To read the mainstream coverage of the GM bankruptcy, you would think President Obama's main enemy--and indeed the enemy of progress for the whole country--is a unionized labor force in the auto industry.
Good thing Obama and his one-person task force on dismantling the auto industry--31-year-old Yale Law School student Brian Deese are ready to stand up to the automakers and the union, we are told.
David Brooks captures this point of view on the op-ed page of the New York Times Tuesday, saying of the UAW: "This is the union that fought for job banks, where employees get paid for doing nothing. This is the organization that championed retirement with full benefits at around age 50." Well paid, middle-class auto workers with health care benefits and other goodies that are increasingly scarce in today's economy are responsible for the collapse of this huge manufacturing industry, the conventional wisdom goes. Obama, in the deal he worked out with GM, will have to remain vigilant lest workers resist the company's plans to send more jobs to China.
Even more absurd, Brooks criticizes the Obama plan because it "rides roughshod over the current private investors and so discourages future investors. G.M. is now a pariah on Wall Street. Say farewell to a potentially powerful source of external commercial pressure."
Ah, Wall Street, that powerful source of good, solid business sense.
This perspective is complete hogwash. As Congresswoman Marcy Kaptur of Ohio aptly notes, however plagued by problems the auto industry and GM in particular may have been, they did not cause the financial crisis that brought them down. The financial industry did that for us.
Car companies that prepared for the current moment: that made smaller cars, did not resist CAFE standards, did not end up in bankruptcy.
Ralph Nader, Joan Claybrook, and other consumer advocates who support union jobs, warned the UAW not to fight CAFE standards, that to do so was shooting themselves in the foot. Ralph Nader excoriated auto industry executives for their nearsightedness on environmental and safety issues, starting with Lee Iacocca, who called seat belts a "fad."
But whatever its faults, the bottom line is that America needs a strong manufacturing sector in order to recover from its economic woes. We need an economy that makes things. Printing more money and moving around derivative investments won't do it. As my friend Mary Bottari of Public Citizen puts it, contrasting the bank bailout with the GM bankruptcy:
"I am astonished by our willingness to go to the wall for an industry that doesn't make anything and NOT go to the wall for this industry that is the foundation of our economy."
Ralph Nader, in an editorial in the Wall Street Journal this week, urged Congress to take power over the GM bankruptcy deal away from the 31-year-old Deese (whom the New York Times describes in an affectionate profile as having awe-shucks attitude toward his first government job, and as continually shaving an regrowing his beard).
"Has [Deese's] task force conducted any kind of formal or informal cost-benefit analysis on the costs of a GM bankruptcy and excessive closures?" Nader asked on the eve of the closure of 14 GM factories, 7 of the in Michigan, and the immediate loss of 21,00 jobs. Nader noted "social effects of lost jobs (including more than 100,000 dealership jobs alone), more housing foreclosures, the government expense of providing unemployment and social relief, lost tax revenues, supplier companies that will be forced to close, damaged consumer confidence in the GM brand, and impacts on GM's industrial creditors."
And then there is that offshore issue.
"Why is the task force permitting GM to increase manufacturing overseas for export back into the U.S.?" Nader demands in the Wall Street Journal. "Under the GM reorganization plan, the company will rely increasingly on overseas plants to make cars for sale in the U.S., with cars made in low-wage countries like Mexico rising from 15% to 23% of GM sales here. For the first time, GM plans to export cars from China to the U.S. in what is a harbinger of the company's future business model. What is the conceivable rationale for permitting GM to increase manufacturing overseas -- especially in dictatorships, for export back into the U.S. -- when preserving jobs and industry is the avowed goal of this immense taxpayer bailout?"
One of the most irrational effects of the job-export and reimport from China plan is the effect on the environment. Since Obama specifically alludes to environmental goals as part of the plan for GM, and since, aside from the financial crisis, the other major crisis our government is dealing with currently is global climate change, outsourcing American auto manufacturing jobs to China is particularly nuts.
Sensible management of the GM bankruptcy would take into account these issues: the need to grow a viable U.S. manufacturing sector, the need to protect good jobs and benefits in this country, and the need to protect our environment.
That is just the opposite of the pressures Wall Street brings to bear on the auto industry. But look at what those pressures have done for us already.
As Marcy Kaptur put it in an interview I did with her for the forthcoming issue of the Progressive, "In essence, it's a battle between Wall Street and Main Street, between financiers and industrialists. And right now the financiers are winning."
The subprime mortgage crisis, and fraud by banks, precipitated the financial crisis, in Kaptur's view, and the resulting credit crunch is killing legitimate business around the country.
"Credit lines have closed along with bank lending to dealerships, bank lending to people who want to buy a car. So this industry, which is so sales-dependent, took a sales nosedive." Not only is GM bankrupt as a result, but our whole economy is on the rocks, say Kaptur: "Manufacturing used to represent well over 40 percent of this economy. It's now down to 12. Half the economy is unsustainable. And look at what's happening. It's crashing all around us."
Members of Congress who can take that kind of overarching view of the crisis ought to be managing the GM bankruptcy and the fight to re-regulate the financial industry.