Citizens Electoral Council of Australia
Media Release Wednesday, 4 October 2017
Glass-Steagall unites unions, community groups against financial looting
Trade unions and social advocacy groups in Australia and the UK should look to their US counterparts, who are uniting behind the campaign to restore the Glass-Steagall separation of banking from financial speculation. Australia, the UK and USA and other neoliberal economies are on the verge of another banking crash, with any number of likely triggers, including the inevitable collapse of Australia’s housing bubble, or a chain-reaction meltdown of the so-called “everything bubble”—corporate debt, consumer debt, derivatives, etc. Under their present policies, governments will resort to massive bailouts (and bail-ins) of the banks that will be the driver for more brutal budget austerity imposed on the poor, sick, elderly and workers. From the experience of the 2008 crash and its ongoing aftermath, there is growing recognition that Glass-Steagall, the US law that from 1933 until its repeal in 1999 kept speculators out of everyday banking that served the community, is the first step necessary to rein in the predatory financial system and make the economy work for everybody. US trade unions and community groups are mobilising a coalition of forces to pressure the US Congress to enact a 21st Century Glass-Steagall Act.
On 27 September the USA’s peak union body, the American Federation of Labour and Congress of Industrial Organisations (AFL-CIO), hosted at its Washington DC headquarters an on-line “Webinar and Panel Discussion on Glass-Steagall Mobilisation”.
The panel of speakers included: Marcus Stanley, Policy Director for Americans for Financial Reform, a leading progressive think tank coalition of more than 200 organisations including consumer, labour, business, and other groups; Nomi Prins, former Managing Director of Goldman Sachs, Managing Director of Bear Stearns, Financial analyst for Lehman Brothers and Chase Manhattan banks, who is now a well-known author of seven books on the banking crisis, including All the Presidents’ Bankers and It Takes a Pillage; Bart Naylor, Public Policy Advocate for Public Citizen, an organisation in support of Glass-Steagall legislation that has over 400,000 members; Heather Slavkin Corzo, Director of the AFL-CIO Office of Investment and formerly the Chair of the Americans for Financial Reform Task Force on Derivatives, during and after the 2008 crisis; and Mayo Makinde, small business owner, community activist and Democratic candidate for Ohio Senate, who has lobbied Congress for the Glass-Steagall bill now being sponsored by Congresswoman Marcy Kaptur and US Senator Elizabeth Warren.
The AFL-CIO’s Corzo explained that the US trade union movement is demanding Glass-Steagall because of the ongoing economic destruction caused by the financial crisis. Her stark description of the crisis should ring alarm bells for everyone in Australia, which is poised for the same disaster. For instance, Corzo emphasised that millions of Americans lost their homes when the US housing bubble burst—a bubble proportionally smaller than Australia’s housing bubble today. Another harbinger for Australians is that trillions of dollars of US workers’ retirement savings—the equivalent of superannuation—was also lost in the crash. She debunked the claim that economic conditions have improved and pointed out that banks are not functioning as engines of economic growth by lending to small and medium enterprises that create jobs for regular Americans, but are speculating instead, which is only generating wealth for the top 1 per cent that the rest of the country isn’t sharing. This parallels the way Australia’s banks are starving small businesses and farmers of credit in order to load up on mortgage loans. “The other huge reason the AFL-CIO supports the reinstitution of the 21st Century Glass-Steagall Act is that we want to see a return to prudent banking, where banking is a vehicle for investment in the real economy as opposed to investment in speculative bubbles and bursts,” Corzo said.
A number of unions in the UK have expressed strong support for Glass-Steagall, as have many MPs from all parties, and the UK Labour Party’s election manifesto called for a firm separation of commercial banking and investment banking. This support is passive, however, and there is not an equivalent grass-roots mobilisation to ensure it becomes law.
For Australia’s labour movement, the AFL-CIO’s leading role in this Glass-Steagall mobilisation should give them pause. Why is Glass-Steagall a major union issue in the USA (and UK), but not Australia? And why did the Australian Labor Party under former union boss Bill Shorten oppose Glass-Steagall, or even a banking inquiry, until it was fishing for extra votes in the 2016 election? The difference is the US and UK trade unions have experienced a financial crash, and know the survival of workers depends upon ending the unbridled speculation that has looted the real economy, and that begins with Glass-Steagall. Australia’s labour movement is in denial.
For too long Australia’s unions have been complicit in the “financialisation” of the economy—the shift from productive industries to financial services—which has enabled financial speculators to dominate and loot the economy. The unions’ own Labor Party privatised the Commonwealth Bank, deregulated the private banks, and replaced a fair aged pension with the compulsory superannuation system, which has forced all Australian workers to ride the stock market rollercoaster, and enables predatory banks like Macquarie—in cahoots with union-controlled industry superannuation funds—to buy privatised assets and gamble with workers’ retirement savings. Since this process began in 1983 under Labor’s Bob Hawke and Paul Keating, manufacturing and agriculture’s share of GDP has plunged, and financial services has become the biggest sector of the economy. Hawke and Keating took their “reforms” from the same neoliberal Mont Pelerin Society blueprint that Margaret Thatcher used in the UK; in turn, Australian Labor’s “success” was used to justify Tony Blair’s continuation of Thatcherism as UK Labour policy—now ended by Jeremy Corbyn.
Australian workers have never been more exposed to a financial crash than they are today. They are losing their full-time jobs in productive industries like car manufacturing, forced to borrow huge money to buy unaffordable houses which leaves them dreading the slightest rise in interest rates, and their superannuation is locked up in the financial casino, much of it invested in the banks. Household debt is soaring in Australia and the UK.
It is time for unions and community groups in Australia and the UK to join forces with their counterparts in the USA and not just support, but mobilise their memberships to fight for, a Glass-Steagall banking separation that can end this era of financial speculation and looting.