GOP vs. UAW, USA--Part III

by: Paul Rosenberg

Sun Dec 21, 2008 at 19:15

In the first diary of this series, GOP vs. UAW, USA, I promised:

Then, in part III, I will take up the issue of how an ambitiously pro-active alternative plan can do much more than just rescue the domestic auto industry-it can help lay the foundation for an entirely new economy, not just technologically new, but new in its basic conception of how wealth is jointly created, husbanded, and expanded for future generations, not just here in the US, but on a world-wide basis that helps form the foundation for lasting global security as well. The point of this third part is quite deliberately the opposite of the reigning Versailles ideology of "pragmatism."  It argues, in short, that we have reached a crisis point beyond which incrementalism and "practical" compromise are doomed.  There is no longer anything practical about continuing along this failed pathway.  The only practical path available to us involves a radical restructuring of how we put the pieces of our social, political, economic and technological world together.

So, now it's time to deliver.

Paul Rosenberg :: GOP vs. UAW, USA--Part III
Right now, we face the most devastating economic collapse since the Great Depression.  We need massive government spending to help rebuild demand.  But we also need to think long-term, about how that spending now can best ensure a future capacity to pay back the cost of this spending over time.  Compared to the $700 Wall Street bailout-half of which is already gone, the auto industry loan is a pittance.  Letting the auto industry go under would obviously be devastating even if we weren't in the midst of an economic crisis.  The ripple effects would put millions of people out of work. The problem is, the auto industry has been a big contributor to our nation's problems, fighting doggedly against consumer and environmentally-responsible measures every step of the way.  The cost of keeping the industry afloat has to be an end to such obstructionism.  And not just an end to that obstruction, but a positive re-orientation toward becoming a big part of the solution.

Repurposing The Auto Industry To Help Solve Multiple Long-Term Problems

The easiest way to do this would be two-fold.  First, some form of nationalization, but not one that would centralize power in a Washington-run bureaucracy.  We need some form of modern variant on what the UAW proposed just after WWII, as Harold Meyerson wrote about long ago-expanding the auto-maker's boards to include all stakeholders: workers, consumers, representatives of communities where factories are located, etc.  Second would be a different sort of corporate charter.  For-profit companies generally have a corporate charter solely conceived in terms of making money.  The end result of this is that all other concerns fall by the wayside.

However, this does not have to be.  Originally, corporations were chartered for specific purposes, and usually only for a specific period of time: a corporation would be formed to build a bridge, for example.  Even today, non-profits---which play a significant role in our economy-are chartered for a specific beneficial purpose.  They can make money, so long as it is reinvested to serve that purpose, and no money goes into any shareholder's pocket  But what guides them is there reason for being-to run a museum, feed the hungry, do medical research, whatever.

There is no reason we can't combine these models, and create a corporate charter defining a public purpose for being which will have legal force in  guiding the corporation, and yet provide for it being able to realize a profit as well.  This way, a transportation corporation could have built into its charter that it work to reduce environmental impacts-and even produce environmental benefits that more than offset the negative environmental impacts it produces.  By making this internal to the corporate structure, we could turn it from being a constant special interest obstacle to other socially important goals into making it an ally instead.

This same concept could be a requirement for every corporation that receives bailout funding.  The point is not to micro-manage.  Quite the contrary, it's to provide corporations with the institutional equivalent of a conscience, if not quite a soul, which would encourage them to pour their creativity and initiative into public policy advocacy benefiting others as well as themselves.  If would be a way of turning them into pro-social entities, rather than anti-social, or at best asocial ones.

Okay, but towards what end(s)?

Here is an initial set of suggestions:

(1) Diversify from auto-making into a full spectrum of transportation manufacture.  Instead of competing against mass transit, for example, the companies would work to build the optimal mix of individual and mass transit, including a full spectrum mix of options that could be configured into multi-modal transportation systems, combining autos, bicycles, buses, trains, etc.

(2) Build-in long-term strategies for increased efficiency and transition to renewable energy as part of the corporate charter.

(3) Further expand the chartered purpose to include clean, renewable energy infrastructure-such as manufacturing wind turbines, solar heating systems, etc.

(4) Include the option of more general purpose infrastructure retrofitting to increase energy efficiency at any level of scale, from single-family dwellings to comprehensive infrastructure redesign and replacement for an entire metropolitan area.

In short, the repurposing of the auto industry should be an integral part of solving our long-term energy needs, curtailing global warming, and reducing a broader range of negative environmental/health impacts that cost us tens, if not hundreds of billions of dollars per year.  By combining all these problems and solutions into one integrated package, we can get much, much more bang for the buck.

The point here would not be to prevent other participants in solving these other problems.  But it would be to get a running start in the quickest period of time, and to set new standards for how this can be done by internalizing social values into all manner of for-profit corporations.

National Health Care

In addition to all the above, there is an obvious need to lift onerous costs that never should have been part of manufacturing in the first place.  The biggest of these is clearly health care, which should be transferred to the federal government.

As Gregg Shotwell said on Democracy Now! this past Friday:

[W]e need to advocate for a national industrial policy that supports and sustains the expansion, rather than the destruction, of the middle class. And I would advocate for a policy that strengthens our economy, our national security, and makes the dream of a higher standard of living attainable for a wider number of citizens. You know, the working class is the backbone of this nation. And I think that we need to strengthen the American worker.

I would like to see, first and foremost, that we have national healthcare, because this is the one solution that would help everyone. It would help the employers. It would help the employees. It would help the consumers. And that is the biggest factor that takes away our competitiveness. That's the one factor that would level the playing field, because all of our competitors have national healthcare and stronger pension systems in their country-and by "pension," I mean government pension-so that when Toyota, you know, imports all these cars, they're not paying for healthcare, they're not paying for the pensions on those employees that are working overseas.

In the end, we need to establish a single-payer system.  It is simply far more efficient than any alternative, both on the micro-level, with enormous reductions in overhead costs, and the macro-level, as it switches incentives away from wasteful and costly forms of medical spending that produce relatively marginal improvements in health outcomes at highly inflated costs.  Paradoxically, the best way for us to reign in Medicare costs over time is to spend more money through Medicare and reduce the private system inflation rates that end up driving up Medicare costs as well.

A Third Reconstruction/A New Social Contract

Finally, we need to break the larger cycle of destructive anti-social political/economic practices exhibited by the lawmakers who tried to use the auto industry crisis to break the UAW.  What's needed here is a sweeping modernization program that can once and for all end the economic backwardness of the South, and change incentive structures so that it stops trying to get ahead by pulling the rest of the country down.  This was discussed by Michael Lind in his Salon article I quoted from and linked to in my earlier diary, "The New Civil War--Could The Attack On The Auto Industry Really Be This Simple?".

Lind wrote:

The alternative to the Southernization of the U.S. is the Americanization of the South -- a process that was not completed by Reconstruction and the New Deal and the Civil Rights era, which can be thought of as the Second Reconstruction. The non-Southern states, through their representatives in Congress and the executive branch, and with the help of enlightened Southerners, need to use the power of the federal government to put a stop to the Southern conservative race-to-the-bottom strategy once and for all.

Call it the Third Reconstruction. The first step is to end the race to the bottom in wages and regulation, by national action. The national minimum wage should be gradually raised until it is a living wage, of $10 to $12 an hour, and it should be adjusted for inflation. At the same time, federal regulations should set a higher floor with respect to worker safety regulations, environmental regulations, and others, preventing America's own internal rogue states from gaining any advantages by flouting national standards. Most Southern politicians and business leaders will howl that this will bankrupt the South. That's what they said about the abolition of slavery, child labor, and the convict lease system, too. The South was a better place to live after those reforms, and it will be a better place to live when there is a living wage throughout the South

This is not the end of what is needed.  But it is a big enough piece to underscore that it will be far more effective to solve multiple problems with an integrated approach than it would be to address them separately in a patchwork fashion.  And that is what we need to start doing: Dream big. Act big. Be big.

When it comes to solving America's problems, why mess around?

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Timely (4.00 / 2)
I had a discussion last night at a holiday party with a Republican who actually wasn't a crazy. To my surprise, he agreed with me -- after some vigorous argument -- that the temporary nationalization of the auto industry might be a good idea, for exactly the reasons you state here. He also agreed to drop the rubric socialized medicine when I pointed out to him that while it was still unavailable to us, or to workers in Tennessee auto plants, Senator Corker gets approximately the same health care as everyone in France gets.

But France, he says, isn't competitive because of the health care burden. Neither is General Motors, says I, and furthermore, Airbus is certainly competitive. But, he says, they get huge government subsidies. So does Boeing, I reply. But that's for defense, he says. I shrug. So...? He shrugs too, and I pour him another glass of wine.

Maybe it's because he's an engineer, and works for IBM, or maybe its because the stock dividends he was counting on to retire have been temporarily suspended, but he's the most reasonable Republican I've run into in twenty years.

I hate to make assertions unsupported by any but anecdotal evidence, but I think there'll a lot more of these guys showing up as we go along. We should try not to gloat.

We need a change candidate in the WH. (4.00 / 3)
I am open to any and all solutions to reconstructing our middle class.  I hope somebody in the WH is listening and has the audacity to quit hoping and start doing.  This transition has got to be longest several weeks in history.

25 years ago, the job training folks in MI told the fed they were nuts to think this country or the people in it wanted or could flip burgers to make a living.  

Thanks for the great series on this issue, Paul.  From the lack of comments, it can be assumed that the "if it bleeds, it leads" canard applies to liberal blogs as well as TV news.  

Shrinking workforce (4.00 / 2)
Retirement costs are a fixed amount.  Spread them over 265,000 employees instead of 114,000 employees and the hourly rate drops sharply from $73 to about $57 per hour.  

Exclude costs for past employees and people get a true apples-to-apples comparison.

Unfortunately, neither the Big 3 nor the UAW has done a very good job of explaining it to the public.  GM knew exactly what it was doing over the years.  Rick Waggoner was a top of the class (Baker Scholar) graduate of the Harvard Business School whose specialty is finance.  Engineering and Marketing may have lagged but believe me, these were conscious decisions.

So let's look at things. If, as mentioned in one of your articles. labor is 10% of the cost of a car, that's $3,000 to $4,000.  Cut it by the Republican amount and the savings at best are $1,000 to $1,200 per car. People are not buying Japanese cares because they are $1,000 cheaper (they tend to be more costly) but because they are judged more reliable or at the upscale level (Lexus, Acura) they pack more amenities and give a smoother ride. The Acura MDX, for example, has more driver and front row passenger space than similarly priced Ford and GM SUVs. Anyway, Toyota, with all its subsidies just announced in today's NY Times that it is losing money.

I think that upping the south to the level of the north won't work because the attitude is such that a race to the bottom will inevitably ensue and be lost by everyone.  Targeting the huge southern subsidies amd blocking them in a tit-for-tat terror spree will work.  Cut off all corporate subsidies for example on cotton or tobacco.  Make Tennesse howl and McConnell and Bunning's Kentucky.  And in particular make the corporate fat cats howl.  Pull military bases kept in the south out.  Those SOBs cut the bases in NY,CA,MI,MA. eytc. strictly for political reasons draped as economy.  Make them howl.

It's worth noting that Ford employs more workers in Kentucky than McConnell's precious Toyota.  It is worth it to note that Gov. Beshear and the Democratic ,ayor of Louisville were there for them.  It is worth it to note that jobs were moved as the production of some small cars were moved from Michigan to Louisville but McConnell stuck the dagger nonetheless. It's worth it to note that parts suppliers are the big mogambo in Kentucky and they are getting the McConnell shiv.

So make the south and its Republican "leaders" howl. Do it just a fraction and maybe the fools will realize that it will cause them pain.  Your market is not public opinion per se, it's a half dpzen senators.  And screw Montana, too.  They are takers, always have been and always will be.  Their 960,000 people don't care but that darned Baucus (and Tester, too) screw up way to much.  Who cares if the darned WQhite House Christmas tree is from Montana.  I'm glad your stupid football team lost the 1-AA championship.  Baucus is as bad as Lieberman.

Is that enough vitriol for you, dkmich.  This Democrat is with you.  

Give this series to Biden (0.00 / 0)
Paul, this was an excellent series!  You should give it to Mike, and ask him to get it into Biden's office...Steve

A New Bottom Line :) (0.00 / 0)
After what EW is trying to write about refocusing the economy on sustainable Ag, I would not take away farm subsidies just to punish the South. There is a greater framework which these crops and subsidies could fit into. Whether Vilsack is interested in that remains to be seen.  

Darkness has a hunger that's insatiable, and lightness has a call that's hard to hear.  

Seriously (0.00 / 0)
Rural communities do not have to be takers. Rural communities can probably be self-sufficient if we worked on providing the right jobs for those communities.  

Darkness has a hunger that's insatiable, and lightness has a call that's hard to hear.  

[ Parent ]
Cut Farm Subsidies? Who Said Anything About That? (0.00 / 0)
I definitely think they need to be restructured towards smaller farmers and more sustainable practices, but not cut. And besides, I didn't even breathe a word about any of that.  Much the less Southern agriculture.

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3

[ Parent ]
No, you didn't (0.00 / 0)
I should have replied to David Kowalski directly.

Darkness has a hunger that's insatiable, and lightness has a call that's hard to hear.  

[ Parent ]
After happily bashing DKos in the last diary, (0.00 / 0)
this post by TrapperJohn is really, really good.  

Darkness has a hunger that's insatiable, and lightness has a call that's hard to hear.  


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