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.
This is a follow-up to my diary GOP vs. UAW, USA, in which I'll extend my argument that the GOP's refusal to support the auto bailout is demonstrative of their hatred of America. I will draw on three recent documents. First is a Washington Post Op-Ed by Harold Meyerson, "Destroying What the UAW Built", which reviews some of the ways in which the UAW has been crucial to building both the American middle class, and the broader range of progressive American politics. Second is a list of various public subsidies for foreign automakers over the past 28 years, totally over $3.5 billion dollars-nearly $4.7 billion, adjusted for inflation. Third is an interview on Democracy Now! from Friday with union activist and writer Gregg Shotwell, a thirty-year General Motors retiree, who gives fine-grained look at what's really going on with this mega-union-busting attempt.
Let us be clear: the Republican Senator's refusal to go along with a bailout of the Big 3, and their targeting of the UAW for destruction is the most blatant demonstration one could wish for that Republicans and conservatives hate America. It is perfectly predictable, really, since over the last 50 years or more their favorite propaganda line-or at least their bottom one-has been that liberals and Democrats hate America. And if there's one thing we've learned about conservatives and Republicans it's this: the easiest way to know what they're up to is listen to what they accuse others of.
The evidence, in this case, is utterly overwhelming. For the entire period of the Democratic-dominated Fifth Party (1933-1968), and a few years beyond (until roughly 1973), the average American worker saw their income rise on a relatively steady basis, broadly shared across all income levels. Since then, throughout the vast majority of the Sixth Party System (1968-2008), in which divided government prevailed, income gains have been sharply concentrated among the top 1%. (See chart on flip.) The dominant sector in the Fifth Party System was industry, and the dominant business sector was automobile manufacturing. The UAW, as the dominant labor union in the dominant sector of the dominant sector, was key to setting the pace for broadly-shared prosperity.
In an Op-Ed in the Washington post yesterday (Destroying What the UAW Built), columnist Harold Meyerson brought up the post WWII history of the UAW and its late President Walter Reuther, whose forward thinking literally built the American Middle Class and gave us thirty years of prosperity which we can only hunger for now.
Thom Hartmann made an interesting statement on Olbermann's show Friday:
We have gone, when Reagan came into office we were the largest exporter of manufactured goods and the largest importer of raw materials on the planet. And the largest creditor. More people owed us money than anybody else in the world. Now just twenty eight years later we're the largest importer of finished goods, manufactured goods, exporter of raw materials which is kind of the definition of a third world nation and we're the most in debt of any country in the world. This is the absolute consequence of Reaganomics.
So here we are facing 2009 and it doesn't look like things will change anytime soon.
Perhaps the shock to banking would be too great just now. I'm willing to be persuaded that intervention is necessary there. But the more I read about the auto industry, the less I am convinced.
People speak about this as if not bailing out Detroit means automobile production in America ends. That's not what failing to bailout Detroit means. Not intervening now would be these automakers would enter bankruptcy. And bankruptcy means the assets of these dinosaurs get reorganized: Someone else buys these companies, at a price the market sets, and runs them profitably, because of the price the market set.
Obviously, that change would not be painless. And I'm all for minimizing the pain where the pain is doing no good -- with workers, or others depending upon these industries. But I'm against interventions designed to minimize the pain where the pain would do good -- by radically changing how that industry is managed. The whole justification for insanely high executive compensation is, in part, so they can weather such storms. I don't see why the government should be in the business of building safety nets for the (relatively) well off.
I just don't get this amazing lack of sympathy for working people, or perhaps, the naivete at how politics actually works. Why a $700B bailout for bankers, which produce no obvious product, and not a $14B bridge loan for people that actually make automobiles? No particular reason. Oh, and the market shall provide. It's really a really remarkable sentiment in this day and age, a sort of tenured 'let them eat cake'.
... I really respect Lessig, I gave him $25 when he thought about running for Congress, and I think he's engaging in good faith here. That doesn't change the fact that I'm just kind of flabbergasted at liberals who casually throw out ideas that have really awful consequences, like a depression, and use casual discredited free market mantras as justifications while glossing over terrible terrible pain these ideas cause. And no, assistance to minimize the pain associated with economic dislocation is not part of the deal.
Do you want a depression? Because if you do, it's easy to get one. Just rail against bailing out the auto industry. Or just argue that the industry should get a blank check. Either one will bring us to a depression. Well, I shouldn't say that's definitely the case, since this is virgin territory no one really understands, I'm no expert (not that the experts know what's going on) and as a friend told me, 'You can only cry 'depression' so many times before the public gets skeptical'.
Still, this problem is really sad and really difficult. While Wall Street got a $700B bailout, the auto industry is looking for a bridge loan because auto sales just crashed in October from a run rate of around 16 million vehicles to 10 million vehicles. That's not something that can really be managed away in a short period of time, it's the equivalent of demobilizing a small war. That's overhang of factories, management, people, capital, and expertise of six million vehicles a year. The auto industry reaches into every community in America, with car dealerships, supply chains, and parts makers sustaining millions of jobs a year. Beyond that, as Wes Clark notes, there's the national security element of electrifying our armed forces, a project the auto industry is moving forward.
Yes, the auto industry has been badly managed, and labor has fought against reasonable environmental regulations. And the management doesn't really 'deserve' a bailout. But what's going on here is not a normal market failure; auto companies have done done surveys which show that consumers will not buy from companies in bankruptcy, and GM is going to be in chapter 7 not chapter 11, which means full liquidation. People won't buy from a company that looks like it'll go bankrupt, but a company without customers will go bankrupt. That's a feedback loop we don't want to see, because liquidation of the auto industry will probably cause a depression. Millions of retirees with pensions and health care will lose it, consumers with domestic cars will lose benefits associated with those cars, the secondary car market will be destroyed, and consumers will lose confidence about all major consumer purchase.
In other words, the auto industry, and really the entire economy, is in the midst of the same dynamics that take hold in a bank run. I just read Paul Krugman's The Return of Depression Economics, and this is the scenario that he draws out in economies system-wide. The temptation here from policy-makers is to cut the baby in half, which is the wrong strategy. Either the government should decide to defend the auto industry at all costs, and tell consumers their car purchases are safe, or the government should let the auto industry die. A bridge loan must be accompanied by a government guarantee,because without it the industry is just in limbo and the underlying confidence problem remains.
This Sutter strike affects 5,500 nurses at 16 different facilities. But it also affects each and every one of us. Nurses are walking the picket line for the dream of better health care in this country. Don't take it from me-listen to the striking nurses in their own words in this video.
It's must see TV for the nurses and patients, as they vlog their famous invasion of the Capitol last week to kickoff the campaign against a bad healthcare deal concocted in California by an unholy alliance of Governor Arnold, the legislature and the big insurance corporations. The movement for guaranteed healthcare and nurse power is heating up around the country…take a look!
The UAW's strike against GM is not just about their members' healthcare…but also about the healthcare of millions of people not represented by a powerful union. We'll look at the potential impact of this historic strike and what it means for workers and the nation that is healthcare increasingly becoming the central issue for labor, both in bargaining and activism…
Well, the UAW went on a nationwide strike, which makes sense as they are being asked to sacrifice more than is reasonable. After all, CEO Rick Wagoner of GM and Vice Chair Bob Lutz are doing just fine, thank you very much.
General Motors nearly doubled the compensation for its chief executive, Rick Wagoner, last year, even though he voluntarily reduced his salary to aid the automaker's restructuring effort, G.M. disclosed Friday in its annual proxy filing.
G.M. valued Mr. Wagoner's 2006 pay package at $10.2 million, up from $5.5 million in 2005. Most of the compensation came in the form of stock awards and options, and he received no bonus for a second year. Mr. Wagoner's base salary, which had been $2.2 million since 2003, was cut to $1.3 million last year at his request.
Mr. Wagoner and other top executives, including the vice chairman, Robert A. Lutz, and the chief financial officer, Frederick A. Henderson, will continue to receive reduced salaries in 2007.
Including noncash compensation, Mr. Lutz earned $8.4 million in 2006, nearly triple the $3 million he received the previous year.
Oh, and if you want to pay GM Vice Chair Bob Lutz a visit, go to his blog Fast Lane and leave a comment. How can he ask GM workers to take $5/hour pay cuts and pay more for health care when he made more than $8M last year?
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