The United States is a democratic capitalist system. At least in theory. Today, Ezra Klein wrote, Three Sentences No One Should Forget About Unions. The sentences come from Richard Yeselson in an interview with Jonathan Cohn for New Republic, Happy Labor Day. Are Unions Dead? And they get at something I talk about a lot. In fact, I talked about it this morning in the birthday post for union organizer Walter Reuther: liberal policy is an important aspect of making capitalism work.

The issue could not be simpler: you need to feed the lion. If you don’t feed the lion, he will get hungry and eat you. In a democratic capitalism, there are two forces that push against each other: the power of the rich to manipulate the political system to funnel money from the poor to the rich, and the power of the poor to enact laws that take money away from the rich and redistribute it. Labor unions are incredibly important in this. But in modern America, the first force has had far more power over the last four decades than the second force.

Richard Yeselson’s three sentences explain the issue:

This goes right along with the last article I wrote, The Rich as Spoiled Brats With Infinite Power. The point I was making was that the rich act in a very shortsighted way because they believe that the government will always bail them out. And the poor exhibit all the signs of learned helplessness.

But let’s look at a graph from Ezra Klein (edited by me for aesthetic reasons). It shows the unionization rates of the various countries in the OECD:

You will note that the United States is pretty far down the list and that includes public employees. But unionization rates are not the only thing that matters. France is not on the chart and it has a lower level of unionization. I assume this is because French labor law is such that workers generally don’t feel they need a labor union. The government protects their interests. In the United States, the government is exactly the opposite: it does everything it can to limit what protections unions provide.

Another graph in Klein’s article shows how well correlated the incomes of the top 10% are with the decline in unionization. He cautions us to not read too much into this. That’s correct. In fact, I suspect the relationship is more the opposite. The more power the top 10% has managed to get, the more they have used it to crush unions and everything else that might limit their ever increasing wealth. I’m sure that a graph of the income of the top 10% and their political power would be at least as stark.

There is a complimentary graph that shows public support for labor unions over the last three decades. What it shows is that union support has been shockingly consistent even while actual unionization has gone steadily down. So the dying union movement isn’t caused by people losing interest. It is just that destroying labor unions is a government policy.

In the United States, we clearly have a capitalist system. When it comes to whether we have a democratic system, it is at least not clear. What the people want doesn’t seem to much matter.

Update (1 September 2014 8:43 pm)

According to Richard Yeselson, “France actually has smaller percentage of union members than the US, but union contracts cover almost the entire workforce.”

Happy labor day, comrades! Do you know why labor day is today and not on May Day — International Workers’ Day? Well, it’s because of the commies and anarchists. President Grover Cleveland was afraid of associating the international worker movements with the American movements. Of course, Cleveland wasn’t all that keen on the labor movement. But he made Labor Day a national holiday! Why? Because he was trying to make nice after totally screwing up in the government’s response to the Pullman Strike.

This is an interesting but totally typical story. The Pullman Company made railroad cars. Following the Panic of 1893, Pullman lowered worker wages. There is nothing especially wrong with this. It can be much better than laying workers off. Of course, Pullman did lay off workers. It probably only lowered wages because it had an excuse. But all that was probably okay.

The problem was that the workers lived in a company town. They paid the company for rent and food and more. But when the company lowered wages, it did not lower the cost it was charging workers for their necessities. The workers were, not surprisingly, unhappy about this situation. But George Pullman refused to lower his company town prices and refused to even arbitrate the matter.

Notice the situation here: Pullman thought that his workers should suffer because of the bad economic conditions. But he didn’t think he should suffer at all. During the first years following our financial crisis and the bursting of the housing bubble, there was endless repetition that what the country needed was “shared sacrifice.” But if you dug down even a little into these pleas, you saw that it was all sacrifice by the lower classes — none by the upper. For example: we heard constantly that we had to cut Social Security, but we couldn’t even mention raising the payroll tax cap. (That would be class warfare!) The bankers were bailed out without much fuss but homeowners were just left to their foreclosures. And there were large cuts to social programs but only a tiny increase in the very top marginal tax rate and only because it was going up anyway.

More desperate than we are today, many of the workers joined Eugene Debs’ American Railway Union (ARU). And they went on strike. It got ugly. Union members eventually stopped railroad service in a number of places. Then Grover Cleveland used the interruption of mail delivery to justify sending in federal troops. This did eventually end the strike — at a loss of 30 striker lives and almost twice as many wounded. This is generally the way it goes.

The government does not like organized labor. It is too much of a threat to the status quo. When organized, workers have enormous power. That was why, in 1947, we got the Taft–Hartley Act, which outlawed “jurisdictional strikes, wildcat strikes, solidarity or political strikes, secondary boycotts, secondary and mass picketing, closed shops, and monetary donations by unions to federal political campaigns.” And after that, Reagan savaged unions and basically made the remaining union rights void through lack of enforcement.

In 1894, of course, the government was scared. Grover Cleveland and the rest of the government wanted to make nice with organized labor. They probably had Louis XVI of France in mind and were trying to hedge their bets. So only six days after the strike ended, Cleveland signed the legislation making Labor Day a federal holiday.

As for old George Pullman, well, a national commission was appointed to look into the causes of the strike. It found Pullman culpable and said his company town was “un-American.” In 1898, the company was forced to sell off the land, which became part of Chicago. It didn’t matter to George Pullman, however; he died the year before.

After the strike, Debs was arrested and charged with conspiracy to obstruct the mail. You know: it wasn’t enough to have your strike crushed; Debs was a little man and so the government needed to crush him too. But Debs was represented by one of the great heroes of that period: Clarence Darrow. Darrow argued that Debs didn’t conspire to do anything and that it was the railroad that conspired against the workers. This is something that doesn’t seem to be understood by my libertarian enemies who almost to a man hate unions: if workers aren’t able to organize, it isn’t fair; the company management is very organized.

The prosecutors saw they were going to lose the case, so they dropped the conspiracy charge. Debs was later convicted on the lesser charge of violating a Supreme Court injunction and was given six months in jail. Although he entered jail what we might call a liberal, he left a socialist. While in prison he read a whole bunch of Marx and that changed his outlook. He was also influenced by visits from Victor L Berger. Along with him and others, Debs founded the Social Democratic Party of America. He went on to run for president as a socialist five times — the last time in 1920, he did from prison. He was serving a ten year sentence for violating Obama’s favorite law, the Espionage Act of 1917. He violated it by giving a speech that “obstructed recruiting” for World War I.

In 1921, The Bridgemen’s Magazine wrote:

So enjoy your Labor Day. But don’t forget the suffering and loss that it represents. And don’t stand for people like Eric Cantor showing such great disrespect to it. We know conservatives hate the labor movement. We know that many so called liberals are at best apathetic towards the labor movement. But the least we can demand is that they all show a modicum of respect one day of the year. Now go enjoy your barbecue or whatever.