentation — including the military draft and leftover New Deal economic regulation — that was fundamentally at odds with American ideals of liberty.

The second problem with this mythical Golden Age is that its genuine golden qualities were not the fruit of union-backed politics. The AFL-CIO bosses and their political henchmen did not produce the widespread prosperity and upward mobility of the 1950s and ’60s.

To the extent that it was really golden, the Era was the product of a unique set of historical conditions. On the heels of the Great Depression, the United States had marshaled its industrial potential to achieve victory in a war that devastated the infrastructures of America’s chief economic competitors, especially Germany and Japan.

Emerging with its industrial capacity unscathed and its workforce accustomed to wartime discipline, postwar America benefited from a source of capital never mentioned by the populist mythologists. Four years of rationing and war-bond drives had prevented Americans from purchasing consumer goods, while encouraging them — forcing them, really — to save wartime wages inflated by the emergency demand for labor. When wartime controls ended, these artificially imposed savings flooded into the marketplace, unleashing a tsunami of consumer demand that created unstoppable economic momentum.

Contrary to the Krugman-Edwards delusion that the good times of the ’50s and ’60s were caused by the political supremacy of labor unions, the causation was more likely the other way around: Because of the good times, perhaps, workers didn’t much mind paying union dues, and the political influence of union bosses was a largely a function of their fat coffers.

Yet that happy honeymoon was over before it really began. In 1946, Americans elected a Republican Congress, and in 1947, the newly elected GOP majority overrode President Harry Truman’s veto to pass the Taft-Hartley Act, limiting the coercive and often violent means by which union bosses had established their stranglehold on the American economy.

Stripped of legal sanction for their thuggish abuses, unions soon began losing membership. After cresting at nearly 33 percent in 1953 — the belated upswing caused by new employees joining already-unionized workplaces — Big Labor’s share of the workforce dwindled steadily. By 1979, less than a quarter of American workers were union members. A decade later, fewer than one-in-six U.S. workers belonged to a union. Today, it’s fewer than one-in-eight.

THIS TREND POINTS TO the third problem with the Krugman-Edwards populist myth. Taft-Hartley doesn’t prevent workers from joining unions; it only prevents unions from forcing workers to join.

The American exodus from the Egyptian bondage of coercive unionism is entirely voluntary — and in many cases, this exodus has been more than a metaphor. U.S. population has been drastically reapportioned in the past half-century, with people departing the heavily-unionized Northeast and Midwest in favor of Sunbelt states where right-to-work laws prevent unions from extracting dues from unwilling workers.

Americans have voted with their feet, and there is not the slightest evidence that the 87 percent of non-unionized U.S. workers crave an opportunity to pay for the privilege of union membership.

If further refutation of the Krugman-Edwards mythology were needed, one might point out that union membership is only 7.4 percent in the private sector, compared to 36 percent for government workers, and that union membership is practically non-existent in the Information Age industries where productivity, growth, and wages are highest.

Krugman’s fairy tale may give Edwards a boost in the race for the Democratic presidential nomination. Voters who understand economic reality aren’t likely to trudge through the snows of Iowa to participate in a Democratic caucus. But if liberals expect to win the White House on the basis of Big Labor mythology, 2008 will prove a very unhappy year for Democrats.

Robert Stacy McCain is co-author (with Lynn Vincent) of Donkey Cons: Sex, Crime, and Corruption in the Democratic Party (Nelson Current).

Robert Stacy McCain
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