Responding to the Oncoming Glacier, Restoring a Sustainable Economy

“But with the slow menace of a glacier, depression came on. No one had any measure of its progress; no one had any plan for stopping it. Everyone tried to get out of its way.” These are the words of Frances Perkins, FDR’s Secretary of Labor. She took plans to stop it as the “Woman Behind the New Deal.” She led the efforts toward a social security system, new industrial relations and minimum wage laws, and an end to child labor. The New Deal ushered in a changed relationship between the people, states, and their federal government, launching public works programs that put millions of Americans back to work to restore the country’s economy.

In this edition of the Expresso, we look at an innovative strategy in Denmark to pay workers during the current global crisis, revisit the New Deal, and contemplate the workings of the Reconstruction Finance Agency and other war-time powers to mobilize capital and rebuild critical industries.

For 25 years, the responsible investment “aviators” of the Heartland Network have been saying that the owners of workers’ capital—the workers--must reinvest to rebuild America. Heartland’s partners have mobilized substantial capital, working in a united front to rebuild our cities, renew our industrial commons, grow the clean economy and make the “boss” more accountable.

We have invested to turn around and grown manufacturing and technology firms; construct green, affordable housing; jump-start community-scale infrastructure; build windmills and solar farms; finance efficient transportation initiatives. These and other investments have saved or created hundreds of thousands of good union jobs and fostered apprenticeship pipelines for young minority and women workers in America.

Now that the $2 trillion stimulus, which was vastly improved to help more workers and small businesses, has been passed, we await the next shoe to fall. Initial claims for unemployment benefits could rise to a record 2.4 million this week, according to Goldman Sachs. Thousands of firms have lost 60-100% of their business, and U.S. unemployment could soar to 9 or even 30 percent, according to St. Louis Federal Reserve President James Bullard.

How many workers, families, businesses, and communities—already compromised by years of sluggish wage growth, income inequality, bad trade deals, gig economy disruptions--will fall into a glacier? Whether or not there’s a new recession, which looks probable, there is already an impetus for a broad rethinking of our economy.

The U.S. needs a sustainable industrial policy. There’s a reason we’ve fallen so far behind in producing ventilators, masks, other essential medical supplies: we gave away much of our manufacturing jobs base. Europe has been shaping its own set of ambitious eco/econ planning strategies now since 2010. Much of that infrastructure is in place: a $1 trillion euro sustainable investment fund, sustainable finance hubs, a $1 billion euro just transition fund and workforce safety nets, R&D innovation and sectoral strategies, a framework for both Industry 4.0 and a circular industrial economy, procurement mechanisms, and a fair trade program.

“In 2010, the European Commission launched the Europe 2020 strategy, a growth strategy to transform the EU into a smart, sustainable and inclusive economy with high levels of employment, productivity and social cohesion. This strategy set out five ambitious objectives – in the areas of employment, innovation, education, social inclusion and climate/energy – to be reached by 2020.” (Calleja, Caballero, “A New Industrial Policy for Europe: Reinforcing Europe’s Industrial Base to Create Employment and Growth.” 2014. https://doi.org/10.4000/rei.5769). The authors point out that the Commission added sharper industrial planning tools to the 2020 framework, given the difficulties of SMEs finding financing and the uneven development across member nations as the pain of the Great Recession (and regrettable austerity policies) stretched across several years.

The Obama Administration put in place some of the building blocks for a U.S. policy, starting with the Manufacturing USA institutes and the 2009 Stimulus. And there are elements of the Green New Deal that could move us forward. And then there are the states, the "laboratories of democracy" as U.S. Supreme Court Justice Brandeis called them. With federal help in some cases, the states have established workable models for early warning/biz retention networks, shared work programs, sectoral initiatives, university R&D programs, inclusive industry training programs, and state pension-funded economically-targeted investments (ETIs).

In June of 2017, the Heartland Network and our host agency, the SVA, joined The Century Foundation and other partners in launching a new initiative in finding ways to bring back high-wage work to America's heartland through manufacturing, technological innovation, expanded workforce training, and target investments. We landed in multiple cities to gather feedback and resources to find solutions. We spent two years integrating ideas from the “best and brightest” policy entrepreneurs across the states and nationally in order to forge a bottoms-up, tri-partite, sustainable industrial policy platform. We proposed long overdue new policies such as a national industrial bank, infrastructure fund, pension-capitalized investment partnerships, just transition strategies for workers left behind. (see www.heartlandnetwork.org/field-work and https://tcf.org/topics/economy-jobs/rediscovering-government/high-wage-america/?agreed=1).

We’ve been here before. The AFL-CIO Housing Investment Trust (HIT), the grandfather of ETI strategies, made the first private sector investments in New York City after 9/11. KPS Capital Partners has arguably built the most formidable, responsible turnaround fund in the world. Many other Heartland partners joined the “Heartland RoadShows to Revitalize America” to ten cities across the country during the Great Recession.

We are here now. Join us.