CommunityFDL Main Blog

The Violated Social Contract: A Debate Worth Having

When Sen. John McCain said on CNN this morning that "we are a victim of the violation of the social contract between capitalism and the American citizen," he may not have fully appreciated the kind of national conversation that statement could-or at least should-provoke.

McCain’s statement, taken at face value, is dead on. What’s missing is an honest and thorough diagnosis of who broke the contract and how that contract needs to be renegotiated. Now that the rapid implosion of some of Wall Street’s most storied financial institutions is paralleling the millions of financial implosions on Main Streets all over America, we just might have the right climate to have that conversation at a level that matches the severity of the economic crisis we face.

That is the aim of an advertising campaign launched today by the Institute for America’s Future, where I work. The first installment of the campaign, which appears on the op-ed page of The New York Times, begins, "The American Dream is on life support," and then outlines the symptoms. The goal is to get all of the players who can play a role in setting the tone of the political debate in these final weeks before the election—including the candidates themselves, the news media, the punditocracy, the blogosphere, community leaders and ordinary citizens—to have a real discussion about the fundamental threats to the well-being of our economy and our democracy.

Later this week, a full-page ad will declare, "It is time to shelve the slogans, the gotcha-politics and the horse-race journalism of the past. Give us a debate worthy of a great nation in trouble."

Getting to the bottom of what happened to the social contract between capitalism and workers is a great place to start. Through much of the period from 2000 to 2007, as the economy was growing, profits were up, productivity was up, but the most productive workers in the industrial world, who work the longest hours, didn’t see the rewards. In fact, as this fact sheet shows, median household income actually went down in real terms. Something is fundamentally wrong.

Robert Borosage, the director of the Institute, notes that this isn’t just a story of one presidential term. He writes in The Huffington Post:

Over the last 30 years, conservatives and their ideas dominated Washington. Both parties joined in. Under Reagan and Clinton, banks were deregulated and a casino financial system grew in the shadows. Global trade deals protected property rights, not worker rights. Taxes were lowered on the wealth and raised on work. With the crushing of the PATCO air comptrollers strike, Reagan declared open season on unions. The minimum wage was frozen for a decade, lowering the floor. Companies under pressure from speculators and global competitors began shredding the promises once made to workers – cutting health care, abandoning pensions, ignoring rules on hours and overtime. Undocumented workers were easily exploited. Even Microsoft, the most profitable monopoly of the time, resorted to using permatemps – permanent temporary workers – to avoid paying folks full-time benefits. Under Bush, this all came to a head.

If we are serious about repairing a social contract between capitalism and workers, at least three fundamentals must be on the table.

First, we need to empower workers again. We have to make sure that workers have the ability to bargain equitably for the wages and working conditions that they deserve. Conservative government has systematically eroded that ability. Measures such as the Employee Free Choice Act, fiercely opposed by congressional conservatives and by the business lobby, need to be considered.

Second, we need to forge a public social contract to replace the private one that the companies are now shredding. Set, as other industrial countries do, a minimum legal standard of basic health care, contributions to a public pension, paid vacation and sick days, and a decent minimum wage pegged to inflation so that companies can’t compete on the low road by driving wages and conditions to the ditch. Among industrial nation, America ranks near the bottom on basic guarantees to workers. That must change.

Third, make full employment the stated goal of our economic policies, at the level of the actions at the Federal Reserve as well as the fiscal policies of the administration and Congress. In 1978, the Humphrey-Hawkins Full Employment Act was signed into law to ensure that full employment was a prime consideration of economic policy. But over the last 30 years, market fundamentalists, reflecting the priorities of Wall Street’s investors, have made controlling inflation the priority. That’s been great for filling our stores with cheap imports, but that has decimated the employment base that had sustained our middle class in the years before the Reagan era. If we were following the intent of Sen. Hubert Humphrey and Rep. Augustus Hawkins when they wrote the bill, we would not allow, to state just one example, ad hominem attacks on government spending on job-creating projects to go unchallenged.

We do have an opportunity to take our political discourse out of the lipstick-and-pigs trough it has been mired in. The Institute ad campaign comes at a time when the tone of media coverage of the presidential campaign has, in the view of a louder chorus of citizens, jumped the shark. Getting a large sector of the electorate thoughtfully engaged in such issues as the content of the social contract is essential to building the mandate for the kind of change that the country needs. Let’s see if we can have a debate worthy of this nation and commensurate with the severity of its challenges.

Previous post

Obama opens can of whoop-ass on McCain's economic 'solution'

Next post

The F Word: Empty Calls for Accountability

Isaiah Poole

Isaiah Poole

Isaiah J. Poole is the executive editor of, the website of Campaign for America's Future. He has been a journalist for more than 25 years, most recently at Congressional Quarterly, where he covered congressional leadership and tracked major bills through Congress. During his mostly Washington-based career he has written articles on topics ranging from presidential politics to pop culture. He is also a founding member of the Washington Association of Black Journalists and the National Lesbian and Gay Journalists Association. He is a native Washingtonian.