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[...]
Now, the third great thinker to mention was a contemporary of Keynes named Michal Kalecki. He was a Polish Socialist who was influenced both by Keynes and Marks and had some ideas, obviously, of his own. And what Kalecki said was, okay, Keynes has now shown us how we can utilize the technical apparatus of economic policy to achieve full employment under capitalism, but what Keynes neglects is the change that it would create in terms of political dynamics, that it would give workers more bargaining power, and that the capitalists don't want the workers to have so much bargaining power. It would squeeze profits. Kalecki acknowledges all this. And therefore, he says, though we have the technical tools to achieve full employment under capitalism, we don't have the political force, and it would be a clear challenge to the prerogatives of the rulers of the society, the capitalists, to do this. So he laid out the real tension there.
[...]
And so the fourth major thinker, most influential thinker, I would say, on the issue of employment is the leading neoliberal economist, Milton Friedman. And Milton Friedman actually said that we have a natural rate of unemployment under capitalism which would be full employment—that is, anybody who wants a job would get a job—if we only didn't have government policies that created barriers to workers and businesses working things out on their own. The example he cited—one of the big examples cited by Friedman is minimum wage laws [...]
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Explaining views on full employment in macroeconomic theory from Marx to Keynes to Friedman, Pollin argues that the policy was abandoned in the United States in the 1970s for the wrong reasons, and he shows how it can be achieved today despite the serious challenges of inflation and globalization.
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Robert Pollin is Professor of Economics and Codirector of the Political Economy Research Institute at the University of Massachusetts, Amherst.
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PAUL JAY, SENIOR EDITOR, TRNN: Welcome to The Real News Network. I'm Paul Jay in Baltimore.

Bob Pollin, who is a economist and regular contributor to The Real News Network—he's also founder and codirector of the PERI institute in Amherst, Massachusetts—has a new book out called Back to Full Employment. And without further ado, he joins us to discuss this book. Thanks for joining us, Bob.

ROBERT POLLIN, CODIRECTOR, ECONOMIC POLICY RESEARCH INSTITUTE: Very glad to be on, Paul.

JAY: Alright. So a lot of people are reading the title Back to Full Employment and they're saying, okay, just when was that? So, obviously, we got to define what you mean by full employment.

POLLIN: Full employment is obviously not an obvious thing to define. In fact, in chapter 1 I talk about problems of definition because first of all we have to talk about full employment at decent jobs. You can't think about full employment in any old job, because actually that's very easy to achieve. The worse conditions are, the easier it is to get full employment at lousy jobs or people begging for jobs. So I do discuss that at the beginning, that we're talking about full employment at decent jobs.

Now, what do we mean by full employment at decent jobs? Full employment, in my view, a realistic definition is below 4 percent as officially measured by the government. And why is that my threshold? Why below 4 percent? Because what we've seen in the 1960s when we got below 4 percent, and again in the late 1990s when we got below 4 percent, you see a decisive change in the labor market dynamics, such that workers' wages go up pretty significantly, even in the late 1990s. This is after a generation. From the early 1970s to the mid 1990s, the average wage for nonsupervisory workers was either going down or stagnating. When we got the employment rate below 4 percent in the late 1990s due to—the financial bubble at that time was the dot-com stock market bubble—wages went up, especially for people at the lowest end of the labor market. So that's really the immediate goal, I think, about something—a definition of full employment.

There's another meaning to the title, and that is that the policy world, the economics profession, needs to get back to thinking about full employment as a policy goal. We're not even there. At least coming out of World War II and through the '60s, the entire edifice of government policy, and for that matter the entire edifice of macroeconomics in the economics profession, was focused around the issues of full employment. Of course, there are different definitions, different policy ideas, but full employment was the central idea. We've completely abandoned that.

JAY: Well, the idea of full employment—and in your book, in one of the later chapters, you kind of dig into this more—but capitalists have always understood—and, I guess, so have socialists—that high unemployment is good for capitalists, to a certain extent, at least, 'cause it dampens wages. And this, you know, polarity between wages and profits and this dynamic has always meant there needs to be a certain level of unemployment. And I think Milton Friedman—I don't know if he coined the term or not, this idea of a natural level of unemployment, that they want to control wages, and so they will almost turn a tap one way or the other so that full employment really isn't their objective, even though legislatively on paper, like the Full Employment Act of 1946, they say it is. But is it really?

POLLIN: No, of course it isn't. Full employment is definitely a challenge to the dynamics of a labor market under capitalism, precisely as I was saying before, because it gives workers more bargaining power. The idea goes all the way back to Karl Marx. The idea goes back to Marx's notion of—his term was the reserve army of labor, which is the reserve army of unemployed people.

When you have a lot of unemployed people, then if the people that are employed try to bargain up their wages or improve the conditions, the owners can just say, well, if you don't like it, you know, I'll just hire those people that don't have a job; they'd love to have your job. There's a lot of truth in that. So that is the basic dynamic that Marx described.

And Marx himself said, therefore capitalism by its nature requires mass unemployment, requires a reserve army of labor. And we can debate, but I think one of the fundamental critiques that Marx had of capitalism was exactly on this point, that you couldn't really build a decent society under capitalism, because in order for it to function on behalf of capitalists, you couldn't have full employment.

So when I say a full employment economy, definitely I am talking about changing the dynamics of the economy, about challenging the prerogatives of capitalists, and doing it in a systematic way. So that's really the nature of the debate around how to get to full employment within the basic structure, still, of a private ownership market economy.

JAY: So part of your thesis is that there have been moments in American history, you know, modern American history, where you have seen low unemployment. Some of that had to do with public policy. And when you say "back to," you're partly talking about going back to that, as you say, still within the capitalist system. Is that correct? And then, if that's true, when are those moments? And give us a bit of that history.

POLLIN: The two periods in the post-World War II era in the United States where you had something close to full employment—so that is, again, below 4 percent—were the late 1960s and the late 1990s, and both experiences are instructive.

In the late 1960s you did have a deliberate policy effort to stimulate the economy through macroeconomics, through a tax cut that was started by President Kennedy, continued by President Johnson. At the same time, under Johnson you had very aggressive policies, relative to what we've had subsequently, in terms of giving an opportunity for people at the low end of the labor market. So that pushed the economy down to below 4 percent unemployment. And you did see very significant gains in terms of poverty reduction, in terms of decent wages, of wages going up, especially for low-income households. So that's exactly why I'm looking to full employment to achieve that again.

Now, you had roughly the same outcomes in the 1990s when—and this was largely as a result of the financial bubble of the 1990s, which drove a very rapid increase in both private spending, consumption spending, and investment spending. It was a bubble and therefore didn't last, but for a brief period the unemployment rate officially fell below 4 percent. And yet again you saw wages went up very rapidly, especially for people at the low end, poverty was reduced, and workers did increase their bargaining power.

So these are very, very important achievements, and they can be attained within a framework of the existing capitalist economy we have now.

JAY: It could be if they wanted to. The question is: those that have power, you know, do they want to? Like, go back to this Humphrey–Hawkings Act, where they take the Full Employment Act, which was—what, 1946 was it?

POLLIN: Yeah.

JAY: And then they change the objectives. It's not just now there should be a maximum unemployment rate of 4 percent, but now they also have inflation objectives.

POLLIN: Right.

JAY: And I think you told to me off-camera it's like really watering down the 1946 act. And this was Hubert Humphrey the great Democrat. And this starts to make the actual policy objective—they say inflation, but we know that's code for let's make sure wages don't get too high.

POLLIN: Right. What happened in the 1970s was that you did start to get higher rates of inflation. The reason you got higher rates of inflation was the oil price increase. In 1973 you had a 400 percent increase in oil prices, and then you had it again in 1979. So that set off this inflationary spiral.

The source of the inflation was not workers' bargaining power. You did get some increase in inflation due to workers having more bargaining power in the late 1960s, but that was not by any means the primary cause of the inflation of the 1970s.

So in the book I do talk about the issues of how to control inflation. And there does have to be some concern about inflation control. I don't deny that.

What we do need to do, though, is not what—where we've gotten, essentially, now in macroeconomics analysis and policy is really to say, well, look, we can't really do anything about employment through government policy. We can control inflation, so let's just stick with inflation and let job creation land wherever it lands. That's what we got out of, like, 30 years of macroeconomics, which then brought us to the Great Recession, such that orthodox economists, when the Great Recession started, had almost nothing worthwhile to say, because they'd been focused entirely on this issue of inflation control.

JAY: So in the next segment of our interview, we're going to pursue this discussion, and the question is actually the question Bob raises in chapter 2 of his book, which is: is full employment under capitalism possible? So please join us for the next segment of our series of interviews with Bob Pollin on The Real News Network.

PAUL JAY, SENIOR EDITOR, TRNN: Welcome to The Real News Network. I'm Paul Jay in Baltimore.

We're continuing our series of interviews with Bob Pollin about his new book, Back to Full Employment. And he joins us again from Amherst, Massachusetts, where he is codirector and founder of the PERI institute. Thanks for joining us again, Bob.

ROBERT POLLIN, COFOUNDER, POLITICAL ECONOMY RESEARCH INSTITUE: Thank you very much, Paul, for having me again.

JAY: So if you haven't watched part one, go watch part one. Part two, the question is: is full employment under capitalism possible? So, Bob, some people would suggest the answer to that question is: if full employment under capitalism was possible, they wouldn't be capitalists. In other words, if they did implement the kind of policies you're talking about, it would just go against their nature. And so how do you answer that?

POLLIN: We have evidence that full employment has operated under capitalism. It certainly operated, as we talked about in the last segment, briefly in the United States in the late '60s and late '90s. It certainly operated in Europe in the early period after World War II. We have a lot of evidence, for example, in the Nordic countries.

Sweden is a really good example of—because the unions in Sweden had a lot of political power, they were able to do some very interesting experiments to push the economy toward full employment and stay there. The unions had enough power that they could think about macroeconomic policies to push the economy to full employment, while the unions themselves were focused as well on inflation control, restraining inflationary pressures, so that you could actually sustain the full employment that would be good for workers over time. And so we do have experience that this has happened.

It is a different kind of capitalism. It is a capitalism in which workers have more power, unions have more strength, the concern for the well-being of working people is much higher than it is today. And that's the kind of society I think we need to move toward. Where we go after that, okay, we can talk about where we go after that, but just to get to that point in which public policy is genuinely focused on providing a maximum amount of job opportunities and well-being for people, to get to that point in our policy debates would be a major achievement.

JAY: And we'll get into that, how you think we get there, a little further in this series of interviews. But let's kind of go step by step here.

So give us—trace us a little bit about the history of this debate. As you said in part one, Marx says it's in the interest of capitalists to have a certain level of unemployment because it controls wages, and then Keynes kinds of counters that argument to some extent in terms of the role government could play. So give us a bit of the historical background here.

POLLIN: Alright. Well, I go through what I think are the four major thinkers on the theory of unemployment. The first is Marx, and it was Marx who said that having a reserve army of labor, a lot of unemployed people, is necessary for the functioning of capitalism, because if you had no unemployment, then workers' bargaining power would go up, workers' wages would go up, capitalists' profits would get squeezed. Okay, that's Marx.

Now, Keynes came in with a different view. Keynes was thinking more as a technician within the framework of capitalism. And he said, if you do not get to full employment through private investment in the economy, then the government should step in and engage in public investment. His term, Keynes's own term, was "somewhat comprehensive socialization of investment". And if the government did this somewhat comprehensive socialization of investment geared towards creating maximum job opportunities, that would be a better society, a different kind of capitalism. But technically, he said, it could be done.

Moreover, the central Keynes point was that actually this could be good for capitalists as well, because even though workers would have more bargaining power, you would also have the economy expanding more rapidly, the markets would be more buoyant, there'd be more opportunity for new business investment, just because workers would have money in their pockets and they could buy things, just like Henry Ford was famous in recognizing that if you paid workers decent wages, well, then workers might actually be able to afford to buy Ford automobiles.

JAY: Right. And this Keynesian idea's heavily influenced this act that we talked about earlier, the Humphrey Hawkins Act, 'cause if I understand correctly, in that act it actually says if the private sector can't create enough jobs to get unemployment at 4 percent, then the government should use public works to do it. I mean, it was in the legislation; I don't think it was ever really enacted, 'cause five years later, unemployment's at almost 10 percent. But the ideas were very influential.

POLLIN: Right. So you have Marx and Keynes, and those are also reflective of different notions about how capitalist economy functions. Keynes was much more in the social democratic tradition, operating within the institutions of capitalism.

Now, the third great thinker to mention was a contemporary of Keynes named Michal Kalecki. He was a Polish Socialist who was influenced both by Keynes and Marks and had some ideas, obviously, of his own. And what Kalecki said was, okay, Keynes has now shown us how we can utilize the technical apparatus of economic policy to achieve full employment under capitalism, but what Keynes neglects is the change that it would create in terms of political dynamics, that it would give workers more bargaining power, and that the capitalists don't want the workers to have so much bargaining power. It would squeeze profits. Kalecki acknowledges all this. And therefore, he says, though we have the technical tools to achieve full employment under capitalism, we don't have the political force, and it would be a clear challenge to the prerogatives of the rulers of the society, the capitalists, to do this. So he laid out the real tension there.

But within Kalecki there is still the point that if you get a bigger market, then capitalists can benefit from a more buoyant market, even if the wages are higher and the capitalists' share of the total market, the income coming back to them, is lower because workers have more bargaining power. That's the tension.

And so the fourth major thinker, most influential thinker, I would say, on the issue of employment is the leading neoliberal economist, Milton Friedman. And Milton Friedman actually said that we have a natural rate of unemployment under capitalism which would be full employment—that is, anybody who wants a job would get a job—if we only didn't have government policies that created barriers to workers and businesses working things out on their own.

The example he cited—one of the big examples cited by Friedman is minimum wage laws, because he said—and unions. Unions, minimum wage laws get in the middle between the workers and the owners. The workers and the owners keep bargaining till they got a wage that everyone can agree to, and then you would have full employment. You just don't want to have these institutional forces like minimum wage laws, like unions, telling the bosses that they have to pay workers more than the workers deserve. So that kind of sets the whole scene of the debate.

Unfortunately, the winner of the debate over the last generation, not just in the U.S., throughout the world, was clearly Milton Friedman, and so that what we have under neoliberalism for essentially the last 40 years is an abandonment of any attempt by government policy to sustain full employment, to use government policy to soak up people that are having a difficulty getting jobs and creating job opportunities for them.

JAY: You can almost say the objective of government policy was the opposite, was to make sure that unemployment never fell below a certain level, because that would, they would say, instigate inflation, their code word for higher wages. So if anything, government policy was the opposite. They wanted what—quote-unquote, this natural level of unemployment.

POLLIN: Right. Well, that's certainly—you know, Milton Friedman was certainly the leading figure in advancing this view in the economics profession, and it spilled into policymaking. And the view was, right, actually, the government is incapable of achieving full employment anywmay; in fact, government is a barrier by, for example, setting up minimum wage laws; but that the government can do one thing, and that is to control the inflation rate, and so that's what macroeconomic policy should be focused on.

Now, it turns out the way you control the inflation rate is by keeping the unemployment rate higher, because, precisely, if the workers get too much bargaining power, then that enables them to push up their wages. That then means that businesses will try to pass on those wage increases in terms of price increases to consumers. And that's how you get inflation. So you have this notion of the tradeoff between inflation and unemployment.

JAY: But that tradeoff is, you know, if you look at the period we're talking about, essentially from 1960 forward, the big spikes in inflation didn't have anything to do with high unemployment. Like, the biggest periods of inflation were actually periods of, also, high unemployment.

POLLIN: Right. And that was—as we talked about in the last segment, that was due to the oil price shock. So the initial theory of the tradeoff between inflation and unemployment completely ignored the fact that there could be other majors sources of inflation. It was very convenient, by the way, because, okay, you get an oil shock, inflation goes up, you have a recession, and then the Friedmanites of the economics profession say, a-ha, there is no tradeoff; in fact, what we see is government efforts to reduce unemployment are just making inflation worse and aren't reducing unemployment anyway; so let's abandon the whole thing; the whole Keynesian thing was wrong. And that's how we got the macroeconomics that we have now, which brought us to the Great Recession.

JAY: So in the next segment of our interview, we're going to pursue this discussion. So please join us for the next segment of our series of interviews with Bob Pollin on The Real News Network.

PAUL JAY, SENIOR EDITOR, TRNN: Welcome back to The Real News Network. I'm Paul Jay in Baltimore.

We're continuing our series of interviews with Bob Pollin about his new book, Back to Full Employment. And he joins us again from Amherst, Massachusetts, where he is codirector and founder of the PERI institute. Thanks for joining us again, Bob.

ROBERT POLLIN, COFOUNDER, POLITICAL ECONOMY RESEARCH INSTITUE: Thank you very much, Paul, for having me again.

JAY: So in terms of modern history, one of the models that's often pointed to, at a country that kind of tried to marry Keynesianism and that form of capitalism that seemed to have been working to some extent, was in Sweden. And you talk about this in your book. So discuss that model a bit.

POLLIN: Well, I think that's a very, very rich model with a lot of lessons for countries throughout the world. I myself, in work I did several years ago in Kenya, actually, on employment opportunities in Kenya, was thinking about the Swedish model in writing the book on Kenya—and still thinking about it in a book about the United States. So it isn't so much about Sweden, per se.

The idea is that, okay, we have the Keynesian tools that can promote employment. We do know that at a certain point you will create inflationary pressures, and so that how do you maintain a full-employment economy that benefits workers. And the best way to do it is when you have strong unions that are committed to full employment. And they will maintain wage increases that are roughly consonant with productivity growth, so that you do not get upward price pressure, because every time you get a wage increase, that's roughly in step with the economy's capacity to produce more goods and services. That's a productivity increase. And it was really due to the unions themselves that attempted and implemented this policy.

In fact, the innovators here were two outstanding union economists, Rudolf Meidner and [?g?st?'r??n]. (I don't know how to pronounce the names correctly. I'm sure I'm mangling them.) But they were very important economists in thinking about how to achieve and sustain a full-employment economy, precisely by empowering workers. Empowering workers gives workers the sense of responsibility [inaud.] oh, well, we are going to take responsibility for dampening whatever inflationary pressures may result, and yes, we can sustain a little bit higher rate of inflation, but we will make sure that prices and wages do not go up excessively, precisely because we the workers, we the unions have the power to do it.

So I think that is a very rich model. They were able to maintain unemployment for 20 years or more at around 2 percent, and the inflation rate was basically stable, even though you had oil price shocks in Sweden as well.

JAY: But but over time, the neoliberal pressure took over Sweden as well and the power of finance asserted itself, and they started undoing that model.

POLLIN: That's right. Well, the Swedish model is still a lot better than the U.S. model [crosstalk]

JAY: Well, everything's better than the U.S. model.

POLLIN: —yeah—and the rest of Europe. So Sweden still stands out as a very—as a country that's performing much better, has much lower levels of inequality. But, yes, a lot of the model has been cut back. But we have to have something to grab on to when we think about how to build out and come up with alternatives out of the Great Recession and the disaster that neoliberalism has inflicted both in the United States and the rest of the world, and I think there's a lot to learn from the Swedish model. I don't say it's perfect, but I think if we think about policies of moving from where we are today, not just thinking about a utopian alternative that we can envision, but policies starting with where the world is today, in the neoliberal swamp, I say that the Swedish model has a lot to offer for moving us forward.

JAY: Okay. We're going to pick up this discussion about the Swedish model and such a little further in the series, 'cause we're going to come back to, keep revisiting many of these issues. But we're going to—in the next part of this series of interviews, we're going to pick up on the next chapter of Bob's book, which is "Globalization, Immigration, and Trade". And part of one of the ideas Bob raises is this idea of the reserve army of the unemployed actually becomes the whole world, and global workers and low-paid workers and global unemployed workers used as a lever against North American and European workers. So we'll pick that up in the next part of our series with Bob Pollin on The Real News Network.

PAUL JAY, SENIOR EDITOR, TRNN: Welcome to The Real News Network. I'm Paul Jay in Baltimore.

We're continuing our series about Bob Pollin's new book, Back to Full Employment. Now joining us to continue this discussion is Bob Pollin. He is the founder, codirector of the PERI institute in Amherst, Massachusetts. Thanks for joining us again, Bob.

ROBERT POLLIN, CODIRECTOR, POLITICAL ECONOMY RESEARCH INSTITUTE: Very glad to be here. Thank you, Paul.

JAY: So just to pick up our last conversation, if you haven't watched the first few parts of this series, I suggest you watch it in order, 'cause all this conversation will make more sense that way. We were talking about your chapter in your book "Is Full Employment Possible under Capitalism". And part of the idea or concept of the book is that there used to be a full-employment objective in public policy in the United States. And I think probably one of the main markers for that is 1946 with the Full Employment Act.

But some people would argue 1946 is a very specific kind of year. First of all, you have more workers on strike in 1946 in entire American history, if I understand correctly. Before '46 and after '46 there were, I have, 4,985 strikes, 4.6 million workers on strike, for a total of 116 million strike days. So in the context of that—and there was—many, many of the soldiers coming back were unemployed. Plus you had the Soviet Union, which at least for many workers held out the promise of a socialist system that was going to work. And one of the most important things about this socialist system, people thought (and we know this promise was not fulfilled, but still, in '46 a lot of people thought it would be), was full employment.

So within the context of the beginnings of the Cold War and all these strike struggles, you get the Full Employment Act. But some people would argue, you know, now the socialist models of Russia and China have failed, and then, particularly with globalization, the ability—as we've talked about a little bit in the earlier segment of the interviews, the ability for capital to use this global reserve force of unemployed or very cheap labor as leverage against the American workers, that they no longer need to make these kind of compromises like they did in '46, or even the New Deal in the '30s, that they can be far more—what's the word?—intense in how they go after American workers, and that full employment simply isn't their objective, so that the set of policies you're talking about or the toolkit you're talking about might well work, but these guys won't do it—. What do you make of that?

POLLIN: Well, the objective of the book was to lay out what I tried to show was a feasible path to full employment, to show how it can be done within the confines of a broadly capitalist system today, so that we can energize political forces today—today—to fight for decent jobs for anybody that wants a job today.

Now, the political forces, that is another issue. In fact, the whole point of the book is to help mobilize political forces. Of course I know full well that the political forces are very different today than they were in 1946, and for that matter in the 1970s. But we also have a crisis on our hands. We had a crisis that started due to the collapse on Wall Street in 2008 and 2009. Employment conditions remain worse than at any time since the Great Depression. So it seems like an appropriate time to start thinking about ways through which we can fight for decent livelihoods and full employment for people in this country.

Of course it's going to take a political mobilization to get there. I mean, we did have—for example, last fall we had the Occupy Wall Street movement, which created a lot of tremendous energy around social justice and workers' rights and inequality in the country. Now, the Occupy Wall Street movement did not attach itself to any specific set of policies—on purpose. They deliberately chose not to. But I would say when we have a second round of this kind of movement, that it should indeed focus on some specific policies, and top on the list, in my view, should be full employment. And it's because full employment is not just about jobs. Of course it is about jobs, but it's about decent jobs, it's about inequality, it's about reducing poverty. And in order to have any chance of getting to full employment, you also have to to have a highly regulated, stable financial market.

JAY: Okay. Well, when we get to the final segment, we'll kind of explore some of the big ideas again. But let's kind of dig into one piece of this, and that is the whole issue of globalization, because certainly, you know, in the postwar years, one—the fall of the Soviet Union is one major factor on the political, you could say, ideological side of this question. But on the sort of objective economic balance of power between business and workers, the biggest development, I would guess, is this globalization of labor, where now you can produce at a very sophisticated level in markets that have high—in countries that have enormous unemployment, very low wages, and bring the products back to the U.S. So talk about the effect of globalization and then what this means in terms of full employment.

POLLIN: Well, globalization, the impact of that on the U.S. labor market—and we can talk about it in other countries as well, but the impact on the U.S. labor market has been going on since the 1970s increasingly. And the single clearest indicator of the impact of this formation of a global reserve army of labor, that is, that businesses can threaten workers in the U.S. by saying, well, we're just going to go produce in China and workers are going to get one-twentieth of what you get—so that seems to me the biggest single factor with globalization, the credible threat that U.S. businesses can use against workers in this country.

The impact has been two generations of wage stagnation. The average worker in the United States today is earning about 7 or 8 percent below what the average worker earned in 1973.

JAY: Yeah, you give the numbers in your book. You have $19.47 an hour in 2011 dollars for the average nonsupervisory worker today, and in 1972 the same worker would actually be making, as you said, 7 to 8 percent more, $20.99.

POLLIN: Right. And the other part of that figure that I show is that that stagnation or decline in the average wages occurred while average productivity in the U.S. economy, that is, the amount that the average worker produces over the course of a day or over the course of a year, has doubled. So the average worker coming to work is producing twice as much as they did, roughly, in 1970, in the early '70s, whereas they're getting paid about 8 or 9 percent less than they did. There's really never been this kind of pattern before that I know of in U.S. history or in the history of any advanced capitalist country. So the workers have been really getting clobbered by globalization.

Now, that is one of the main themes of the book: how do you fight against that? That is one of the questions that I try to raise in the book, counteracting those pressures from globalization.

JAY: Let's go there. I know if we'd follow directly chronologically in the book, this isn't the next thing you take up, but you have in previous interviews. For example, you deal with is immigration or illegal immigration really a problem. We've done interviews about that. You can watch it below us. We've done interviews on—. But let's pick up on what one solution to globalization is, and maybe then go to what you think it should be, and that's the issue of trade tariffs, that some people are saying there should simply be a return to tariffs on imported goods, protect the American market, and in that way protect jobs for American workers, and you hear that both from the right and sections of the left.

POLLIN: Right. Right. Now, the issue that I raise in the book—it was really two sets of issues. One, is this the kind of policy that really has a big chance of success? My view is that the chances of success are not very good.

JAY: "This policy" meaning protectionism.

POLLIN: The policy of trade protectionism as a counterforce to globalization. And the basic reason why I don't think it's going to succeed is, if we think about the policy tools that we have, they're basically ways to set up barriers so that, say, Chinese goods are more expensive. And the most basic way to do that is to force the Chinese to raise the value of its currency, the yuan, relative to the dollar, or, correspondingly, for the U.S. to push down the value of the dollar relative to the yuan.

Whether we can even do that if we try is itself questionable. I mean, the U.S. right now—the Fed is trying to decide what to do to try to move the growth in the U.S. economy forward. And the measures that we've taken have had only limited success. There's no reason to assume that the U.S. would be capable of moving the dollar to where it wanted to be relative to China even if it wanted to. In addition, why wouldn't China or any other developing country that depends on the U.S. market retaliate? They will retaliate.

JAY: In other words, you start getting currency wars and everybody tries to keep dropping below the U.S. dollar wherever it goes.

POLLIN: That's right. And then the other thing is, even if at the level of national governments Third World countries didn't retaliate, the producers in the Third World, they will retaliate. They don't want to lose the U.S. market. So what they will do is push down the wages of the workers in the Third World. So that'll force super exploitation on the workers that are already getting paid too little. So I don't really see this as a viable solution even technically, certainly not in terms of solidarity.

And the other issue in terms of solidarity is I don't think that the U.S. should be focused—certainly progressives in the U.S.—should be focused on creating jobs for U.S. workers by taking away jobs from Third World workers.

JAY: You could add another piece to that too, which, if the history of the 20th century's to be understood, and before that, you know, trade wars, which essentially a currency war would be, and especially if you add protectionism to that, tend to lead to real wars.

POLLIN: Right. So I don't think, for all of these reasons, that is a viable policy. Around the edges, of course, you know, we can negotiate with China and talk tough and all that, and I do favor industrial policies to promote manufacturing and the green economy in the U.S., but I don't see that as, necessarily, an aggressive trade policy against Third World producers.

JAY: Okay. So let's go. In the next segment, we're going to go to—then let's look at what would be viable policies. And we'll start looking at—both in terms of—and we're going to start with an assessment of did the Obama stimulus work, and if it didn't, why didn't it. And then we'll go from there.

So thanks very much for joining us on The Real News Network, and join us for the next part of our series with Bob Pollin.