The Tear-Down (Detroit Edition)

It's interesting that while no one knew exactly what the consequences would be if the U.S. Treasury failed to ride the rescue of mismanaged big banks, everyone pretty much DOES know what the consequences will be if Congress stiffs the mismanaged and cash-strapped domestic auto industry. Yet a significant portion of the political establishment, and a preponderance of people within the corporate media establishment, seem to care very little. That's too bad.

It may not be not quite 1 in 10 U.S. jobs that will disappear if these companies go out of business. But it's a heck of a lot of jobs, and not all of them are in the Rust Belt (as if leaving the damage there ought to make anyone feel good).

I worked in Detroit for eight years running communications at Solidarity House, the UAW headquarters. When I showed up there, 26 years ago this month, auto sales were way down and the union had close to 300,000 Big Three workers on layoff, all of them collecting Supplemental Unemployment Benefits thanks to their union contracts. Reporters took the mass layoffs very seriously; so did state governments. Even though the SUB pay was pretty good, everyone wanted those workers back on the lines, making their full wage and paying the taxes that kept all kinds of wheels turning throughout the real economy.

I'm told that today's Big three employ only around 140,000 hourly workers in total. That's shocking, and the numerical diminishment of the core unionized workforce is doubtless one reason so many politicians and pundits seem prepared to let the whole thing go down. Some senators and representatives from states where non-union "transplant" automakers operate (these include Ohio, Tennessee, Kentucky, South Carolina, Virginia, Alabama, and Texas) also seem to think that a Big Three collapse won't affect them. They could not be more mistaken.

Auto and auto-parts manufacturing is an integrated business in every sense. Not only do Big Three-controlled parts suppliers also ship parts to "transplant" factories, but it's still good UAW wage levels that set the pace for base compensation in ALL auto assembly facilities, whether in Michigan or in Alabama. This why keeping those UAW men and women making cars and trucks turns out to be a critical matter for the whole economy. If they are made to punch out for the last time, thanks to Congressional indifference, it won't be just 140,000 hourly wage workers who will stop bringing home $67,500 a year; suddenly there will no longer be any incentive for Toyota, Honda, and Nissan to peg their pay rates to those levels, which they currently do as part of their union-prevention business plans.

And that goes to the core issue. All of the well-paid journalists and B-school types who have been braying that bankruptcy is the way to put things right at GM are really saying that bankruptcy is the way the companies can finally, some 72 years after the first wave of sit-down strikes, wriggle out of their union contract obligations.

Sure they can; that is exactly what they will do in the event of bankruptcy. And then what?

The nation is said to be in need to some bottom-up economic stimulus. And NOW we're going to tear down what remains of the country's manufacturing core? We're going to say good-bye to companies that collectively (and again, because of union bargaining power) provide health coverage for two million people (their direct employees, dependents, retirees, and supplier employees)??

Yes, I know: it drives some otherwise-progressive people nuts that there can be Americans out there who don't have fancy degrees and who don't shuffle paper with uncalloused hands but who can still make $67,500 by bending metal. Everyday manual workers who can actually support a family, enjoy a vacation, and not worry about the cost of getting sick.

I swear I just don't understand the source of the intellectuals' rage about this.

I guess they must prefer the Wal-Mart model, where full-time workers (and Wal-Mart defines "full-time" as 34 hours per week) make just $19,200 annually. Of course it is their privilege to believe that a low-wage economy is the right path for 21st-century America. But then let's hear no more from them about bottom-up economic stimulus. There is no real bottom-up approach that even begins to compare with strengthening, not destroying, workers' bargaining power.

Read More:

Read more opinion from HuffPost bloggers on the Detroit bailout

Comments

[Trebor1]

Well said Reverend! Strong unions have to exist, if for no other reason than as a countervailing force to run-away, crony, monopoly capitalism. Government did not seem to want to keep the worst excesses of capitalism in check, so that duty fell to the unions. Without unions there is no balance. As the Bible tells us, unfair balance is an abomination, while just scales are a delight to the Lord.

Good Reverend, many who call themselves "liberal" today are only social liberals; pro-choice, pro-gay rights and anti-gun. They would step over a bleeding and unconcious blue-collar worker to be first in line at a "preferred customer" sale. Yet, they are the first to whine and cry when their jobs are outsourced or when their 401(k)s lose money. They begrudge the laborer his hire and believe they have some God-given right to the world's bounty at slave-wage prices.

But they have screwed themselves -- because a world economy requires that many in the world have wages high enough to buy the products. The Yuppies have caused the meltdown because they thought they should be the only ones able to afford consumption. The house of cards they built is falling on them - their houses are losing value, their 401s are melting and their health care costs are spiraling out of control. Good riddance to bad rubbish.

[rpahk]

Somewhat OT but one has to wonder what is left of America's manufacturing base when you see new, foreign made autos being offloaded at our West Coast ports and the largest export being scrap paper for recycling. We are importing manufactured goods and exporting our garbage. How can we create middle class manufacturing jobs under these circumstances?

[Henry]

Yes the government should provide the loan(s) needed to make it through the recession period at reasonable interest rates. Loan agreements to be negotiated between the congress and the auto representatives. If it does not work it will still be better than two and one-half months in Iraq!

[Choicelady]

Right on the money, Rev. Laarman! What people in places such as Silicon Valley do not understand is that if you don't have a powerful capital and durable consumer goods industrial sector, you don't have much to sustain the "information" economy. If the large industries all go away, who will order the softwear? Once the auto industry goes - not just the core but the suppliers and dealers - where is the business for Silicon Valley? "Information" does not sell into a void - it needs customers who use it. The auto, steel, machining, and other capital sectors are the stabilizing base for any economy. Workers there are the hub, even now, of the middle class. Our decision to abandon them is at our nation's peril. Better to lend the money - it IS a loan, not a bail-out - with many strings. With Henry Waxman now heading the Energy Committee, Detroit CAN have its feet held to the fire to meet CAFE standards and other 'green' goals. It can also begin integrating its own workers into decision-making a la Southwest Airlines since those who work in an industry really DO know best how to run it. Since 1980 US auto workers have given back billions in wages and benefits coupled with lost jobs. They can make no more sacrifices but should have their knowledge thought of as their corporations' greatest capital. Let's do the smart thing and create a 21st-century industry. It will benefit the entire nation.

[stavros]

The only way myself and many see of helping them, is to control them.

[Matt51]

The US must save the auto industry. Once it is lost, it will never come back. Considering our debt, it is easy to argue the US is becoming a colony of China and Japan.