Amity Shlaes’s Forgotten History: When Unions Go Bust, We All Do

For years, American workers’ wages have stagnated even as they produced more. Since 2008, they have been socked with staggering new bills for bank bailouts and hammered by a Great Recession brought on by the very same banks. Now public sector workers are confronted by a new crop of Republican governors who want to put an end to unions. Union workers in Wisconsin have already conceded all of Governor Walker’s draconian demands. But they want to hold on to their right to bargain so that they won’t be at the mercy of the whims of political appointees or rogue school boards. Tens of thousands have swarmed Madison to show their support for the working people of Wisconsin.

Conservatives are tasked with coming up with a narrative that makes villains out of these working folks and heroes out of the powerful people who aim to squeeze them for what’s left of their economic security.

This is not easy. And you have to admire their ingenuity. Amity Shlaes, ever the eager revisionist, has whipped up a widely parroted narrative that contains just enough truth to give it the ring of plausibility. It goes like this: Governor Scott Walker is a paragon of virtue who will soon be embraced by the American public, just like his union-crushing predecessors Calvin Coolidge and Ronald Reagan. According to Shlaes’s account, Coolidge, then governor of Massachusetts, stood boldly against badly abused Boston policemen who walked off the job in 1919 and left the city unprotected against looters. After firing the policemen, Coolidge became a national hero and was promptly swept into the Vice President’s office on a wave of popular admiration. When President Warren Harding died, Coolidge took office and it was suddenly Morning in America. As Shlaes tells it:

“’Boston Police’ remained American code for the principle that union causes do not trump others. The concern that the U.S. might succumb to European-style revolutions lifted. Strikes abated. Wages rose without unions in Motor City. Private-sector union membership declined. Joblessness dropped. Companies poured cash, which they otherwise would have spent on union relations, into innovation.”

Let us fill in some finer detail, shall we?

As Shlaes admits, the Boston police force had been grossly abused with long hours and horrific conditions. And it was true that there was some disorder when they walked off the job, though she somewhat overstates the case. It is also true that Coolidge’s response made his reputation as a Republican politician.

But it was not exactly popular enthusiasm that wafted Coolidge into the White House. Actually, there was a huge orchestrated effort to push Coolidge by powerful financial interests. He ended up on the ticket with Warren Harding not so much because of his overwhelming appeal to the American public – he was known for being taciturn, unsociable, and downright weird (Alice Roosevelt Longworth wondered if he had been “weaned on a pickle”). Rather, it was his overwhelming appeal to American bankers.

They knew a good thing when they saw it.

Young Coolidge, you see, had gone to Amherst College, where he had hardly any friends except Dwight Morrow, who became his bosom buddy. Coolidge went on to become a small town Massachusetts attorney representing banks, while Morrow became a senior partner in House of Morgan. When Morrow saw his pal Coolidge attracting attention in the Boston Police Strike, he wrote to everyone he knew and launched a national campaign to make a legend out of the uncharismatic Coolidge. Morrow and fellow Morgan partner Thomas Cochran lobbied tirelessly for Coolidge at the Chicago Republican Convention in 1920, and their lobbying paid off. Coolidge, first as vice president and then as president in 1923 when Harding died, became a valuable partner for the House of Morgan. Famously declaring that “the business of America is business,” Coolidge stocked his administration with enough Morgan men to fill a banking convention. Historian Murray N. Rothbard notes that

“the year 1924 indeed saw the House of Morgan at the pinnacle of political power in the United States. President Calvin Coolidge, friend and protégé of Morgan partner Dwight Morrow, was deeply admired by J.P. “Jack” Morgan, Jr. Jack Morgan saw the president, perhaps uniquely, as a rare blend of deep thinker and moralist. Morgan wrote a friend: ‘I have never seen any president who gives me just the feeling of confidence in the country and its institutions, and the working out of our problems, that Mr. Coolidge does.’”

Coolidge got to the White House for crushing unions, where he slept ten hours a day and hopped on and off a mechanical horse in his underpants and a cowboy hat.

Here’s what America got: the Great Depression.

Coolidge’s real legacy was a huge upward shift of income during the “roaring twenties” away from ordinary people to the rich and powerful, who got even richer and more powerful thanks to his regulatory and policy inactivity. The best Average Joe could hope for under Coolidge was for his income to hold steady. The profits from that wondrous innovation and growth that send Shlaes into rhapsodies went to fatcats who turned the country into a casino and smashed the economy.

Reagan’s history is better known – or so you would think. His firing of 13,000 striking workers was, as Washington Post columnist Harold Meyerson put it, “an unambiguous signal that employers need feel little or no obligation to their workers.” After Reagan, employers were emboldened to illegally ditch workers who sought to unionize, replace permanent employees who could collect benefits with temps, and ship factories and jobs abroad. Ever-smiling with his friendly cowboy image, Reagan tried to lower the minimum wage for younger workers, weaken child labor, job safety and anti-sweatshop laws, and do away with training programs for the jobless. He also did his best to replace thousands of federal employees with temps without civil service or union protections. Under his watch, the share of the nation’s wealth held by the richest 1 percent of Americans went up 5 percent richer. Guess whose declined?

At the time, Americans were supportive, by slim margins, of Reagan’s stance against the air traffic controllers, who went on strike to win benefit concessions from the federal government. However, the comparison with Wisconsin workers is not exactly apples to apples. These workers have agreed to concessions, and only fight to maintain their right to collective bargaining. Intuiting correctly that the public may not be on their side in this battle, conservatives have relentlessly pushed the deceptive idea that public employees enjoy higher salaries and better benefits than their private-sector counterparts. But this has been widely debunked. Careful research has shown that when you adjust for skill levels, public sector workers are not overpaid relative to private sector pay scales.

After the Great Crash, Coolidge’s bank-friendly, union-bashing policies didn’t seem like such a great gift to America. And just like in the twenties, Reagan’s signal that it was open season on unions energized a much bolder effort to hold down wages by corporate America: Over the next few years, workers by the thousands were let go, found their pay slashed, and turned into poorly paid part time employees. US income inequality reached Himalayan levels as people’s share of the benefits from increased productivity took a sharp nosedive. Today, after the Great Recession, Reagan’s anti-union attitude and enthusiasm for deregulation has also proven to be a dubious legacy.

Governor Walker says he’s fighting for ordinary Americans. So why does he want to require unions to re-certify every year, but we don’t hear a peep about corporations being required to renew their charters every year? Why does he want to control the salaries of public employees, but doesn’t have any interest in controlling the salaries of grossly overcompensated corporate CEOs? Why does he call for sacrifices from hard-working people who have been screwed by the economy through no fault of their own, and none from the financiers who caused the crisis?

Maybe it’s because he has quite a bit in common with Coolidge and Reagan after all. In Reagan’s case, as in Coolidge’s, union-busting led to some of the biggest peacetime income re-distributions in modern history. Democracy got weaker, oligopolies got stronger, the rich got richer, and the rest of us got left behind.

The real lesson from Coolidge and Reagan is this: If Governor Walker and his Republican friends are allowed to crush the public unions, you ain’t seen nothing yet.