Molly Ivins February 19

PORTLAND, Ore. — Bad nooz in the developing economic crisis. In the papers that have stopped obsessing about the Lewinsky affair, President Suharto of Indonesia made Page 1 by firing his top central banker, thus setting up a confrontation with the International Monetary Fund. The IMF will now have to pull the whole $40 billion rescue package or admit that it has no control over what Indonesia does about its own economy.

This is a lulu of a development because if the IMF pulls out, the Indonesian economy will probably collapse. Not that it's looking solid right now — according to The New York Times, it "has deteriorated at an astonishing pace in recent weeks, and riots over rising prices have grown more frequent." I think we can safely assume that Suharto is pretty much a rotter, and it's quite possible that his plan to strengthen his country's currency is just a ploy to let his family get their fortune (estimated at $30 billion) turned into dollars and out of the country. On his record, he's that kind of guy.

On the other hand, the IMF could, if it would, learn a few things from this mess. The reason Suharto has popular support for his fiscal folly is because, once again, the IMF's way of handling these crises forces little people — who had nothing to do with causing the problems — to suffer enormously in order to pay off big bankers. The little people's well-justified resentment is not aimed just at the IMF but at the United States as a major player. We are sowing an enormous crop of hatred that will haunt us in the future, as well as making a bad economic situation worse in many ways.

When even Fed Chairman Alan Greenspan starts muttering about deflation instead of obsessing about inflation, you know it's past time to pay attention. What we're looking at is surplus capacity and inadequate demand across the board. We have concentrated on supply-side economics for so long that we have neglected the demand side, and there it is. As The Nation recently editorialized, "It's time for the United States to rally the industrial nations to stimulate demand and growth, not to make the problem worse through budget surpluses and imagination deficits."

And instead of having the IMF run around after the fact, trying to clean up after these crises, we desperately need regulation to prevent them from occurring in the first place.

We need regulation of currency and capital markets and curbs on short-term speculation. One of the first tenets of populism is "Never trust a banker," and that goes for the big international kind as well as the little darlings who brought us the S&L disaster.

The Nation also points out: "In an era of surplus capacity and inadequate demand, labor rights and environmental protections are not simply important ethically, they are vital economically. By ignoring this broad point, Bill Clinton is missing the great progressive challenge of the day."

Consider the beauty of doing these IMF bailouts so that working people benefit rather than suffer. Insist as part of the IMF loan package that countries level the playing field between labor and capital. The consequence of giving unions a chance is that unions get higher wages for workers, thus increasing demand, thus saving the economy. Instead of making the United States the hated villain, we would figure everywhere as the friend of the people, winning lots of future bennies for ourselves.

And there's no place like home to start. A recent article by former Secretary of Labor Robert Reich reminds us of the old but no longer true truism that as companies do better, their workers should, too.

Instead, Reich writes in The Nation, "Profitable companies now routinely downsize their work forces, or they resort to what might be called 'down-waging' and 'down-benefiting.' Layoffs in the current expansion are occurring at an even higher rate than in the expansion of the '80s. Companies are replacing full-time workers with independent contractors, temporary workers and part-timers: They are bringing in new full-time workers at lower wage scales than current workers, or are subcontracting the work to smaller firms offering lower wages and benefits. Employer-provided health benefits are declining across the board, and health costs are being shifted to employees in the form of higher co-payments, deductibles and premiums. Defined-benefit pension plans are giving way to 401(k) plans without employer contributions, or to no pensions at all. Meanwhile, beginning in the early '80s, U.S. companies began battling against unionization with more ferocity than at any time in the past half-century. The adjusted incidence of companies illegally firing their employees for trying to organize unions increased from 8 percent in the early '70s to around 30 percent in the early '80s, where it has remained."

When the bottom 50 percent of the people in this country are making no economic progress (the median wage has yet to get back to where it was before the Bush recession), no one should be surprised by the appearance of a demand problem in the economic system.

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Molly Ivins is a columnist for the Fort Worth Star-Telegram.

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