CLASS WAR: Bailout Questions From The Worker's Perspective
This is the 4th blog post in a "CLASS WAR" series. The others can be found by scrolling through the other "CLASS WAR" posts here.
We are told that we cannot presently consider repealing the Bush Tax cuts that were recently passed in support of the wealthiest among us. After all, we need to keep money in the hands of consumers so they will stimulate the economy. This prompts a number of follow-up questions that are raised within five different categories:
Productive Stimulus or Circle Jerk?
Does this increased personal wealth that results from the lower taxes paid by the upper few percent of the economy translate into an increase in consumer spending? Aren't these people more likely to invest this money in the bonds the government is selling to cover the hundreds of billions of dollars that are being offered to the financial markets and now the Big Three Automakers? Are we not therefore essentially giving this money to the wealthiest class of people in this economy and then subsequently paying them for the privilege of borrowing our money back from them to then fund a stimulus plan? Is this a wholly productive economic stimulus plan or simply a stimulus plan preceded by a circle jerk for the wealthy and their subservient pols?
"Autoworkers, Unite!" Solving the Competitiveness Dilemma.
If it is truly in our interest to keep money in the hands of consumers to stimulate the economy, why should we not compel the other automakers to pay a UAW wage rather than compel UAW members to take a major reduction? Wouldn't the workers' "competitiveness" be restored in either case, with the universal UAW wage providing additional stimulus as required?
Tax Subsidies for Foreign Car-Makers: Asking US Workers to Purchase Their Own Noose Via Redistribution of Their Tax Dollars
In his TPM Blog, Kenneth Thomas shows that the foreign automakers who have built plants in the US have received over $3.3 billion in government subsidies. Shouldn't it be a requirement that any manufacturer seeking such government subsidies must agree to pay the prevailing wage? Does it really make sense to instead spend our tax dollars on subsidies that actually encourage these businesses to undercut the present earning capacity of American workers?
Economic Stimulus Plan Requires a Further Widening of the Disparity of Wealth Between Upper and Middle Classes?
If we cannot repeal the Bush tax cuts because we now need to keep that money in circulation to stimulate the economy, what is the possible justification for making it a requirement of the loan to the Big Three that the UAW members must now take a cut in pay for "the good of the economy?"
Can We Effectively Leverage These Billions We Are About to Loan to the Auto Industry?
Of the three major players at the table (The Automakers, the Government, and the UAW) negotiating the Big Three loan package, the UAW members are the least culpable for the problems faced by our car industry. They have shown up for work making cars and have had nothing to do with the lack of oversight on Wall Street that has made a criminal syndicate of our financial markets, nor have they participated in the bad business decisions of the Big Three Management and its shareholders. Yet, of these three groups, the UAW is expected to make the greatest sacrifices to gain loan assistance from the government that is required to keep the industry afloat. Would it not therefore be proper for these loans to be offered to the UAW members instead of to the Big Three directly for purpose of letting the UAW members buy the companies in exchange for their sacrifices? Why is it a foregone conclusion that this money must go the shareholders and not the employees when arguably the latter group has a more vested interest in doing whatever it takes to make the industry viable?
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I look forward to the discussion. I can't say I know all the answers, but I think it is time someone began asking the right questions.
FIRST, the Economic Oligarchy and the Republican Majority of old had been involved in a circ jerk for four decades.I sometimes despise talking points but socialism for the rich and powerful kind of sums it all up.
SECOND, workers cannot survive on $15/hr. And actually, the foreign car makers do pay better than that. Reps wish to point at the actual cost of per hour labor and ignore the obvious burdens carried around by the Big 3 who did not adequately fund their pensions, evidently. Universal, one pay health insurance, might solve a lot of this problem.
FINALLY, I think that w might have accomplished the only decent thing I have ever seen him do by providing an interim loan so that our New Administration can take on this issue from a labor standpoint, from an employment standpoint, from a health insurance standpoint and yes, from a green standpoint.
There is a class war going on out there and I know which side I am on.
Good post.
December 20, 2008 7:33 AM | Reply | Permalink
Your link to the others brings a reader back to this blog!
Until the link gets fixed, I suggest you just look above the blog title, where you can see the most recent blogs and click backwards to you get to earlier entries in this series.
Thanks a million for your presence on this site SJ and for this series!
December 20, 2008 2:59 PM | Reply | Permalink
Thanks, TheraP, for the suggestion and, as always, for your very kind words of encouragement.
I have alot to do in housekeeping to pull these blog posts together into a cohesive article. Meanwhile, I think I've temporarily addressed the confusion caused by my link in this piece.
Also, I know I'm not alone in thanking YOU for your presence here. You manage to keep us all in order, and your commnents and enthusiasm are always joyously anticipated.
December 20, 2008 3:15 PM | Reply | Permalink
Boy, this place keeps us busy, doesn't it? We comment and next thing we know, it has to be turned into a blog! And meanwhile all these other blogs have shown up..... whew!
Thanks for your kind words as well. :)
December 20, 2008 3:18 PM | Reply | Permalink
Wow that's a long post. Here's my thoughts:
1. The UAW's wages/benefits are not competitive with other industrial businesses in the Mid-west or with other auto companies across the country. If we increase wages for non-UAW auto workers than all the other car companies will be bleeding cash like the Big 3.
2. Those state subsidies for the transplant auto companies (Toyota, BMW, etc) created jobs for hundreds of thousands of Americans. Without those subsidies those car companies would have gone to other countries. Is that a good idea? Plus there's a difference between STATE tax funds which you can argue benefit a particular state like South Carolina versus giving FEDERAL funds to the Big Three.
3. The UAW is not for the "good of the economy", it's to save the Big Three. All parties are sharing the pain, equityholders, debtholders, unions, suppliers, etc.
4. The lack of oversight on Wall Street is NOT why the car companies are in this mess. GM and Chrysler have been bleeding cash for years because of the legacy and current benfit costs. Things like the job bank and the medical co-pays that union members pay are a joke (The only people that have better sweatheart deals are Congress).
I also am not sure how you quantify that the UAW is "making the greatest sacrifices". Bondholders are going to accept 20-30 cents on the dollar, equityholders get wiped, management gets replaced, etc. These loans are not going to the shareholders like you say (it's likely GM's stock price will go to pennies). The money is going to the COMPANIES to run their operations. If the bailout was lent directly to the UAW then how is GM going to pay to keep the lights on and the assembly lines running?
December 20, 2008 3:12 PM | Reply | Permalink
Thanks, Bill. These are all good points and questions warranting a reply. I will get to that when I can - hopefully tomorrow. Meanwhile, I'm off again to go play in the cold and snow all night behind the wheel of an aging Freightliner making sure that a good number of Santa's gifts all get delivered on time via the USPS. Later!
December 20, 2008 4:41 PM | Reply | Permalink
Here goes, as promised...
1.) Lowering the UAW wage is not the only way to restore "competitiveness." Raising the wages of everyone else woulld also accomplish the same - and go a long way in making a significant statement while helping to repair the massively growing disparity in incomes between the upper class and the rest of us.
2.) Without those subsidies those car companies would have gone to other countries. Is that a good idea? It's actually a great idea! Make cars in Malaysia rather than here, and then sell them to the Malaysians. Just don't bring them here and expect to sell them. We want fair trade, not colonial trade.
As to all the extra jobs these tax dollars provide? Not such a grand idea if the net effect is to overbuild capacity in the market so that neither labor NOR the manufacturers can make a sustainable wage/profit.
3.) Little argument here, although I would say that the autoworkers have the most on the line after already giving so many concessions. And there is no doubt that they are the target in the sights of the GOP in making these demands, which are unlike any preconditions they placed on the Wall Street giveaway that dwarfs this loan program in terms of tax dollars on the line.
4.) When the GOP and its trolls start calling for truly meaningful universal health care (not their "market based" solution - don't even get me started on the GOP's proposed "market based" realignment of responsibility giveaway to corporations!) and other social safety nets, I will grant them some credibility in discussing legacy costs and company-paid worker benefits. Meanwhile, you put the lie to your earlier "competitiveness" argument by not recognizing that the lack of these gov't programs make our industry uncompetitive with many in Europe and Japan and other developed countries.
To your final point, the answer is so simple that your failure to grasp it says a great deal about your corporate perspective. Having provided more monies than these businesses are presently worth, we taxpayers have the right to assume primary (sole?) equity stake in the business. If we were to assign that stake to the autoworkers with agreements that this loan gets paiid back with interest, then we need not worry how GM "is going to pay to keep the lights on and the assembly lines running." After all, this will be the responsibility of the new company, owned and operated by the employees themselves.
Like I said earlier, I believe in Fair Trade. Employee ownership is fair exchange for the sacrifices being requested. And I have no doubt that the autoworkers will bring to the task much more focus and creativity in the effort to rebuild this economy than will the present GM management/stakeholders.
December 21, 2008 10:02 PM | Reply | Permalink
And I will sit here and wait for my unemployment check...
December 20, 2008 8:37 PM | Reply | Permalink
Seriously? You refer to yourself as middle class and collect unemployment? My good man, welcome to the lower class. It's a harsh reality, but for some reason you no longer qualify for middle class.
Given your propensity to attack labor and the UAW for making too much money, getting too much healthcare and having a pension, I am encouraged that you walk the walk. I understand your resentment now. I think it would be in your best interests to ask yourself "Why can't I have what they do?" rather then "Why do they get more then me?" Tearing them down will not improve your plight.
December 20, 2008 11:48 PM | Reply | Permalink
Was recently let go by a big bank. So collecting unemployment but should have a white-collar job again soon
December 21, 2008 8:52 AM | Reply | Permalink
The auto industry parts of your post. I have so much to say about it, I don't know where to start. Here goes anyway...
I am a GM baby, baby. I was born and raised in Flint, MI. My dad worked for GM for 38 years. My grandpa worked for GM, "Man and boy," he liked to say, for fifty-three years. They were both union men.
Not many are familiar anymore with the sit-down strike of 1937...but it is a part of my family history. I know about it because my grandma was one of the women that risked life and limb delivering sandwiches and coffee to the men holed up inside the plant. Everyday the non-union workers gathered outside and pelted those women with bricks and rocks and anything else they could get their hands on to throw. But, when it was all over and the union gained fair wages and treatment for the workers, did any of those rock throwers walk away from their suddenly higher paying jobs? Nah.
Fast forward to the present.
Those auto plants in the south...the ones with the non-union workers. Do you think the workers there would be getting the wages and benefits they do get without the interevention of a union if it hadn't been for the UAW fighting for decent pay and treatment in the first place? Nah.
According to Rep. Debbie Stabenow (D-MI) the wages of the non-union plants in the south are actually a few pennies higher than their counterparts in the union north.
Truthfully, there is room for the UAW to make concessions. The union is just as bloated with non-essential personel as the Big Three and the government. The UAW has become a business unto itself. The union bosses may walk around wearing blue jeans and knit shirts with their 'local' emblazoned on the back, but underneath, they are all wearing suits and ties. That the ordinary factory worker gets a kickback is just a side effect and if there are any sizeable cutbacks in wages there will be a class war like you don't wanna see. It won't be workers vs. GM. It will be workers vs. UAW.
I realize this sounds like I have a split personality about the situation. On one hand I love the union. On the other, I think it sucks. I'm confused myself. But, I am beginning to realize that it's time to rethink the union. It's time to find a new way to protect workers interests. I think to have them make some non-wage related concessions would be a good start...and they have plenty of those to work with, believe me.
As for class wars...I know which side I'm on, too. The one with the pitchforks and two-by-fours.
Also, I apologize for being a gasbag. But, this whole auto industry thing makes me go grrrrrrr.
December 20, 2008 9:24 PM | Reply | Permalink
No need to apologize, Flowerchild.
I laughed when I read your post. Love the Union and hate the Union all at the same time? How can that be?
I laugh because I know EXACTLY what you are saying. (Remember, I was once a member of the Teamsters!)
I would be curious to hear from some of these non-union autoworkers in the south. I wonder what they think of this demand for UAW workers to take a cut. After all, I'm sure most of them are well aware that they owe their wage rate to the contracts won elsewhere by the UAW.
It doesn't take a genius to figure out that these non-union autoworkers are NOW at the top of the heap in wages. It is therefore probably only a matter of time before they are asked to take a major wage cut. After all, there are workers in the maquiladora who will build cars for considerably less money. Shelby can be expected to be among the first to tell them they must be competitive, after all, and should therefore take their few pesos per day in wages and shut up about it.
December 21, 2008 9:24 PM | Reply | Permalink
I would be curious to hear from a few southern autoworkers as well. I would love to hear what they have to say.
I have some relatives in S.C. who come up to Michigan every so often for a visit. They talk to me about a 'right to work' law they have down there and they don't need no steenkin' union.
I asked, "How does that 'right to work' law work?" because I am curious.
So far, the only answer I have gotten from them is, "Every man has the right to work!"
Well, duh. You need a law for that?
If somebody out there can explain to me how the 'right to work' law works and helps the ordinary citizen, I would truly appreciate it.
December 22, 2008 9:21 AM | Reply | Permalink
I always heard it quoted as the "right to work fer nuttin'" law
It takes away closed shop for union shops. There is nothing in it that benefits any middle class workers.
December 22, 2008 11:54 AM | Reply | Permalink
"right to work for nuttin'" hahaha...I never heard that before. So, that explains why they're so happy to work for $8.50 an hour. Thanks!
December 22, 2008 4:15 PM | Reply | Permalink
Flowerchild - thanks for your comments. The wages are a few pennies higher, but what about the benefits? Are you ignoring those?
And I don't understand your point about the South's wages and benefits were helped by the intervention of a union?? The South's total package (wages plus benefits, including retirees) is much less. So I don't understand how the Detroit UAW helped BMW in Spartansburg
December 20, 2008 9:31 PM | Reply | Permalink
Ignoring the benefits? No. I just tried to confine my comment to the wage cuts mentioned in the original post by SleepinJeezus. I gassed long enough without going off on the benefits thing.
You don't understand how the UAW helped build plants in the south?
By not being there, that's how.
December 20, 2008 10:45 PM | Reply | Permalink
Jeezus - thanks for the response. if you don't want Americans to be able to buy foreign made cars, that's certainly one perspective.
As for your last point, I apologize that I still don't follow it. I agree that the taxpayers should get a portion of the equity if the loan isn't paid back.
Sounds like you want to turn GM into a company owned by UAW. So we would make loans to the UAW workers so they could manage the money themselves and run the company?? You probably think of me as a simpleton (and probably called me one too). But I think you are mixing apples and oranges.
The loans are to the company. They're not making loans to the shareholders. You said in your original post that the loans should go to the UAW instead of the shareholders.
Well I have always assumed that the current shareholders get wiped out. The new "shareholders" are the UAW, debtholders and new management (and maybe suppliers).
But these loans don't go the UAW workers themselves. These loans (like I was trying to say) are given to the company so it can keep itself operating assembly lines, turning on the lights, etc.
December 21, 2008 10:22 PM | Reply | Permalink