Conclusion

What happened in Ohio in 2011 was an important part of a conflict that has roots in American history about what kind of country the United States should be.

On one side are those who believe that America, its people, and its institutions should be regimented by the free market and private enterprise. Acquisition of money and wealth being the primary social good, society should be molded to allow those with substantial financial resources to operate without restriction in the economic, political, and social life of the nation, imposing whatever values they see fit. After all, the market should be allowed to determine our policies, our values, and our way of life.

On the other side are those who believe that individuals should be able to craft a life for themselves. They value the power of democracy, not the power of wealth. Rather than allowing a small number of plutocrats and corporations to set the course for the nation’s economic, political, and social life, they believe that there is room in America for diverse views, and that through cooperative action, life can be made better for the bulk of Americans and their families. Far from surrendering their freedom to the market and the economy, they greatly respect both the strengths and the limitations of free enterprise and believe the economy should be made to serve the people.

To those who believe that this contrast is too sharp, it may be best to return to where we began this story—in the 1930s, with the reaction of the wealthy corporate plutocrats to the New Deal and the campaign they launched, outlined in Chapter 2, to undermine those progressive policy changes that led eventually in 2011 to Senate Bill 5 and the Battle of Ohio.

President Franklin D. Roosevelt was a remarkable individual. Born to wealth, early in his life he operated without a social conscience about the opportunities that were an accident of his birth. But he went through a remarkable transformation while recovering from polio as he struggled against forces that were beyond his control. Through his personal struggle, Roosevelt came to a sophisticated understanding of the plight of ordinary Americans facing an economy that was stacked against them. Consider FDR’s perceptive “Rendezvous with Destiny” speech at the 1936 Democratic Party Convention in Philadelphia.

Recognizing the onset of the Great Depression under the Republican administration in 1929, FDR praised the millions of Americans “who have borne disaster bravely and have dared to smile through the storm . . . In our strength we rose together, rallied our energies together, applied the old rules of common sense, and together survived.” Although Americans had “conquered fear,” he could not tell them that all was now well. “Clouds of suspicion,” he noted, “tides of ill-will and intolerance gather darkly in many places.” He argued that there were “problems that must be solved if we are to preserve . . . the political and economic freedom for which Washington and Jefferson planned and fought.” He urged the people to pledge themselves to “a wider freedom.”¹

Roosevelt argued that the American Revolution had been designed to assure political freedom. “That victory,” he said, “gave the business of governing into the hands of the average man, who won the right with his neighbors to make and order his own destiny through his own Government.” Since that time, however, the industrial revolution and changes in the nature of the economy have created new problems for those “who seek to remain free”:

For out of this modern civilization economic royalists carved new dynasties. New kingdoms were built upon concentration of control over material things. Through new uses of corporations, banks and securities, new machinery of industry and agriculture, of labor and capital—all undreamed of by the fathers—the whole structure of modern life was impressed into this royal service . . .

It was natural and perhaps human that the privileged princes of these new economic dynasties, thirsting for power, reached out for control over Government itself. They created a new despotism and wrapped it in the robes of legal sanction. In its service new mercenaries sought to regiment the people, their labor, and their property . . .

The hours men and women worked, the wages they received, the conditions of their labor—these had passed beyond the control of the people, and were imposed by this new industrial dictatorship.

The savings of the average family, the capital of the small business man, the investments set aside for old age—other people’s money—these were tools which the new economic royalty used to dig itself in.

For too many of us the political equality we once had won was meaningless in the face of economic inequality. A small group had concentrated into their own hands an almost complete control over other people’s property, other people’s money, other people’s labor—other people’s lives. For too many of us life was no longer free; liberty no longer real; men could no longer follow the pursuit of happiness.

The royalists of the economic order have conceded that political freedom was the business of the Government, but they have maintained that economic slavery was nobody’s business. They granted that the Government could protect the citizen in his right to vote, but they denied that the Government could do anything to protect the citizen in his right to work and his right to live.

Today we stand committed to the proposition that freedom is no half-and-half affair. If the average citizen is guaranteed equal opportunity in the polling place, he must have equal opportunity in the market place . . .

These economic royalists complain that we seek to overthrow the institutions of America. What they really complain of is that we seek to take away their power. Our allegiance to American institutions requires the overthrow of this kind of power. In vain they seek to hide behind the Flag and the Constitution. In their blindness they forget what the Flag and the Constitution stand for. Now, as always, they stand for democracy, not tyranny; for freedom, not subjection; and against a dictatorship by mob rule and the over-privileged alike.

These are powerful words. Clearly, we can see why FDR’s right-wing critics at the Heritage Foundation and elsewhere are so eager to attack him and his legacy: Is he not describing our own day? Given the attacks that working people have faced in Ohio, Wisconsin, Indiana, and Michigan by conservatives in power in those states, backed by corporate money and plutocrats of great wealth, the unavoidable conclusion is that Roosevelt was right then and still is now. The concentration of unprecedented wealth in the hands of a few, and their influence on our political system today, is a threat to American democracy, American workers, and the American way of life. As Michael J. Sandel points out in his powerful book What Money Can’t Buy, there are moral limits to markets. “The most fateful change in the last three decades,” Sandel argues, “was the expansion of markets, and market values, into spheres of life where they don’t belong.” He argues that it is a very different thing to have a “market economy,” in which markets are “a tool for organizing productive activity,” or a “market society,” which is a way of life where “market activity seeps into every aspect of human endeavor.” Americans have an obligation to question the change in values such a transformation imposes.²

Roosevelt and the New Deal created a safety net for the poor, imposed regulations on a rapacious economy in order to prevent its worst abuses, gave working men and women some control over their lives and livelihoods, and, in FDR’s own words, established a government that was not “indifferent” to the fate of its people.

The movement to undermine the spirit of the New Deal came to power in the person of Ronald Reagan; we’ve already discussed his transformation from union president to union buster through the efforts of GE’s Lemuel Boulware. But to fully understand Reagan and the damaging impact he and his ideology have had on America, it is necessary to understand the work of Kevin Phillips. Phillips was a Republican strategist who played a role in the conservative campaign that helped turn the Old South from a Democratic to a Republican bastion rooted in resistance to civil rights. In 1969, Phillips authored the important book The Emerging Republican Majority, which outlined how this electoral shift was going to take place in the South and West.³ The book—which explained that racial divisions were long-lasting, that Republicans were exploiting these divisions, and that this was leading to an enduring Republican majority—had a tremendous impact on the political world. Strategists and politicians were simultaneously repelled and fascinated by the argument. Nixon, of course, had ridden this Southern strategy to victory in 1968, but it was not yet clear to most observers—as it would become clear later—that this was a long-term realignment, generated by Southern resistance to the civil rights and voting rights acts, and that the Republican Party’s Operation Dixie was, in fact, working.⁴

What this meant was that the right-wing economic ideology rooted in the Austrian economists was going to be carried to power on the back of American racial politics. But Nixon was too complicated and independent to be blindly devoted to this new economic ideology, and his abuse of presidential power brought his presidency to an early end. Jimmy Carter won the presidency because of his morality and his Georgia roots, but he was an interruption in the march to power of those who would try to reshape the American economy.⁵ The victory of Republican standard-bearer Ronald Reagan in 1980 ushered in the new ideology.

President Reagan and his Republican allies began early on to attack the legacy of the New Deal. Phillips, who gradually became aware of the destructive impact this had on American society, came to criticize the Reagan era in another powerful book, The Politics of Rich and Poor, published in 1990.⁶ Phillips documents the enormous shift of wealth to the top one percent of the population. “The 1980s were the triumph of upper America,” Phillips wrote, “an ostentatious celebration of wealth, the political ascendancy of the richest third of the population, and a glorification of capitalism, free markets, and finance.” But hardly anyone asked why. “Despite the armies of homeless sleeping on grates,” Phillips notes, “political leaders . . . had little to say about the Republican party’s historical role . . . to tilt power, policy, wealth and income toward the richest portions of the population.”⁷

Phillips credits several specific actions by the Reagan administration that caused this dramatic shift of wealth to a small percentage of Americans, but it was primarily its advocacy in taking the top tax bracket from 70 percent to 28 percent in only seven years. This was a dramatic windfall for the wealthy. Not surprisingly, in addition to vast deficits, a shocking disparity developed between CEOs and rank-and-file workers. In 1979, CEOs made 29 times the income of the average manufacturing worker. By 1985, CEOs made 40 times more.⁸

It is worth noting that the rhetorical underpinnings of the “Reagan revolution” were often subordinated to a Reagan political reality that led him to compromise on issues like taxes—which he raised 11 times during his presidency. In contrast to today’s Republicans, Reagan actually attempted to govern. Today’s Reagan devotees, the core of SB 5 advocates and supporters, have forgotten the pragmatic governing Reagan, fixating instead on the rhetorical Reagan, and have taken his extreme rhetoric to even more extreme places. What we often get today is Reagan’s extreme rhetoric, devoid of perspective and even devoid of facts. Still, it is necessary to recognize the genuine damage that Reagan’s ideology has done to the middle class.

“The presidency of Ronald Reagan,” Timothy Noah writes in his important book The Great Divergence, “was the first to adopt a public stance that was openly and unapologetically anti-union.”⁹ And perhaps the most damaging action by President Reagan to the welfare of so many Americans was his decision to crush the Professional Air Traffic Controllers Organization (PATCO). This blatant use of presidential power to crush a white-collar union had severely damaging effects on the labor movement and the income of ordinary Americans for years into the future.¹⁰ The dramatic growth of inequality in America, Britain’s Economist magazine reported in October 2012, tends to support two beliefs: “First, that a system that works well for the very richest has delivered returns on labor that are disappointing for everyone else. Second, that the people at the top have made out like bandits over the past few decades, and that now everyone else must pick up the bill.”¹¹ The income inequality that has swept the country since the 1980s has a parallel in academia. In 2009, I lost a close colleague in my department at UC–Blue Ash. Dr. Jim Cebula was a professor of history and had taught at our college for 40 years. He was diagnosed with lung cancer and survived for about a year. He continued to teach until just a few weeks before he died because he loved teaching so much. A historian of labor and Ohio history, his published work included a book on Ohio politician James Cox and several essays about union history. He was one of the organizers who helped bring our AAUP chapter its first collective bargaining contract in 1975. Dr. Cebula served in many positions with the AAUP over four decades, all volunteer, including president of the local chapter, as well as a member of the executive boards of both the state conference and the national organization. He served on several committees over a long period of years at every level at the union and across the university, including the Faculty Senate. Few people have devoted so much effort to promoting the values of the AAUP than did Jim Cebula. He was a fierce defender of the faculty and quality education at UC and elsewhere. His devotion to his students was well known. Jim was, without question, the kind of professor who changed lives. He was awarded the Distinguished Teaching Award at our college in 2007. Jim was known for his demanding teaching style. “He’s maddening, irritating, exasperating. He’s just wonderful,” one student wrote. Hearing of his death, another wrote to me about how Jim had inspired her and her classmates:

Somewhere along the way, I started really enjoying my new found thirst for knowledge. Being able to speak about a topic and actually have something valuable to contribute to a discussion made me realize what people had been saying all along about the whole “knowledge is power” thing. Professor Cebula made me realize how important it is to know where we came from as a country, and to keep up to date with where we are now. I think he really helped me to become a more well-rounded, less ignorant individual. He caused me many sleepless nights before final exams, but I really learned and knew my stuff.

Shortly after Jim’s death, I received an email from a student who had just passed his doctoral dissertation defense at Miami University. He wrote: “Driving home I was struck by how much I would have loved to share the occasion with Dr. Cebula . . . I defended a dissertation . . . that I never would have written had I not registered for Dr. Cebula’s history course. It is safe to say that I would have never developed such an interest in academia w/o Jim’s tutelage.”¹²

Jim Cebula was doing the real work of the university, educating students, changing lives, contributing in a very real way to the good of society. At the end of Jim’s career after 40 years of teaching, his salary amounted to not quite $90,000 a year. A decent salary, certainly, and not one about which Jim would have complained—but, nevertheless, it took a doctorate and four decades to get there.

Obviously, the money in the university is not in faculty salaries. It has become a common joke that the highest-paid person on any campus is the football coach, and that says a great deal about misplaced priorities. But in terms of revenue directed away from a university’s primary instructional mission, nothing beats the layers of top administrators.

Gordon Gee, president of Ohio State University, has long been the poster child for presidential pay gone wrong. The Dayton Daily News performed an investigation of Gee’s compensation that showed that since he took the job in 2007 through 2012 he has drawn more than $8.6 million in salary and compensation. And, shockingly, that does not include his expenses of $7.7 million over the same period. All of this funds an extraordinarily lavish lifestyle. “Records show,” the Daily News reported, “that Gee stays in luxury hotels, dines at country clubs and swank restaurants, throws lavish parties, flies on private jets and hands out thousands of gifts—all at public expense.” Since 2007, Ohio State has spent more than $64,000 on bow ties, bow tie cookies, and O-H and bow tie pins for Gee and others to distribute, the newspaper found. Meanwhile, OSU’s endowment has slipped relative to its peers, and student tuition has increased 13.6 percent. Gee resigned in June 2013, under fire for controversial comments, but it is certain he will get a generous severance package.¹³

While Gee and OSU (which does not have a faculty union) are the outsize examples of irresponsibility by boards of trustees, they certainly are not alone. At the University of Cincinnati, for example, President Gregory Williams resigned in 2012, and nevertheless received a nearly $1.3 million severance package—including, amazingly, as The Cincinnati Enquirer reported, “a consulting deal that will pay him $300,000 during the first year and $200,000 the second year.” Williams even received a $255,000 teaching salary in the law school for a year, but he did not have to teach. Of course, it was not the first time that UC has been so generous. In 2011, for example, David Stern, dean of the College of Medicine, resigned and walked away with a cool $900,000. At Kent State University, President Lester Lefton, who is paid $417,799 a year, received a $104,000 bonus in 2013 by Kent trustees. In 2011, when the Kent trustees gave Lefton a $100,000 bonus, while hiking tuition 3.5 percent, a columnist in the Plain Dealer accused the trustees of “robbing the poor to pay the rich” and pointed out that Lefton made nearly 10 times the average full-time faculty salary.¹⁴

This is not to single out these individuals for particular criticism but to focus on the reality that, in Ohio and elsewhere, there is a system in academia where the people who actually do the work of the university, the faculty, get a relatively small cut of the revenue generated while a substantial and growing level of administrators at the top are compensated irresponsibly. All the while, tuition continues to go up, and the state contribution continues to dwindle. It does, in fact, mirror the income disparity problem that has developed more broadly in the United States during the same period of the last 30 years.

It is in this context of runaway salaries for top management that the Ohio legislature chose to try to crush the public employee unions. And, to be consistent, Gov. Kasich gave his own top staffers big pay increases while cutting the jobs of those on the lower rungs of his staff. His chief of staff, for example, started at $170,000, while Strickland’s had made $122,000. “I appreciate Gov. Kasich keeping one of his campaign promises to operate the governor’s office the way he operated Lehman Brothers,” Chris Redfern, head of the Ohio Democratic Party, said wryly.¹⁵

The dramatic growth in inequality has expanded since the Reagan years, as subsequent politicians have continued to undo the New Deal and even introduce new and more creative ways to reward the wealthy for being wealthy. Newt Gingrich and John Kasich, during their control of Congress in the 1990s, continued the drive to make sure that the political system was captive to this new ideology. The role of the Republican Party as an obstructionist force has been well documented by Norman J. Ornstein and Thomas E. Mann in their book, aptly titled, It’s Even Worse Than It Looks: How the American Constitutional System Collided With the New Politics of Extremism. The “Republican Party has become an insurgent outlier,” they point out, “ideologically extreme; contemptuous of the inherited social and economic policy regime; scornful of compromise; unpersuadable by conventional understanding of facts, evidence and science; and dismissive of the legitimacy of its political opposition.” When “one party moves this far from the center of American politics,” Mann and Ornstein write, “it is extremely difficult to enact policies responsive to the country’s most pressing challenges.”¹⁶

This, of course, aptly describes the Republican Party that Ohio was saddled with in the wake of the 2010 election—a regime that continues to be in a position to do great harm as it attempted to do with Senate Bill 5. Consider the observations of Columbus Dispatch columnist Joe Hallett, who wrote in April 2013: “These days, the Republican-dominated Ohio General Assembly might be unmatched for its production of bad legislation, its devotion to fringe groups and their narrow-minded ideology, and its loyalty to the lobbies that larder legislative campaign accounts.”⁷¹

Contrary to the ideological extremism represented by SB 5, many economists are actually more supportive of the positive impact that unions can and do have in American society. “The simple story of America,” explains Nobel Prize-winning economist Joseph E. Stiglitz, “is this: the rich are getting richer, the richest of the rich are getting still richer, the poor are becoming poorer and more numerous, and the middle class is being hollowed out.” He notes that trickle-down economics, the idea that if the people at the top benefit a lot, everyone will share in the success, “has long been discredited” because “higher inequality has not led to more growth, and most Americans have actually seen their incomes sink or stagnate.”¹⁸

Stiglitz sees a clear explanation for the decline in earnings for most Americans: the decline of unions. “This has created an imbalance of economic power and a political vacuum,” he argues. Without the protection of unions, “workers have fared even more poorly than they would have otherwise.” In contrast to Franklin Roosevelt and the Wagner Act, which encouraged unions, “Republicans at both state and the federal levels, have worked to weaken them,” Stiglitz observes, adding that Reagan’s attack on PATCO represented “a critical juncture” in the breaking of union strength.¹⁹

The conservative movement argues that union busting contributes to economic strength, but Stiglitz disagrees: “I would argue that strong worker protections correct what would otherwise be an imbalance of economic power.” Such protection, Stiglitz maintains, “leads to a higher-quality labor force with workers who are more loyal to their firms and more willing to invest in themselves and in their jobs. It also makes for a more cohesive society and better workplaces,” as well as more sharing of the wealth generated by economic activity with the people actually doing the work.²⁰

Stiglitz argues that this is, at heart, an ideological debate, and the right wing has gotten the best of the argument in recent years, aided by Fox News and wealthy right-wing think tanks. The result is the creation of a series of economic problems the nation now faces. “The Right wants the ‘right’ rules of the game,” Stiglitz points out, which are “those that advantage the wealthy at the expense of the rest.” In the world that conservatives imagine, there is a single set of rules “that would be best for all.” But, as Stiglitz notes, “that’s just not true.” If you listened to conservative arguments, he maintains that, for example, “you would have thought that markets always worked and government always failed,” and thus you would not have recognized the consistent failures of the market. Stiglitz emphasizes how conservatives can easily recall examples of government failures, but “the massive failures of our financial system in the run-up to the Great Recession are quickly forgotten, described as an anomaly, or blamed on the government.”²¹

“The question,” writes economist Richard Thaler, “comes down to whether we want a society in which the rich take an ever-increasing share of the pie, or prefer to return to conditions that allow all classes to anticipate an increasing standard of living.” He quotes Warren Buffet: “There’s class warfare, all right, but it’s my class, the rich class, that’s making war, and we’re winning.”²²

The damage that union-busting legislation like Senate Bill 5 and so-called right-to-work does to the American workforce is easily documented, and in the last few years there has been a plethora of works published about these facts, many of which have been cited in this book. As unions have declined between 1973 and 2011, wage growth in the United States has been just 10.7 percent for the median worker’s real hourly compensation, according to the Economic Policy Institute (EPI). “A major factor driving these trends,” EPI has determined, “has been the ongoing erosion of unionization and the declining bargaining power of unions, along with the weakened ability of unions to set norms or labor standards that raise the wages of comparable nonunion workers.”²³

And while corporate profits have soared—including a 171 percent increase after taxes just under Barack Obama’s presidency—the corporate titans continue to complain about a lack of advantages. Tom Donohue of the U.S. Chamber and John Engler of the National Business Roundtable have both recently been beating a drum about fears of higher taxes and more regulation, and proclaiming that Obama deserves no credit for the economic rebound. But as Bloomberg News points out, business has never had it so good. “Profits are more than twice as high as their peak during President Ronald Reagan’s administration,” Bloomberg reports, “and more than 50 percent greater than during the late-1990s Internet boom, measured by the size of the economy.”²⁴ Of course, this takes us back to Mann and Ornstein, and their recognition of the inability of so many in today’s Republican Party circles to deal with facts. Longtime Republican figure Bruce Bartlett has gone through a change in his attitude toward those conservatives in charge of the GOP because of their unwillingness to deal with real issues. Writing about the Democratic victories in the 2012 election, Bartlett writes: “All the stupidity and closed-mindedness that right-wingers have displayed over the last 10 years has come back to haunt them.”²⁵

The impact of this ideologically driven strategy is clear. “No one proposes abolishing large corporations because so many exploit their workers or damage the environment or engage in anticompetitive practices,” Stiglitz notes. That’s because of a recognition that all human institutions have weaknesses. But the attitude toward unions has been the opposite. “They are vilified,” Stiglitz points out, “and in many states there are explicit attempts to undermine them” with “no recognition of the important role they can play in countervailing other special interests and in defending the basic social protections that are necessary if workers are to accept change and to adjust to the changing economic environment.”²⁶

“On paper,” Nobel Prize-winning economist Paul Krugman writes, “we’re a one-person-one-vote nation; in reality, we’re more than a bit of an oligarchy, in which a handful of wealthy people dominate. Given this reality, it’s important to have institutions that can act as counterweights to the power of big money. And unions are among the most important of these institutions.”²⁷

That, of course, leads us to the Tea Party caucus in Congress, the Ohio legislature, and elsewhere. As a historian, it is particularly difficult to listen to the comic-book history promoted by the Tea Party—a central misconception being that the government has never been involved in the economy until now. The truth is that the government has, from the very beginnings of the republic, been an important part of and guide to the economy. High school history courses must routinely cover such government involvement in—even driving of—the economy as the construction of the Erie Canal, the building of the transcontinental railroads, the interstate highway system, and the internet. The plan originally called the “American Way” and eventually known as the “American System” was championed by both Alexander Hamilton and Henry Clay. It required government involvement in the economy at many levels from 1815 onward, for decades. This government economic activism included high tariffs to generate money for the federal government, the preservation of a national bank, and the development and funding of a system of internal improvements, especially roads and canals. Then, of course, there was the massive government spending during the Civil War that industrialized the country, and then the massive government spending during World War II that transformed the American economy and provided the means to become a global power. Further, historian Alex Fields has pointed out that the “decades of the 1930s, 40s, 50s, and 60s were periods of high productivity increases—higher than the decades before and after—and much of this success had to do with public investments.”²⁸ There is much more that could be added, but the obvious facts of American history contradict the Tea Party narrative that somehow, just recently, the government became involved in the economy for the first time and that it is a bad idea.²⁹

It is important to note, as well, that with all the predictions by SB 5 proponents of impending disaster for Ohio if the union movement was not crushed, the state of Ohio in 2013 had a surplus of at least $1 billion. Certainly, the surplus was generated by irresponsible cuts to public education and municipal governments, but, clearly, crushing the unions was not necessary to put the state budget in the black as was claimed.³⁰

“The imbalance of wealth and democracy in the United States is unsustainable,” Kevin Phillips points out in a warning for the future. “Market theology and unelected leadership have been displacing politics and elections. Either democracy must be renewed, with politics brought back to life, or wealth is likely to cement a new and less democratic regime—plutocracy by some other name.”³¹

Several analysts have suggested a few obvious areas of reform that would serve as a way out of having a government throttled by extremists funded by the corporate elite and as a way to create an economy that works for all the people:³²

• Repeal some or all of the Taft-Hartley Act and allow unions to begin to really advocate for workers once again.
• Create in Ohio and other states a redistricting system that allows democracy to flourish again. Ohio is a prime example of how to gerrymander a state to ensure political extremism. Under a fair system, Republican moderates might have a chance to influence their party.
• At institutions of higher education, redirect at least 15 percent of the revenue currently going to administration to instructional purposes instead. In the public schools, ask teachers and parents how to improve education, not lobbyists for right-wing corporate-funded educational think tanks.
• Restore a system of taxation and regulation that generates necessary revenue from wealthy individuals as well as from the American corporate community. Deficits manufactured for political purposes should never be used to create phony crises as they were with Senate Bill 5. The “Buffet Rule” should have real meaning, and huge corporations, like Exxon, should not be able to avoid paying taxes.
• In Congress, put real limits on the filibuster so that the people’s business can once again proceed unmolested by political extremism or by special interests.

The genius of American politics has been compromise based on real and not imagined issues. If we can manage these simple reforms, America, and Ohio as well, may well be poised for an amazingly positive twenty-first century. As FDR said:

There is a mysterious cycle in human events. To some generations much is given. Of other generations much is expected. This generation of Americans has a rendezvous with destiny.