GOP vs. UAW, USA-Part II

by: Paul Rosenberg

Sun Dec 21, 2008 at 12:42

Meyerson's op-ed makes three major points.  First, that the UAW, from as far back as 1942, has long been far more visionary than the auto companies and their over-priced executives.  Second, that the UAW played an invaluable role in creating the modern American working class.  Third, that the UAW played an invaluable role in creating modern American liberalism, including the Civil Rights Movement that made Obama's presidency possible in the first place.  Let's take these in order.

Meyerson begins with the visionary nature of the UAW:

In 1949, a pamphlet was published that argued that the American auto industry should pursue a different direction. Titled "A Small Car Named Desire," the pamphlet suggested that Detroit not put all its bets on bigness, that a substantial share of American consumers would welcome smaller cars that cost less and burned fuel more efficiently.

The pamphlet's author was the research department of the United Auto Workers.
By the standards of the postwar UAW, there was nothing exceptional about "A Small Car Named Desire." In its glory days, under the leadership of Walter Reuther, the UAW was the most farsighted institution -- not just the most farsighted union -- in America. "We are the architects of America's future," Reuther told the delegates at the union's 1947 convention, where his supporters won control of what was already the nation's leading union.

Meyerson goes on to backtrack a bit, recalling how Reuther developed wartime conversion plans in 1942 to do the job faster than the auto companies did-a subject I'll return to in Part III.  The subtext of this part of Meyerson's op-ed is that far from just being drones, workers are often much more aware of potential possibilities than their bosses are, and that when they are organized, that awareness can point to a much better future than their bosses can ever imagine.  

Next, Meyerson briefly touches on the UAW's crucial bread-and-butter contributions:

At the end of the war, he led a strike at GM with a set of demands that included putting union and public representatives on GM's board.

That proved to be a bridge too far. Instead, by the early 1950s, the UAW had secured a number of contractual innovations -- annual cost-of-living adjustments, for instance -- that set a pattern for the rest of American industry and created the broadly shared prosperity enjoyed by the nation in the 30 years after World War II.

In retrospect, what the UAW didn't achieve-union and public representatives on GM's board-was as significant as what it did.  Without such outside stakeholders on its board, GM made a series of disastrous decisions over the coming decades that were largely responsible for the perilous situation it finds itself in today.  Put simply, the narrow imperatives of the marketplace are not enough to ensure the long-term prosperity of even the largest private enterprise operation in the world's leading economy.  There are many millions of people outside the ownership and management chain of command who have a vital stake in the success of a venture as large as GM, and their perspectives and their interests, far from being an obstacle to management, are potentially an invaluable resource-but a resource that management and ownership could not and cannot tap into because of the blindness imposed by their narrow-minded ideology.

And so, the UAW was limited in what it could achieve to creating unprecedented broad prosperity for American workers.  Shut out of an active role in management, it could not ensure that such prosperity would continue indefinitely, but it was not for lack of trying.

Finally, Meyerson turns to the broader political contributions the UAW made to the creation of modern America:

The architects did not stop there. During the Reuther years, the UAW also used its resources to incubate every up-and-coming liberal movement in America. It was the UAW that funded the great 1963 March on Washington and provided the first serious financial backing for César Chávez's fledgling farm workers union. The union took a lively interest in the birth of a student movement in the early '60s, providing its conference center in Port Huron, Mich., to a group called Students for a Democratic Society when the group wanted to draft and debate its manifesto. Later that decade, the union provided resources to help the National Organization for Women get off the ground and helped fund the first Earth Day. And for decades after Reuther's death in a 1970 plane crash, the UAW was among the foremost advocates of national health care -- a policy that, had it been enacted, would have saved the Big Three tens of billions of dollars in health insurance expenses, but which the Big Three themselves were until recently too ideologically hidebound to support.

Narrow? Parochial? The UAW not only built the American middle class but helped engender every movement at the center of American liberalism today -- which is one reason that conservatives have always held the union in particular disdain.

This passage is key, because it demonstrates how little most progressives know or understand about the contributions of the UAW-as opposed to conservatives who have a much more realistic view of what a progressive bastion of strength and creativity it is.

Altogether, Meyerson's op-ed does an admirable job of laying out the background of what's at stake in the GOP attempt to deny the auto industry bailout, and to destroy the UAW.  He concludes by saying:

In a narrow sense, what the Republicans are proposing would gut the benefits of roughly a million retirees. In a broad sense, they want to destroy the institution that did more than any other to raise American living standards, and they want to do it by using the power of government to lower American living standards -- in the middle of the most severe recession since the 1930s. The auto workers deserve better, and so does the nation they did so much to build.

The Middle View: Domestic Government Subsidies For Foreign Auto Makers

On December 12, the organization Good Jobs First (GJF) put out a press release highlighting the long record of massive public subsidies for foreign automakers in America from as far back as 1980:

"As elected officials debate aid for the Big 3, taxpayers have the right to know the full extent of government involvement in America's auto industry," said Greg LeRoy, GJF's executive director. "And while proposed federal aid to the Big 3 would take the form of a loan, the vast majority of subsidies to foreign auto plants were taxpayer gifts such as property and sales tax exemptions, income tax credits, infrastructure aid, land discounts, and training grants," he said.

The list of subsidies is as follows:

Honda, Marysville OH, 1980, $27 million*
Nissan, Smyrna, TN, 1980, $233 million**
Toyota, Georgetown, KY, 1985, $147 million
Honda, Anna, OH, 1985, $27 million*
Subaru, Lafayette, IN, 1986, $94 million
Honda, East Liberty, OH, 1987, $27 million*
BMW, Spartanburg, SC, 1992, $150 million
Mercedes-Benz, Vance, AL, 1993, $258 million
Toyota, Princeton, IN, 1995, $30 million
Nissan, Decherd, TN, 1995, $200 million**
Toyota, Buffalo, WV, 1996, more than $15 million
Honda, Lincoln, AL, 1999, $248 million
Nissan, Canton, MS, 2000, $295 million
Toyota, Huntsville, AL, 2001, $30 million
Hyundai, Montgomery, AL, 2002, $252 million
Toyota, San Antonio, TX, 2003, $133 million
Kia, West Point, GA, 2006, $400 million
Honda, Greensburg, IN, 2006, $141 million
Toyota, Blue Springs, MS, 2007, $300 million
Volkswagen, Chattanooga, TN, 2008, $577 million

Total: more than $3.58 billion

* total of direct subsidies to all Honda facilities in Ohio
** includes about $200 million for expansions of Smyrna and Decherd plants

Good Jobs First went on to add some caveats about how conservative their estimates were:

List does not include joint ventures with U.S. companies

These data, drawn primarily from contemporary media accounts, are very conservative. They do not account for inflation; some would be worth far more in today's dollars. They do not include any estimate of subsidies granted to hundreds of foreign-owned auto supply companies that have located in the same areas, virtually all of which were also heavily subsidized. Finally, they do not reflect later news accounts, which often place higher subsidy values.

There wasn't much I could do about most of that.  But there is an online inflation calculator, which can at least bring numbers up to the value in 2007 dollars.  So I took all the above items, aggregated by year, and adjusted the calculations of all the pre-2007 subsidies into 2007 dollars.  The grand total was $4.68 billion.  And remember, this is outright subsidies, not loans, we're talking about.  So that's a conservative benchmark of the level of outright gifts that have been given to foreign automakers to keep in mind, as we turn to a look at the auto industry loan situation itself.

A Critical Shop's-Eye View Of the Auto Industry and GOP Machinations

Now we turn to the Democracy Now! interview that presents the perspective of a longtime union activist and writer.  First off, Juan Gonzalez and Amy Goodman set the scene and introduce writer and union activist Gregg Shotwell, who then describes his view of the general situation:

JUAN GONZALEZ: The future of auto giants General Motors and Chrysler remains up in the air one week after Senate Republicans rejected a deal to grant the automakers $14 billion in emergency loans. Chrysler is closing all of its plants today. They won't reopen until at least January 19. General Motors and Ford have said they, too, will idle some plants.

Bloomberg News reports a Bush administration rescue plan would be announced as early as today, but it's unclear what concessions would have to be made by the auto companies and the United Auto Workers. The White House says it is considering allowing General Motors and Chrysler to go bankrupt in what it describes as a "orderly way."

....

AMY GOODMAN: ....

We're joined now in Michigan by union activist and writer Gregg Shotwell. He worked at General Motors for thirty years before retiring in November. He's a longtime dissident member of the United Auto Workers and co-founder of the website soldiersofsolidarity.com

Gregg Shotwell, tell us what's happening in Michigan and your response to the possibility of letting these auto companies go bankrupt.

GREGG SHOTWELL: If they let these auto companies go bankrupt, it's going to turn this recession into a depression. I'm shocked that they're even contemplating this. There's no such thing as an orderly bankruptcy. You know, millions of people would be affected. I don't mean directly. You know that General Motors only employs 73,000 UAW members. But it's all the suppliers, and those suppliers are going to be affected today. It's going to start with Chrysler, you know, shutting down for the next thirty days. Anybody that supplies them in any way is out of work, and they're not getting SUB payment, and these people won't even get unemployment. And then General Motors is shutting down all these plants now, too.

This loan that they're asking for is often mischaracterized as a bailout. It's not a bailout; it's a loan. And it's the result of this credit crisis-and some gross mismanagement. I'll concede that. The only people who are not at fault in this are the workers. The workers show up every day. They do their jobs. They do them well. They do them diligently. And they're the only people who should not have to make any concessions. And, in fact, they already have made concessions. And I don't just mean UAW members. Wages have been falling in the United States since 1973. People cannot keep up.

Shotwell goes on to explain that bankruptcy would not be a simple matter, it would take years and years to work through.  And the outcome would inevitably be a form of legalized theft, with money coming out of union pension funds, while the companies hand on to their overseas investments:

GREGG SHOTWELL: .... The danger of this that I see, as well, is that, you know, in the '90s, when the auto companies were making billions of dollars, they were taking profits out of North America and investing them overseas in Europe, South America and Asia. So there's been a huge transfer of assets overseas. Now, those assets would remain protected in bankruptcy. So what, in effect, they've done is undermined the manufacturing base in the United States so that they could become a major importer to the United States. You see, they already have fuel-efficient-small fuel-efficient cars that they're making in Europe and in Asia and in South America. They're ready for import. And they would like to be like Toyota. Yes, Toyota has plants in the United States, but Toyota imports about 46 percent of all the cars it sells in the United States. That's what General Motors is setting itself up to do, and they're going to use this capitalist disaster to help them wipe out the dealerships and close the plants. And Congress is just going to help them strong-arm the unions into giving up any job security or gains.

Also, you're right about the bankruptcy. And this is one of their goals, is to wipe out the legacy costs. You know, the people who earned a pension and earned healthcare and retirement in the past, they would take that away. To me, it's like a thirty-year mortgage. I paid my mortgage every week, and I paid it off. Now that house is mine. Now they want to say, well, we're going to take it back.

Shotwell then addresses the misrepresentation of labor costs.

GREGG SHOTWELL: Well, there's a good reason that the plants, the transplants in the South, have not been organized, and that's mainly because they make as much or more money as organized workers. And that was a strategy that the Japanese plants did on purpose, because they didn't want the plants organized. So they pay as much.

The real difference is in what they owe the retirees, what they call the legacy costs. Now, you'll hear in the media, they'll say GM workers get $73 an hour, and Toyota workers only get $45 an hour. They arrive at that $73 an hour by tacking on the cost of all the retirees onto the active worker. This is fraudulent bookkeeping. This is essentially a Ponzi scheme, wherein the old investors are paid off by the new investors. In other words, the older investors, the retirees, their pay-their pension and healthcare-comes from the new investors, the workers. I heard Keith Olbermann compare it to saying the average wage in America, and then you would add on everybody who's collecting Social Security or pensions. It's really preposterous.

Looked at another way, Shotwell explains:

SHOTWELL: On top of that, I want to emphasize this. I earned my pension while I was working, not [inaudible] somebody else. The guy working today isn't earning my pension. I already earned that. General Motors should have taken that money, set it aside, put it in a trust. If they didn't do that, then they've committed a malfeasance. That's their responsibility. Also, when I was working, they charged the customer more money based on the fact, based on their excuse that "we have to pay more for this worker because of healthcare and pension and his retirement, so we have to charge the customer more." Whether that was 1980 or 1990, they raised those prices. What did they do with that money? They apparently didn't put it in a trust. But they did-and this is a fact-they've invested largely overseas. General Motors and Ford, they have more plants overseas than they have in the United States. They're ready to become major importers to the United States and dump all their responsibilities to the people who made those profits.

And, finally, Shotwell talks about labor costs in context.  Among other things, he points out that although GM has lost market share since 1992, it's producing the same number of cars with a much smaller workforce (less than half what it was 16 years ago), and hence, much greater productivity.  But there have been no raises commensurate with that much higher productivity:

JUAN GONZALEZ: Gregg Shotwell, one of the things that you raise in some of the articles you've written is that there's a lot of attention placed on, again, labor costs, but that the actual production workers for the Big Three, their salaries represent about ten percent of the cost of a car, while the money spent for supervisors and management represents 20 percent of the cost of a car. But we rarely get any attention on that aspect of the compensation.

GREGG SHOTWELL: No. You know, the media and Congress really look at UAW wages, and this just shows their bias. But, you know, these facts I got from the book Fat and Mean by [David] Gordon. And he points out that the United States actually has, you know, like three or four times as many supervisors and monitors as Germany or Japan, that we waste a lot more money on management.

But, you know, the actual labor costs-you know, this is another aspect, I think, that people don't understand. I understand why, but-our productivity really should justify a raise. And when I say that, in 1992-you know, they say that-they justify all this, because we're losing market share. Well, the market has gotten bigger. The pie is bigger. But General Motors is selling as many cars. And the notion that they don't like-people don't like GM cars belies the fact that they've sold more cars than Toyota. In 1992, GM had 34 percent of the US market. This is from the Bureau of Labor Statistics. And they produced 4.4 million cars. Now, at that time, GM's hourly employment was 265,000. In 2005, the market share had fallen about eight percent, but they had produced the same level of cars, 4.5 million, with 111,000 workers. With 154,000 workers less, they produced the same amount of cars. They lost market share, but they still produced the same number of cars. Their productivity has doubled. So this would-in normal times, when your productivity goes up, that means you deserve an annual improvement factor, a raise.

We've experienced just the opposite. The only reason that autoworkers make what seems to be a higher wage than non-union workers is that we have a cost-of-living adjustment. We won that back in 1970. But we often do not get any raise at all. And in the best years, we only get a three percent raise. But it's the cost of living that we have that is the difference between union and non-union.

Shotwell goes on to talk about what he'd like to see in the way of a solution.  But I'm saving that for Part III.  Suffice it to say, his viewpoint is one you won't see very often on the corporate media.  But he's lived it for 30 years, and researched it as well.  This is not "liberal spin" to counter "rightwing spin".  This is what we used to call "the facts."  And if there's one bottom line thing that the Democrats in DC need to do, it's to keep the discussion focused on the facts.  We need a reality-based approach to dig ourselves out of the catastrophe that four decades of rightwing fantasy have given us.