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If anyone doubted that a class war is in progress, hidden beneath a variety of euphemisms, like ‘bail out’, ‘downsizing,’ ‘outsourcing’ and ‘NAFTA’, their doubts can now be given the decent burial that they deserve. There has been no more blatant act of class antagonism in recent memory than the apparent willingness of Congress and Wall Street’s appointed grifter, Henry Paulson, to let a major part of the American manufacturing sector die. The difference between a diffident Congress respectfully requesting a teensy bit more information before handing Henry The-Sky –Is-Falling Paulson a $700 billion authorization, in record time and with no strings attached, stands in stark contrast to the hostility and derision directed at Detroit’s auto executives, who are responsible for actually making something useful and who are requesting a $34 billion guaranteed loan to help get them through the harshest economy in memory. An economy in freefall, by the way, that is the direct and immediate consequence of Wall Street and its Washington, D.C., enablers. Until recently, auto manufacturers were selling their big, profitable SUVs, making money for shareholders and being applauded by investors. Suddenly, Wall Street speculators hijacked the oil industry, transportation and food prices skyrocketed, the economic core of the country, the homeowner, went into Wall Street-induced foreclosure, and before Detroit could turn its massive ship around and concentrate more of its attention on hybrids, SUVs were collecting dust on new car lots. A lack of foresight? Yes. Just like millions of homeowners who tried to get ahead of the curve. Just like the Congress that had deregulated so many markets that corrosion had seeped into the financial base forming the substructure of impending economic doom. The auto executives were told that they couldn’t get a government loan without a specific plan detailing how they would use the funding. With a brand new set of standards that had been notably lacking when Paulson’s railroad came through, Senator Pelosi made clear: “No plan, no money.” Despite the negligence and incompetence of banks, Wall Street, and the U.S. Congress which have caused an international crisis that will certainly bring U.S. hegemony to an end, Paulson was never asked for a reasoned, intellectually honest plan for his bail out billions, which, as events quickly showed, he couldn’t have provided anyway. Senators, deep in the depths of hypocrisy, castigated the auto executives for flying to Washington on private jets. They suggested that the auto honchos step down from their jobs so that new management could be put in place. The auto executives were even asked if they would forego their salaries for the requested loan. None of these subjects was broached with Wall Street surrogate and ex-Goldman Sachs CEO Paulson. The sight of U.S. Senators conducting a withering assault on representatives of the manufacturing sector was a sad spectacle made surreal by the participants themselves. The U.S. Congress and its approval of one free trade agreement after another has made virtually all American industry, with its environmental safeguards and middle class wages, noncompetitive in the global market. The entire industrial sector is well on its way to having a Southeast Asia or Mexico zip code. Legislators talk as though the U.S. manufacturing sector is a dispensable nuisance instead of a sign of strength, and when South Carolina’s republican governor Mark Sanford says the American auto industry is unnecessary (PBS, 12/3/2008), we have to wonder if this was their intent all along. Richard Shelby, R-Ala, has been the most derisive of the industry’s critics. However, as USAToday noted on December 2, his state is home to Honda, Toyota and Hyundai plants, and has given $650 million in tax incentives to foreign manufacturers. The South in total has handed them $3.2 billion. Critics say that auto workers are paid too much. If we’re talking about the CEOs there is no argument, although they are scarcely in the same league as Merrill Lynch CEO John Thain, who made $83 million in 2007, or Goldman Sachs’ Lloyd Blankfein at $54 million. The workers themselves make about the same as employees at Toyota and Honda, about $26 an hour. The real difference lies in the legacy costs of the Big Three. Although nonexistent at the foreign automakers with their new manufacturing operations, Ford, Chrysler and G.M. have decades of history including retired employees, pension and health benefits obligations. Added together and divided by the current workforce, their hourly employee cost of operation, they say, is $70. Politicians want Detroit to do away with its high legacy costs by ‘restructuring’ or declaring bankruptcy and letting a judge do it for them. It’s no exaggeration to say that Detroit’s auto industry is largely responsible for creating America’s middle class. Kicking and screaming, the auto companies in the 1940s and 1950s worked with their unions to provide decent pay and benefits. Then – voila! -their employees could not only buy the cars they made but also housing, appliances, and clothing, too. Because of the health care and pension benefits eventually built into their contracts, auto workers became some of the most economically secure citizens in the world. All workers wanted what Detroit had made possible. Before 1960, the pay and benefits in the industrial sector had become the gold standard for every employee across the country. The quality of life of the U.S. middle class had become the envy of the world. About 30 years ago, automakers began to take seriously the inroads being made by foreign manufacturers and, in the interest of remaining competitive, began serious efforts to ‘restructure’, that is, reduce the number of employees, pay and benefits. Free trade agreements beginning in the 1990s made circumstances nearly untenable for employer and employee. Detroit went into a downward spiral. Now, with Washington politicians demanding that auto makers jettison their legacy obligations and cut wages, many in the ‘elite’ classes gleefully anticipate the complete annihilation of the remnants of the hard-won, historically unprecedented, social contract between employer and employee. With an estimated 3 million jobs at stake, this could mean the extinction of the remaining middle class wage earner and pensioner.
Cameron Salisbury is a biostatistician, epidemiologist and grant writer living in Atlanta. For more camsalis go to: www.opedinfo.com
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