The Winds of Change Are Blowing
November 8, 2023
The Bidenomics Brief is a Roosevelt Institute newsletter where we track the big debates and developments shaping the new economic paradigm.
This week, we get a clear snapshot of the parts of Bidenomics that are really working, and which parts still fall short of what the moment requires. We start with how the collapse of the Ocean Winds project reflects the limitations of Bidenomics’ dependence on incentives to private companies to fund infrastructure the public needs. Then we turn to recent actions by the National Labor Relations Board (NLRB), an unsung part of Bidenomics’ success in strengthening the hand of workers and their unions in negotiations with employers.
Offshore wind is off-balance. Here’s how to fix it.
The Biden administration’s push to make the mid-Atlantic into a major producer of wind power hit a serious setback this month with Danish developer Ørsted’s decision to cease the development of several large wind farms it was set to build off the coast of New Jersey. The company cited “high inflation, rising interest rates, and supply chain bottlenecks impacting our long-term capital investments” as reasons for ceasing the project.
But the whole episode shows the central role and need for public investment. As an initial matter, the offshore wind investments would not even have been contemplated in the first place without strong public supports through policies like the Inflation Reduction Act. At the same time, that the projects could be abandoned just because of a change in the business cycle shows the public sector may not have been empowered to go far enough.
Public investment matters, and Biden’s team knows it. In an April 2022 speech to the Economic Club of New York, then-director of the National Economic Council Brian Deese argued that “we need to identify sectors where private industry, on its own, has not mobilized toward our core economic and national security interests—and lay the foundation for investment,” and “strategic public investment must serve as the backbone to a strong industrial base.” He argued for a complementary role for laws like the Defense Production Act in filling gaps left by private markets—a strategy Sameera Fazili, Deese’s former deputy director and a current Roosevelt fellow, explored in a report for Roosevelt in April 2023.
Just imagine how the Ørsted episode would have played out with a more robust set of public capacities.
Here’s what did happen: A private company failed to engage in adequate planning and found itself at the mercy of what private finance was willing to bank. And spoiler alert: There are a lot of unhappy campers. Here’s what New Jersey Governor Phil Murphy had to say: “Today’s decision by Ørsted to abandon its commitments to New Jersey is outrageous and calls into question the company’s credibility and competence.”
Here’s what could have happened: A public bank could have stepped in with emergency stopgap financing at low or no interest rates to keep the project viable. This type of institution is common in many of America’s trading partners. In fact, Ørsted itself is majority-owned by the government of Denmark and has benefited from public loans. Moreover, such arrangements were a cornerstone of the Roosevelt administration’s economic policies. Roosevelt Institute scholars have long argued for the (re)creation of public financial institutions like FDR’s Reconstruction Finance Corporation to guarantee that projects that are necessary for the economic development of the country can secure the funding they need regardless of market conditions. And tools like the Defense Production Act and national development planning (see here and here) can be used to resolve supply chain bottlenecks and coordination problems that private actors on their own can’t figure out. Now that’s what rebalancing looks like.
Some Like It Hot
A new sheriff in town
The Biden administration’s National Labor Relations Board has been central to the rising power of workers, and key to Bidenomics’ efforts to rebalance power in our economy—but far too little attention has been paid to the NLRB’s role in ushering in this genuine shift in economic governance.
Only 6 percent of American workers in the private sector are part of a union, but 65 percent of Americans approve of unions, and one recent analysis suggests upwards of 70 percent of workers would join a union if given the chance. Since the 1980s, under presidents of both parties, the NLRB took minimal steps to punish employers who were found to have coerced workers not to form a union or refused to negotiate a first contract. Businesses learned they could just factor the minor fees from the NLRB and union-busting consultants into the cost of doing business. The lack of enforcement during the neoliberal era meant that forming a union became nearly impossible, even when the majority of workers in a unit were deeply committed to it. Enabling employers to violate labor law was a core part of the neoliberal agenda and a key factor contributing to the decline of union density in America.
But, under the leadership of Jennifer Abruzzo, the general counsel of the NLRB, the tide has turned dramatically in favor of workers. Much like how Lina Khan’s revival of New Deal–era doctrines at the FTC put an end to the Chicago school consensus that had kneecapped antitrust enforcement, Abruzzo’s NLRB has issued a series of decisions that revive the promise at the heart of the National Labor Relations Act: “protecting the exercise by workers of full freedom of association, self-organization, and designation of representatives of their own choosing.” In a series of cases, Abruzzo has sought to return to the status of the law that prevailed during the mid-century era of peak union density. Rather than allowing employers to interfere with or indefinitely delay union elections, the law now takes seriously workers’ rights. If a company breaks the law to stop workers from deciding freely whether to form a union, the consequence is clear: The NLRB will order the company to recognize the union and enter into bargaining. These and other NLRB decisions, issued late this summer, have been called “maybe the most important . . . in a generation” by Georgetown Law professor Brishen Rogers, and this NLRB “makes union organizing possible again,” according to Harold Meyerson of The American Prospect.
The NLRB also recently issued a new rule just a few weeks ago, called the “joint employer rule,” which closes the door on one of the most powerful ways corporations have evaded union organizing over the past several decades. A ruling by the Reagan-era NLRB paved the way for corporations to use subcontractors and staffing agencies, and even create franchise relationships to prevent workers who wanted to form a union from bargaining with the people who were really pulling the strings. For years, the Fight for $15 campaign and many others have been pushing to change the joint employer rule, so that workers could bargain with the multinational fast food corporations that shared responsibility with the franchise owners for their wages and working conditions. Now the NLRB has made it a reality.
While it’s expected that senators like Joe Manchin (D-WV) and the Roberts Court will do what they can to prevent the new rule from taking effect, the new joint employer rule is another sign that the Biden administration’s National Labor Relations Board is rebalancing power away from corporations and toward the collective power of workers to have a real say in the economy.
What to Read
The new rules are taking hold
- Writing in Washington Monthly, Rana Foroohar lays out how the Biden administration “heralds the beginning of a sea change in America’s political economy.”
- In the wake of President Biden’s executive order on AI, we’re reading essays from Boston Review’s fantastic 2021 series on AI and automation.
- In a major win for the antitrust movement, a federal jury recently ruled that the “National Association of Realtors and several large brokerages had conspired to artificially inflate the commissions paid to real estate agents.”
Who Said It: JRB or FDR?
As you know by now, we close every week with a quote from either President Biden or FDR. If you guessed last week’s quote was from FDR, you were right! The quote about how the dangers of concentrated power lead to fascism comes from a speech he gave to Congress on curbing monopolies in 1938.
And now, for this week’s quote:
“Clear-sighted men saw with fear the danger that opportunity would no longer be equal; that the growing corporation, like the feudal baron of old, might threaten the economic freedom of individuals to earn a living. In that hour, our antitrust laws were born.”