In short, the major economic problem America faces today is not just concentration of profits—which characterizes both the Fordist and current era—but concentration into specific kinds of politically powerful firms subsequent to a legal fissuring of production activities and labor forces. Nothing about the three-tier economy is inevitable or technologically determined. Franchisors’ immunity from obligations to their franchisees’ workers is a domestic legal artifact, as is copyright duration or the robustness and ease of patent protection. Access to cheap offshore labor and tax havens is an internationally negotiated legal artifact. As noted above, the big change is not a wholesale physical reorganization of production processes but rather a wholesale fissuring of the legal containers—firms—that plan those production processes and the creation of a legal architecture supporting the global dispersal of production. In this respect, the fiscal and Federal Reserve responses to the Covid-19 pandemic have already up-ended the old relationship between the state and the economy and opened up space for policy that might ameliorate or reverse the economic problems that the past thirty years of vertical disintegration and offshoring have produced.
Relatively simple solutions that now seem much less politically difficult include higher minimum wages, stronger antitrust enforcement, and more stringent criteria for granting IPRs, as well as shorter terms for such protections. While the $600 per week federal unemployment supplement is unlikely to become a permanent basic income, it not only shows that higher wages and incomes at the bottom are possible but has created a constituency for a permanent expansion. Similar to the wartime experiences driving a federal commitment to health care for veterans, Covid-19 has already exposed the fundamental irrationality of a health care system in which many actors see profits as priority one and patients simply a source of cash flow. Doctors used to constitute a phalanx against federal intrusion, but layoffs and pay cuts at the many practices owned by private equity firms may change attitudes about where the real danger to income and autonomy lie. Finally, forcing lead firms in commodity chains to take some responsibility for workers in the bottom tier would go a long way towards fixing the problems limned above. Similarly, giving franchisees more leeway in the sources of inputs, or making franchisors true risk-sharing partners, would level the playing field in those commodity chains. Right now, franchisors enjoy all the benefits, disclaiming legal responsibility towards franchisees and their workers, while exerting near total control and taking a guaranteed cut of operating revenues. The National Labor Relations Board tried to level that playing field in 2015 in the Browning-Ferris case, but new appointees reversed that decision in 2017.13 Finally, incorporating and actually enforcing labor and environmental standards will help shift production away from China.
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