Bankers Are No Prettier Than Auto Workers

Our surefooted Congress has proved with utter clarity that it is over-matched by events. With the collapse of the real estate bubble and the concomitant financial fizzle out, neither party has shown much evidence of having a clue. And yet, the US auto crisis has provided emasculated Senate Republicans with a way to 'shine' in a whole new way. Rather than performing their appointed task of being loyal opposition at a time of great national need, they are instead opting for the role of political spoiler.

Perhaps, I am overreacting. Republicans, after all, are supposed to be small-government, free-market enthusiasts. And yet it's hard to fit that description to a group who rejected TARP as too expensive at $600 billion but acceptable at $750 billion. In comparison, the interim auto package would have cost about 2% of the amount given to Wall Street.

That poses a problem for the Republicans: they could not object for quantitative reasons. Instead, they went after both management and workers, calling the former inept and the latter greedy. Now, being of generally sound mind, I am not going to defend the merits of management at Detroit's Big Three. They have clung to the past and made stunning errors. In the process, they have lost the confidence of American buyers. I would, however, argue that they are no worse than the Wall Street moguls who delivered a head-shot to the US economy. The latter situation will require both economists and historians to calculate the damage that has been inflicted upon the globe. (On a positive note, Oliver Stone's Wall Street suddenly feels rather quaint.)

When it comes to the UAW, the Republican are vilifying working people for having the audacity to want to hold on to health insurance and secure retirements. For most of the past 60 years, such things were cornerstones of the post-War (II) American dream, but now they are seen as selfish. I would remind everyone that these are blue collar workers, not the people driving up the price of Bordeaux futures or building McMansions. And yet, Republican Senators with benefits, decent pay and the almost certainty of lucrative lobbying careers are cocky enough to sneer at the UAW.

If such behavior were merely the result of stupidity, it might be forgivable. True, the Senate probably does not need a MENSA chapter, but not all Republic senators are stupid. They are, however, seemingly willing to sacrifice one of the last vestiges of US heavy industry to facilitate their own political rehabilitation. I would wager that they are betting that the Democrats and the Bush administration - once their awe inspiring leader - will have no choice but to find a way to save the auto industry without the involvement of GOP senators. That leaves the party of Lincoln free to hurl bile across the party the line with no danger of dribbling on themselves. And if Detroit does sink, then the incoming administration will simply have a bigger mess to clean up. Either way, Democrats won't seem so wonderful.

Republicans, 2012 is a long way-off. You will have plenty of legitimate issues to fight over. In the meantime, your nation could use your help. And that's why I would ask you to remember that a banker is no prettier than an auto worker.

Comments

[GlobalInvestor]

Go to the Global Investment Watch blog to read a good article related to Republican attempts to use the auto bailout to attack labor unions ...

http://globalinvestmentwatch.com/2008/12/14/demint-vitter-and-mcconnell-the-three-horsemen-of-the-hypocracy/

[Sundialsvc4]

I, for one, see this as a pretty transparent attempt at "union busting," because: (a) "automobiles" are only a tiny fraction of these companies' business, and (b) they are not at all unique as a labor-intensive heavy industry in this country. Furthermore: the work that these people do, in assembling TODAY'S car, consists of assembling an immensely complicated machine (hundreds of them a day...), which is a highly skilled form of labor with great consequences for any mistakes.

If, in the USA of all places(!!), if such a worker cannot be paid $60,000 plus benefits, then something is very desperately wrong ... because I know "administrative assistants" who are paid that much or more (with benefits) to push paper.

I grow very, very tired of watching government officials using their government powers to do what they think will make them more money in their "other jobs." (Like, would any of these people have a GHOST of an idea what to do on a modern assembly line?) What will they do if ... people just decide not to work at building cars anymore? What if... people decide not to buy mortgages anymore?

For a regulator or legislator, it's a pretty narrow line between "smart" and "stupid."

[DuganS1]

$60,000 a year? Why not $80,000 or $100,000 while you're at it? The bottom line is that GM loses huge amounts of money every quarter for many years, even when business was good (2005). When businesses can't make enough money to pay their expenses, at some point they fail. No one is going to keep loaning money to a company that loses money like a sieve and has $60 billion in debt with a $2 billion market cap -- they would never get it back. Keeping failing businesses alive is bad for the economy in the longer term. It would be best to file chapter 11 or 7, get rid of the pension, close some facilities, eliminate brands, cut salaries, and then start over. At some point if they become efficient and make money again they can hire more workers and become stronger than ever before. If they don't, they'll continue to be a failed enterprise on life support and suck resources out of the rest of the economy.

[Michael B. Laskoff - Huffpost Blogger]

Right on.

[DuganS1]

The Republican congressmen understand that GM and Chrysler have failed business models. GM, for example, has $60 billion in debt and yet has made no money for many years, even when business was good (see 2005). The congressmen understand that GM will be back asking for more money in just a few months and that GM will never be able to pay the money back. The problem with GM in particular but also Chrysler is almost entirely because of the retiree benefits and worker health care benefits. There is nothing wrong with bankruptcy. Companies go bankrupt all the time. In the end this could actually be good for workers. GM will never grow again under current conditions. But if they file for bankruptcy, they could reorganize, make themselves a viable business entity, and then grow again in the future and add workers. The airlines did it, the auto parts makers did it, energy companies did it in the 90s, some retailers are doing it now (although they'll be gone forever), etc. etc. Subsidizing failing businesses is not good for the economy, for workers in the longer term, and certainly not for tax-payers.

[Michael B. Laskoff - Huffpost Blogger]

You are not wrong in any of your facts, but I do think it is worth considering an aspect of your logic. In the US, we have privatized many aspects of the social welfare system which are nationalized elsewhere. Chief amongst these are retirement and health benefits. (People who rely upon social security and Medicare basically live in poverty.)

When we talk about the virtues of bankruptcy because it will force a restructuring of health benefits and retirement packages, we tend to focus on GM itself. But even if the company recovers, grows and hires more workers, employees will have lost in aggregate. They will surrendered the idea that people who work hard are entitled to reasonable financial security in retirement and decent medical care.

Certainly the system is broken, but the piecemeal approach will simply diminish or collective prospects.

[DuganS1]

Workers will probably be lost anyway because there is tremendous over-capacity. Plus, because of an increase in efficiency (productivity) it takes about half as many people to make the same amount of cars than it did 30 years ago. I agree something has to be done on the national level to take health care costs away from business. I don't believe that requires nationalization, but the govt will have to do it on some level. As for employees and/or retirees having decent health care, the problem is their health care is too good IMO. Companies (nor the govt) should be subsidizing things like ED drugs, anti-depressants, counseling, and many other things which people should be responsible for themselves. I don't remember the exact number, but GM pays many tens of millions of dollars each year just to subsidize ED drugs for employees and retirees. This IMO should not happen. It increases health care costs for everybody and makes the system much more difficult to sustain.

[U5122]

Congratulations Senate Republicans, in one fell swoop you managed to change my staunch Republican family blue overnight. I'm a registered Independent who voted Democrat this year because of various reasons, including my key issue which is jobs. But in the last week or so all my Republican family has been calling me to say I was right to vote for Obama. They feel disillusioned and abandoned by their party right now. The Senate Republicans efforts to kill the bridge loan are transparent and foolish, everyone I talk to realizes their vested interest in the downfall of the big 3. Not only will it create a monopoly for the Southern Republicans foreign automakers, losing 2-3 million jobs will make it even harder for Obama to succeed. Automakers around the world are also down by 30%, the difference is their countries already support their industries with subsidies and low interest loans. Economic experts including Jeffrey Sachs advised you that bankruptsy will not work, it's not like one plant will close down. We are talking all the employees of GM, Chrysler and Ford, all their dealerships,and their parts factories- that even the foreign auto industry needs to stay viable. So do something besides heckling from the sidelines, the days of sitting back and waiting for the opposing party to fail are over. Get on board with keeping and creating jobs here in America or get out of the way.

[P3]

The specifics is international trade, such as GATT, which allows other nations to ship their
products here, which removes jobs and business from America, congress has the duty to regulate
trade and collect duties...taxes. Companies close factories here and borrow the laid off workers
funds from the bank to finance a foreign factory to ship the goods back here. Not promoting the
general welfare.

[DuganS1]

The US economy has flourished since WW2 because of the removal of trade barriers and the increase in global trade. Without the increase in trade since the late 40s, our economy would be significantly smaller than it is now and we'd be riddled with inflation and have access to far fewer consumer goods and services.

[Michael B. Laskoff - Huffpost Blogger]

Interesting to note the exception to this rule has been the Pharma industry. Not only do they foist higher costs on the US, they prevent the importation of their own goods from other countries in the name of consumer safety.

That does not make your free trade perspective wrong, but it does go to show how selective we tend to be about who has to live under the rules and who does not. If pharma had to compete in a global market and did not enjoy de facto protectionism, we might not have a health care crisis to add to our burst real estate bubble.

[darthdarcy]

Republicans don't serve our nation, they serve the corrupt bankers and international business cabal..

[Michael B. Laskoff - Huffpost Blogger]

I cannot believe such a thing: it implies too much internationalism...

[Rule Of Law]

Not to wave the conspiracy banner too broadly, Michael, but given that most financial corporations are international and have no national identity or loyalty, and that many of our hard industries (those remaining...) like auto, already build their cars from many components sourced from abroad, wouldn't it seem that darth's comment above is pretty close to the truth?