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Culling the Herd: Wall Street or Detroit? Predators or Workers?
Hunting season ended yesterday in Montana. More than ever people
needed to get meat into the freezer. People who live close to the land
like we do on a working cattle ranch understand that the weak will die
in the snow come winter. Frontier theory goes that culling the animal
herd with guns or arrows will leave more feed for winter for the deer,
antelope, and elk while putting food on the human's table. Less weak
all the way around, but something's got to die. And a big old buck is
what they aim for. Fine. But when men in Armani suits talk of blood
in the snow or on the floor, my blood runs cold and my injustice alarm
goes off.
Alexander Cockburn, in The Nation pens a piece called "Nail That Double Standard to the Mast". In it, he quotes George Melleon, a former editor-in-chief of the Wall Street Journal recalling a lunch with Paul Volcker just after Jimmy Carter had appointed Volcker Federal Reserve Chairman in 1979. In explaining what he was about to do with the Fed and monetary policy Volcker said:
"When there's blood all over the floor, will you guys still support me?"
Cockburn points out that the blood was the blood of bankrupt farmers in the Midwest and Latin America. There was blood on the floor literally in the form of suicides. Cockburn points out that "the WSJ's editors have always taken a stern line about letting the weak die in the snow." That kind of attitude he, as well as I, had noted on the McLaughlin Group of November 23 as the group griped about autoworkers extravagant pay.
When it comes to the U.S. auto industry what should we do? How do we get out of the woods and into the Emerald City without going through the field of poppies? This is a very serious debate that we must have. It is practically life and death to millions of Americans who work in the auto and auto related industries. So it would help if the white-collar media would get the facts straight about blue-collar pay. The Fat Cat News is at it again. On November 17, 2008, New York Times financial columnist Andrew Ross Sorkin made the case that the Big Three should declare bankruptcy because they have so utterly mismanaged their work force. He harrumphed that at GM those workers "get paid $73 an hour if you include health care and pension costs". Coddled car guys with their "lavish contracts" said the New York Post.
Great labor journalists like Jonathan Tasini blew the whistle on all this crap back on November 19 directly after the testimony of the auto executives and auto workers reps. He posts at workinglife.com and at huffingtonpost.com.
http://www.workinglife.org/blogs/view_post.php?content_id=10368
Tasini points out one exception, the Los Angeles Times. The reporter noted that Alan Reuther, legislative director of the UAW states that huge concessions were made in both the 2005 and the 2007 contracts between the UAW and the Big 3.
Sorkin's piece in The New York Times dumps on the workers without a mention of these concessions. It obviously doesn't fit the tall story (myth) he's weaving.
So thank goodness we have a great media watchdog like mediamatters.org. that keeps after this malarkey. Eric Boehlert writes on Nov 29 that there's a whole lot of "misrepresentation" going on about autoworkers' salaries. But he points out that it's one thing for conservative columnists like Charles Krauthammer and conservative radio host Lars Larson to bloviate about the audacity of union workers. That's to be expected. But he is most aggrieved that Sorkin in the "paper of record" the once venerable NY Times would keep this meme (myth) going. mediamatters.org/columns/200811250012
What is the truth? Boehlert says that Felix Salmon over at Portfolio gets to the heart of the $73 an hour auto worker pay "urban myth". www.portfolio.com/views/blogs/market-movers/2008/11/18/the-return-of-the-70-per-hour-meme
What it costs GM per worker to make cars and what GM pays its workers are two different things. And Boehlert says that to use the $73 figure is "misleading and dishonest". Friends in Michigan told me that many of the new young workers make $14 an hour. And what about the auto parts shops in the Midwest that Cockburn mentions? "They are non-union, sweatshop-type factories with few benefits and an increasingly Latino and undocumented workforce."
Toyota and Honda have their labor cost per car around $47. Autoworkers have already made huge concessions and have now taken over their healthcare by establishing a UAW run trust. So the $73 will begin to fall sharply says Solomon. Jonathan Tasini notes in his piece that in Ron Gettlefinger's testimony he speaks of the concessions and says:
That's the truth. Felix Solomon concludes that columnists who have a theory are using bad statistics and leaving out the truth. Why?
"Trying to be deceptive" and "misleading and dishonest" are the conclusions of these reporters. Why? Why you ask? Because it is war. It's class war and the battle lines keep being drawn. But whatever side you are on, making crap up about hard working Americans is something that makes my blood boil. It's just a nasty elitist way of talking trash about workers in the guise of a phony economic theory. It's just the eternal conservative's justification for selfishness, to paraphrase John Kenneth Galbraith.
And, as often is the case, Alexander Cockburn nails it to the mast:
This is not about welfare, but warfare. . It's warfare dressed up like righteous indignation over the begging society aka unions aka poor people.
So, the Wall Street Journal does a full frontal attack as do various conservative wind machines and bloviators like Limbaugh, Hannity,Beck, et.al. That's to be expected. But when the mainstream corporate media get in the act, then alarm bells should be going off.
Is it 1980 all over again? Is this some awful deja vu? Is this plain old union busting? Rather than restoring labor to its rightful place at the head of the table, are working Americans once more being thrown crumbs and told that they are the weak of the species and they should die in the snow?
James Galbraith in his new book "The Predator State" makes a compelling argument that good paying jobs will get us out of this mess. That less inequality is the most efficient way to run a capitalist system because people don't leave good jobs.
We got this all ass backwards. If anybody should be lying on the floor it should be people who can't dig or build or teach but can only make things up out of thin air. If any groups should be culled and left to die in the snow, it should be the people who don't know how to make anything except hot air.
Alexander Cockburn, in The Nation pens a piece called "Nail That Double Standard to the Mast". In it, he quotes George Melleon, a former editor-in-chief of the Wall Street Journal recalling a lunch with Paul Volcker just after Jimmy Carter had appointed Volcker Federal Reserve Chairman in 1979. In explaining what he was about to do with the Fed and monetary policy Volcker said:
"When there's blood all over the floor, will you guys still support me?"
Cockburn points out that the blood was the blood of bankrupt farmers in the Midwest and Latin America. There was blood on the floor literally in the form of suicides. Cockburn points out that "the WSJ's editors have always taken a stern line about letting the weak die in the snow." That kind of attitude he, as well as I, had noted on the McLaughlin Group of November 23 as the group griped about autoworkers extravagant pay.
When it comes to the U.S. auto industry what should we do? How do we get out of the woods and into the Emerald City without going through the field of poppies? This is a very serious debate that we must have. It is practically life and death to millions of Americans who work in the auto and auto related industries. So it would help if the white-collar media would get the facts straight about blue-collar pay. The Fat Cat News is at it again. On November 17, 2008, New York Times financial columnist Andrew Ross Sorkin made the case that the Big Three should declare bankruptcy because they have so utterly mismanaged their work force. He harrumphed that at GM those workers "get paid $73 an hour if you include health care and pension costs". Coddled car guys with their "lavish contracts" said the New York Post.
Great labor journalists like Jonathan Tasini blew the whistle on all this crap back on November 19 directly after the testimony of the auto executives and auto workers reps. He posts at workinglife.com and at huffingtonpost.com.
http://www.workinglife.org/blogs/view_post.php?content_id=10368
In the case of the Washington Post, New York Times, and Wall Street Journal there was no reporting--ZERO--about the parts of the testimony of UAW President Ron Gettelfinger that detailed the hits UAW members have taken just in the last few years (and some didn't even bother to even mention Gettelfinger was even in the room).
Tasini points out one exception, the Los Angeles Times. The reporter noted that Alan Reuther, legislative director of the UAW states that huge concessions were made in both the 2005 and the 2007 contracts between the UAW and the Big 3.
"Wages for new employees were slashed 50%; new employees do not get any guaranteed retiree health benefits; they also do not get the traditional defined-benefit pension plan," he said. "And the healthcare liabilities for existing retirees will be transferred to an independent [entity]. Bottom line: The workers and retirees have already accepted major cuts.
Sorkin's piece in The New York Times dumps on the workers without a mention of these concessions. It obviously doesn't fit the tall story (myth) he's weaving.
So thank goodness we have a great media watchdog like mediamatters.org. that keeps after this malarkey. Eric Boehlert writes on Nov 29 that there's a whole lot of "misrepresentation" going on about autoworkers' salaries. But he points out that it's one thing for conservative columnists like Charles Krauthammer and conservative radio host Lars Larson to bloviate about the audacity of union workers. That's to be expected. But he is most aggrieved that Sorkin in the "paper of record" the once venerable NY Times would keep this meme (myth) going. mediamatters.org/columns/200811250012
What is the truth? Boehlert says that Felix Salmon over at Portfolio gets to the heart of the $73 an hour auto worker pay "urban myth". www.portfolio.com/views/blogs/market-movers/2008/11/18/the-return-of-the-70-per-hour-meme
The average GM assembly-line worker makes about $28 per hour in wages, and I can assure you that GM is not paying $42 an hour in health insurance and pension plan contributions. Rather, the $70 per hour figure (or $73 an hour, or whatever) is a ridiculous number obtained by adding up GM's total labor, health, and pension costs, and then dividing by the total number of hours worked. In other words, it includes all the healthcare and retirement costs of retired workers.
What it costs GM per worker to make cars and what GM pays its workers are two different things. And Boehlert says that to use the $73 figure is "misleading and dishonest". Friends in Michigan told me that many of the new young workers make $14 an hour. And what about the auto parts shops in the Midwest that Cockburn mentions? "They are non-union, sweatshop-type factories with few benefits and an increasingly Latino and undocumented workforce."
Toyota and Honda have their labor cost per car around $47. Autoworkers have already made huge concessions and have now taken over their healthcare by establishing a UAW run trust. So the $73 will begin to fall sharply says Solomon. Jonathan Tasini notes in his piece that in Ron Gettlefinger's testimony he speaks of the concessions and says:
As a result of all these painful concessions, the gap in labor costs that had previously existed between the Detroit-based auto companies and the foreign transplant operations will be largely or completely eliminated by the end of the contracts. [emphasis added] Indeed, one industry analyst has indicated that labor costs for the Detroit-based auto companies will actually be lower than those for Toyota's U.S. operations. Thus, the truth is the UAW and our active and retired members have already stepped up to the plate and made the hard changes that were necessary to make our companies competitive in terms of their labor costs.
That's the truth. Felix Solomon concludes that columnists who have a theory are using bad statistics and leaving out the truth. Why?
As of 2007, the UAW represented 180,681 members at Chrysler, Ford and Genera Motors; it also represented 419,621 retired members and 120,723 surviving spouses. If you take the costs associated with 721,025 individuals and then divide those costs by the hours worked by 180,681 individuals, you're going to end up with a very large hourly rate. But it won't mean anything, unless you're trying to be deceptive.
"Trying to be deceptive" and "misleading and dishonest" are the conclusions of these reporters. Why? Why you ask? Because it is war. It's class war and the battle lines keep being drawn. But whatever side you are on, making crap up about hard working Americans is something that makes my blood boil. It's just a nasty elitist way of talking trash about workers in the guise of a phony economic theory. It's just the eternal conservative's justification for selfishness, to paraphrase John Kenneth Galbraith.
And, as often is the case, Alexander Cockburn nails it to the mast:
You see, shoveling money at Goldman Sachs and the other titans of Wall Street constitutes systemic rescue of the billionaires vital to national well--being and self-esteem. Stabilizing the remaining core of America's industrial base, particularly a core infested by people with union cards, is quite another matter."
This is not about welfare, but warfare. . It's warfare dressed up like righteous indignation over the begging society aka unions aka poor people.
So, the Wall Street Journal does a full frontal attack as do various conservative wind machines and bloviators like Limbaugh, Hannity,Beck, et.al. That's to be expected. But when the mainstream corporate media get in the act, then alarm bells should be going off.
Is it 1980 all over again? Is this some awful deja vu? Is this plain old union busting? Rather than restoring labor to its rightful place at the head of the table, are working Americans once more being thrown crumbs and told that they are the weak of the species and they should die in the snow?
James Galbraith in his new book "The Predator State" makes a compelling argument that good paying jobs will get us out of this mess. That less inequality is the most efficient way to run a capitalist system because people don't leave good jobs.
We got this all ass backwards. If anybody should be lying on the floor it should be people who can't dig or build or teach but can only make things up out of thin air. If any groups should be culled and left to die in the snow, it should be the people who don't know how to make anything except hot air.
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Tasini has more today on workinglife.com. It's called "Auto Workers in the Cross Hairs". They want to eliminate a very good program called job banks. It keeps idled workers on at limited pay so that if needed they can come back on the line. This eliminated the need for training of a new person. Some jobs take months to learn and engineering jobs can take years.
So eliminate a program to benefit auto workers, but give AIG employees bonuses and spa trips? Tasini thinks this is bull.
December 1, 2008 12:53 PM | Reply | Permalink
Dead on, Feral Cat.
As usual, it's about class war. They wage it, and working people suffer.
December 1, 2008 1:04 PM | Reply | Permalink
Thanks, Tom. Your diary on dailykos last week was dead on. Why isn't there a labor guy on the economic advisory board? Why isn't the labor secretary announced alongside the treasury dude? There are great economists like Jamie Galbraith and Dean Baker and Michael Hudson.. There are great economic journalists like Naomi Klein who is a true big picture thinker.
And then there is the wisdom of crowds that I really believe in.
The people here who can make things out of iron and can grow things from lousy soil have great wisdom.
But don't tell that to the Gucci loafer crowd.
December 1, 2008 1:21 PM | Reply | Permalink
Well said DKC.
Sure, there are lots of wider changes I'd like to see in how we all work, get paid, make cars, etc. - but you'd have to be a fool not to grasp the sheer animosity & selfishness of some of these commentators.
Just as the tiniest starter, why not use a standardized method of talking about pay, instead of hourly wages vs annual salaries? A lot of these commenters make hundreds of dollars an hour just from their writing gig, beside their even more well-paid other jobs. And a lot of the executives & financiers they're talking about earn in the thousands of dollars an hour.
I'd like to see each columnist have to argue about $14 vs $35 vs $73... but with a $175 or $315/hour label stuck next to their name.
As a footnote, seeing people cheer the return of Volcker, after the wringer he put working people through, and the way he helped kickstart the revolution of the rich, almost makes me hurl. Thanks for wringing out inflation in the fine, even-handed way you did, Paul. As if there was no other way. I can't wait to see what gifts this next round of "tough love" is gonna bring.
And yeah, JK Galbraith was good enough for FDR & co., right? All hail, FDR, we sing!!! But young Galbraith? Errrr, thanks, but no thanks. People need to speak up NOW, while these choices are being made, because once they're in, you have to try and get them out while eating your Kraft Dinner.
December 1, 2008 1:27 PM | Reply | Permalink
Jamie Galbraith's book is quite incredible. Like his father, he take conventional wisdom and sets it on its head. I thought balanced budgets were the end all and be all. I prided myself in having no debt. But a family budget isn't a nation's budget. Galbraith has a whole chapter on why balanced budgets screwed us up. While the Rubinistas were busy making money and balancing budgets, our infrastructure went to hell. No money was spent on wind or solar power. No money for mass transit. No money for health care. Just more sprawl and the creation of the richer than rich.
You just can't have a functioning nation without making things. We are well on our way to working at Wal-Mart or for the military. Those will be our choices.
December 1, 2008 1:44 PM | Reply | Permalink
absolutely right on the mark! Thanks, and definitely rec'd.
December 1, 2008 1:36 PM | Reply | Permalink
Cosign. Great write up and I agree with Quinn, the time to speak up is now, or pass the mac & cheese, (though I do make a good one - from scratch).
December 1, 2008 4:48 PM | Reply | Permalink
As someone asked yesterday, Camembert or Velveeta?
December 1, 2008 4:59 PM | Reply | Permalink
Well reasoned. It's time for the ordinary hard-working American to be protected and appreciated. We are all born as we are by an accident of fate. And no one deserves more money or more financial breaks just because they got more education or were born into a wealthy family. We are all in this together. And why some should get millions in bonuses for making huge mistakes while others get booted out the door or deprived of unions to fight for them? Time for a change!
Thanks for your imagery and your links and your righteous rage!
December 1, 2008 2:32 PM | Reply | Permalink
Over the course of my working life, I've made some real money (as an author, as an architectural consultant, and as a stylist for architectural photography)..... as I've also made next to nothing (after taxes, $6.87 an hour as a teacher)...... or nothing at all (by volunteering at a soup kitchen; feeding the musicians of a symphony during intermission; and by supporting -- by underwriting and furnishing -- a battered women's shelter.)
I mention this range of earnings versus effort, not so I may be lauded for effort, but rather, because what I've learned from that range of experience is two things: a) in principle, money earned, or perks offered, has nothing whatsoever to do with the satisfaction derived from a challenge that one cares about; and, b) in practical terms, there is a soul-stultifying effect that pertains when one is giving 100% or more -- at whatever rate -- and it is taken for granted, and thereby dismissed as being of little value.
Bottom line: the autoworkers who have already made incremental sacrifices over a number of years deserve not only our respect, but also our support. Period end. As do the legions of people who do not even have the back-up of a union -- the salaried or hourly workers who are vulnerable to whatever cuts an employer decides to make.
Godammit. We're better than this... aren't we?
December 1, 2008 7:17 PM | Reply | Permalink
Amen!
December 1, 2008 8:12 PM | Reply | Permalink
Profound comment. I am like you. I've earned very little and I've earned a fair amount when I became a New York and Hollywood agent. I bagged Hollywood and married a cattle rancher. Small ranchers don't make a profit so I still work in the movie business, but now rep below the line people and not the stars.
There is something very remarkable about film crews. The electricians, the set builders, the drivers, the craft service people, the wardrobe and the makeup people, the scurrying assistants and the awesome assistant directors. They put together a product in 12 weeks and then go home and hope for another gig. They are workers.
Garret Keizer wrote a dazzllingly thought provoking piece for Harper's called "Crap Shoot: We all lose when politics is a game." He talks about the nature rhythms of work. Workers know that after work is rest. But the "player" never rests. The players are getting all the rewards right now and that is a travesty.
December 1, 2008 8:34 PM | Reply | Permalink
Honor Labor.
Rec'd.
December 1, 2008 8:09 PM | Reply | Permalink
Would you care for your $3400 with your helping of Moose meat? That's the per capita difference between what the good folks of Montana pay out to the federal government and what they receive in return. Sorry, I'm an angry Wall Streeter who makes less than $1BN per year, but makes enough to subsidize the rugged individuals of the Plains.
I'm not picking an argument with your post, just your self-righteous, salt of the earth, preamble.
The $73/hour figure is bullshit when referenced in the same paragraph with wages. It is, however, a fully loaded cost when viewed from the corporate budget. It's not uncommon to measure fully loaded costs in order to understand where cost flexibiliy can be found (sorry, was that too elite?).
For those who enjoy history, you may want to look at the labor deals struck in the US steel industry back in the 1950's. At the time the unions were suggesting setting up their own pension and healthcare funds. The manufacturers did not like this idea since it would create portability, which in turn could inflate wages over time (if a worker is free to move between companies without losing any benefits, then there would be competition for the best workers which would inflate median wages--if you don't get this idea, stop reading now--I'm a banker not a third grade teacher). The manufacturers made a generous counter-offer (believing that they'd always be on top of the world) and the unions went for it. It was a deal with the devil--for both sides. Thus the much touted and maligned era of the well compensated union worker began. It lasted just about 15-years before the wheels started coming off.
Let's not pretend that the blue collars are pure victim. The union leaders, elected by their own membership, were and continue to be complicit. I will never defend a 1000 multiple between the line and the executive suite, but don't think for a minute cutting all the seven figure comp packages will fix the problem.
The solution is found in healthcare and financial planning reform. The only way to bring down the fully loaded cost is to refinance them in a bigger pool, and force that pool to get efficient.
No amount of moose or proletariate blood will needed.
December 2, 2008 7:56 AM | Reply | Permalink
Thanks for the critique of my preamble. I originally started the piece with the paragraph "When it comes to the auto industry, what shall we do? And I was writing this piece for a local paper as a request to myth bust the $73 meme. But when I read Alexander Cockburn's piece with his reference to the Wall Street Journal's policy of letting the "weak die in the snow", I was curious about that expression.
Though raised in Illinois, I spent 15 years in NYC and 2 years in LA and worked with the Armani crowd and confess to loving the stuff. It's pretty. Living in Montana for the last 16 years amongst conservatives has made me continue to struggle for the right language to talk to my neighbors who pretty much buy whatever the pundits are spewing on the TV.
What I was trying to do and continue to do in print and on my local liberal talk radio show is make the connection between people who work in Detroit and people who work in Montana. We are continually being divided by those who wish to keep power and their media lackeys. I was not making a personal value judgment on people who work in the financial industries. I, after all, work in the movie business. It's not what you do, but how you do it, a famous actor once said to me.
But what Cockburn is saying is that there should be more discussion on who lives and who dies. And that we should honor labor and not trash it. There should be a place for collective bargaining in both Detroit and in Seattle. If America does not manufacture stuff, there is no need for finance because there's nothing to finance. The point of the piece was that we have our priorities screwed up right now and, if we are not careful, it will be 1980 all over again.
December 2, 2008 11:29 AM | Reply | Permalink
In Wall Street land the operative assumption when things are good is that they will always be good; same for when things are bad (which might explain why the credit markets remain frozen despite massive fed investment). The late great John K Galbraith wryly commented that Wall Street has a thirty year limit to its memory. Mix the two together and you get a fair understanding of the group think in the canyons.
Letting the "weak die in the snow" is good times bravado; more eloquently coined by Schumpeter as “creative destruction.” It assumes that the markets are functioning properly, so that out of the death of an aged and stale industry new entrepreneurial innovation will takes its place and continue to grow the economy. Of course, the operative assumption that the economy is working fine is required for this; otherwise where will the enterprising young business pioneer get the capital to make their vision a reality? Pre-2003, the role of the aged stale industry was played by manufacturing, epitomized by the time card punching, lunchbox wielding, blue collar worker. The thinking was that as America becomes an “information” economy, those manufacturing dinosaurs should be left for dead in their tar pits to be studied as fossils by some future generation of millionaires’ children.
Then we came perilously close to recession, and were saved only by Walmart’s clientele. Consumer spending lifted the economy a safe distance from economic trouble and the die was caste. Cheap money further fueled the imaginary economy, exploding debt, enriching lenders, and amping up Chinese manufacturing (and oil consumption). Middle America’s pick-up clique suddenly had some cache, and with the help of mortgage brokers, some cash to boot. No one was left to die in the snow until the snow came in August of 2007 and Merrill Lynch reported their first major loss on mortgage backs. The rest is recent history.
I don’t know of any real money men who think letting Detroit fall off a cliff is a good idea. I only hear it from the talking heads, who get paid to talk, and say anything to keep in the lime light. George Will, anyone? The general sentiment from south of Canal is that bailouts are good and necessary. Likewise there is good support for the new administration, healthcare reform, and targeted banking regulations.
In short, no one here is looking to throw the weak out into the blizzard; it’s hard to know who is weak and who is strong, so no one presumes.
December 2, 2008 2:58 PM | Reply | Permalink