Why American Industry (And Its Future) Matters
Ian has a great piece up at FDL on the financial sector’s problems, their genesis, and the Obama Administration’s conventional wisdom, status quo, manner of dealing with them:
I have become increasingly concerned that some in the Obama administration are treating this economic crisis as a "black swan" event. That is a very rare, random and unpredictable event. The key thing about black swans is that they are random and unpredictable and you can’t stop them from happening, you can only create your systems so that they can handle them if they occur.
…
But, of course, the economic and financial crisis unfolding right now was not random. It was predicted by multiple people, and it was predicted because of policy steps taken by government and widely known private actions.
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All of which is to say the crisis was caused by a number of factors. It was not random. It was predictable and predicted. If we just muddle through this current meltdown—spend a lot of money bailing out the banks, throw some stimulus around—and don’t fix the fundamentally flawed incentives and structures of the system, it will likely happen again.
Ian was discussing the financial sector, but it strikes me that the same applies for America’s industrial and manufacturing sector. The United States was built on the backs of hard working people that planted and built things, sweated, toiled and prevailed. In the post-modern hustle and flow of the digital and financial whiz bang world, we seem to both forget and neglect the industry, manufacturing and workers that put us here. I want to focus, and open a discussion, on that.
I am not expert on the issues and economics that underpin this area, so I am going to rely on the collective wisdom here to engage and flesh out the discussion. I do, however, want to open that discussion on a familiar note, the American automotive industry. Roland Jones at MSNBC.com yesterday did an interesting piece as to why bankruptcy is not a viable option for General Motors:
“If these companies went into bankruptcy right now, in exactly the position they are in today, they would be liquidated because no one out there would supply them with the financing they need to get through bankruptcy,” Mark Zandi, chief economist with Moody’s Economy.com, told CNBC Wednesday.
That would mean a few million jobs lost, Zandi said, which would be “cataclysmic” for the U.S. economy, already shedding about a million jobs every two months. A better option would be to give the automakers the extra funding they need to stay in business until March 31. Then the government could prepare for a bankruptcy later on with provisions for securing financing to bring them through Chapter 11 and guarantee vehicle warranties.
…
An outright liquidation of either of the companies — which would bring massive unemployment, lost tax revenues, and would place the burden of the automakers’ pension liabilities on the government’s shoulders — would cost the government more, according to Rebecca Lindland, director of the Automotive Group at consultancy IHS Global Insight.“If taxpayers are complaining now, wait until the pension obligations are swapped over — it will cost a lot more than the $39 billion the automakers are asking for now,” she said. “So in any scenario, it’s not as if the taxpayer’s going to get away with this scot-free. With so many workers losing their jobs there would be a lot of federal aid required.”
This is an aspect of the auto mess that is consistently given short shrift. We are worried about our economy, but keep trying to patch it up with financial jiggering, and don’t seem to be paying attention to the real foundation. That is how we got to this point, not how we will get out of it. It is time for a wake up call in that regard. One person who has been speaking out on this is author William Holstein who has a new book, Why GM Matters, on just this phenomenon, using General Motors as a microcosm of the larger problem:
Holstein is using GM as a symbol for whether it makes sense for the U.S. to bother with manufacturing. That might sound odd for a country that for now probably remains the world’s largest manufacturing economy. But Holstein argues that our political and financial leaders don’t get manufacturing, and don’t think it’s important. This is the crux of the Main Street vs. Wall Street debate, and it is shaping up as the core fight of economic policy over the next few years: do we get a justifiable return if we invest in making things, or should we focus on information-driven innovation?
Holstein seems to represent the argument that information-driven companies — such as financial services firms — simply cannot sustain our economy by themselves, and we must continue to be able to manufacture. In fact, he does directly argue that GM can now manufacture head to head with Toyota, and he might be right.
This is a discussion that is important to have at least side by side with, if not in fact primary to, the discussion on the Wall Street, finance and housing bailouts. Sometime in the next day or so, I plan to bring Holstein in for a live chat discussion about his book and the greater state and future of American industry. I hope one and all will join in, but in the meantime, let’s get the discussion going.
Excellent, bmaz, excellent!!!
Don’t see much discussion about the impact on all those that own GM vehicles and the drop in value. Additionally used car dealers that have GM vehicles on their lots. What would be the impact on their floor plan loans etc.
Please discuss just that. That is the purpose of this thread. what have you to say on those issues? Why do you think they are important. Get us rolling.
Great Bmaz. I tell you it has been a real pleasure to spend many hours with the older gents and ladies at Maria Joseph’s, Singing Woods, the VA and Heartland nu nursing homes assisted living centers over the last year and at several other. Have had so many conversations with retired GM, Goodyear, Firestone, United Telegraph, U.S. Postal service workers the last year.
Many of them are very aware of that the auto industry did not get on the ball with environmental standards, smaller more economical cars etc. But all of them know that our middle class was built by unions, that those without a college education could access a middle income and fair wages via unions.
I think about 40 years ago (the mid 60’s) that I spent arguing with my father (a Teamster) about his argument for “buying American” I would agree but would argue that the heads of many companies even then were deserting the U.S. moving abroad for cheaper labor, weak environmental standards etc.
The loss of manufacturing has been leaving the U.S. for a long time
Did anyone watch the Frontline special on the fall of Wall Street
“Banking at the Brink”
http://www.pbs.org/wgbh/pages/…..brink.html
One thing that I had not been aware of was how Former Secretary of the Treasury Hank Paulson and the CEO of Lehmen brothers at been extreme competitors almost sounded as if they were arch enemies. Does anyone think that there was anything personal in letting Lehman Brothers fail? After watching that Frontline special I thought so.
I enjoy hearing your reports of what some of America’s living ‘treasures’ has to say, Leen.
My experience of the early mid-sixties was this: I entered, while in high school, a ‘contest’, sponsored by the Fisher Body Division of General Motors, designing and building (from “scratch”) two 1/24th scale automobiles, one a sports car with faired-in, or covered, headlights and a Kamm-style ‘tail’, the other a more conventional (but still very aerodynamic) five-place sedan. I did well-enough that I was contacted for further discussion.
That is when I ‘blew it’, first, because I let it be known that I was convinced that aerodynamic consideration was important (I mentioned Chapman’s Lotus Elite, the original one) and would become more so and that I considered a ‘coherency’ in design (rather than a ‘pastiche’) was a key to public acceptance, approval and desire. And then, I really put my foot in it, by suggesting that radial tires and seat belts were the wave of the future. Those ’suggestions’ were based on experience, in the first case and ‘observation’, in the second. I ‘discovered’ that an MGA, equipted with radial tires (from a Volkswagen ‘Bug’) handled far better than when I used cross-ply type tires (mostly as a ‘result’ of the stiffer side-walls of the radial tires). I also (intentionally) walked through a ‘junkyard’, as they were termed in those long ago days, on my way to and from school, and noted the number of ‘exits’ that had been made through windshields of automobiles which had stopped very abruptly, (especially as the result of encountering unmovable objects or objects that appeared to have been coming from the, more or less, opposite direction, as well as the steering wheels collapsed around the blood covered ‘columns’ …
About the time I mentioned alternative means of propulsion, I was talking about fuel-cells and the use of electric motors, it dawned on me that my audience was somewhat less than ‘receptive’. One of them told me, later, in a more private conversation, that ‘design’, now (or ‘then’) was, essentially by committee (foolishly, I admitted that it appeared so to me, at least judging by the results …) and that what I had termed the ‘excessive’ use of chrome and gimmickry’ was dear to the hearts of the consuming public (who were never wrong in their taste or discernment) and that, regrettably, it appeared that I should have to apply my ‘talents’ someplace else.
It is probably just as well that I wasn’t allowed to go on and mention the excessive avoirdupois that I felt had settled over American automobiles, having experienced the, relatively lighter and (I thought) more nimbly performing European machines that my father and a number of his friends seemed to favor.
Perhaps it was unfair of me, but I decided, then and there, that clearly, American automotive ‘design’ was in the hands of those who had a very different ‘perspective’ than I. That I would be very unhappy, trying to change such a ‘culture’ and that it probably would not change until forced to do so.
I confess, however, to continuing, in my ‘motor-head’ days, my love affair with the American V-8 engine, even plunking one into another MGA that happened to cross my path … but that is a story for another time.
By the time that our manufacturing base, and those who possessed the skills that went with it were denigrated, as both were, I was convinced that the Wisdoms of Wealth hadn’t a clue as to the true nature of wealth production.
In that sense, I disagree with Krugman, since he thinks ‘wealth creation’ ended in 2000, while I consider that it was well-damaged and disparaged quite some time before that.
I am told, however, that American automobiles are far better than they used to be, now that the SUV craze is diminishing, so, I guess, we are making progress.
I wonder when steel-making and other basic ‘manufacture’ might be revived?
Living in Pittsburgh, I have discovered that a number of my contemporaries who have considerable skills in some of those areas, are interested in that question as well…
” on my way to and from school, and noted the number of ‘exits’ that had been made through windshields of automobiles which had stopped very abruptly, (especially as the result of encountering unmovable objects or objects that appeared to have been coming from the, more or less, opposite direction, as well as the steering wheels collapsed around the blood covered ‘columns’”
From that big Catholic family that I popped out of in Dayton there are a pile of GM blue collar types, management types and several engineers. One of the gal cousins is an engineer at GM (she still has her job) and has several major awards in her pocket for her work with side air bags
http://query.nytimes.com/gst/f…..A962958260
DW Bartoo ” and that it probably would not change until forced to”… And our legislators let them sit in their own hard headed ways while Japanese and other auto manufacturers move forward. The time has clearly come.
Thanks, Leen:
Way cool. Give your cousin a big thumbs up from me when next you see her.
From the NY Times (1994) article: “But it’s no secret that side air bags are coming to the North American auto industry.”
Let us hope that an appreciation of the necessity of (’state of the art’, ‘best practices’ etc.) manufacturing capacity is not being held hostage to “National Security” or the ‘need’ of some perverse ’secrecy’, but may actually be ‘coming’ to North America … sometime soon.
On the assumption that there’s some truth to the idea that not having national health makes it harder to build things in the US, I am annoyed that this long after Daschle’s implosion all we have are trial balloons that it’s going to be Sebelius. When you talk about big, bold moves – taking the recession as an opportunity – I want to hear more about Conyers’ rather simple plan and not sit around waiting to hear why the Villagers do or don’t like Sebelius.
You know, I think that is a pretty important part of the discussion; vital you might say. I actually think that the subsurface of the recent agreement to pay the second part of the bridge funding to GM (and to a lesser extent Chrysler), and inclination to work with them on viability without bankruptcy signals an intent by the Obama Administration to make a move on healthcare this year. It would appear to be an amalgamation of the Obama, Clinton and Baucus plans to me; but that is all my best guess.
In a way, that’s what worries me. You don’t get a major depression every day. Which means that you don’t get the chance to actual make some huge changes every day. I do not want the gov’t paying insurance companies. I want national health. So the last thing I want is Baucus meddling in this (which is why I was so scared last week that Obama would name Baucus). Now I’ve seen some suggestions that Sebelius hates the insurance industry enough that she might be the person I’m after, but I’m not so sure and any mention of Baucus or the old Clinton plan in the same breath makes me queasy. In contrast, I do know that Conyers’ plan is almost exactly what I want. I want it on the table right now.
agree. let’s put hr676 on the table now!
I agree with that pretty much lock, stock and two smoking barrels. I desperately want single payer national healthcare. I have previously suggested it be phrased and sold as “Medicare For Everyone” because most families have had decent experiences with Medicare, and because the concept still allows for excess coverage so that rich twits don’t get their panties ina wad about being crammed in with the common folk.
That said, I don’t think we logistically get there is one step; however, if there ever was a way to go directly to single payer, it would be through a “Shock Doctrine” taking advantage of the current financial whirlwind going on.
I understood the logic behind Obama’s multi-step plan (i.e., first make Medicare more attractive than private insurance and then slowly take over), but that was before the recession/depression/whatever-we’re-in. I accepted Obama’s logic because I didn’t see enough motivation to get there quicker and no-one with any DC-cred was pushing for the big one-step jump. But now we have both factors working in favor: the economy is in the toilet and Conyers has offered a bill. So, I say, no caving right now. Push hard for the big one-step jump and (secretly … no-one reads this blog, right?) be open to the multi-step compromise.
I agree with you but extreme caution should be taken. There should be measures taken in the compromise that assures that the public system does not become the dumping ground for all those with preexisting conditions. I can just hear the wingnuts in a few years saying look at how much cheaper private insurance is.
Good topic!
It used to be that “What was good for GM was good for the country.”
Those days are long gone, eh?
…or not.
Bob in HI
Maybe what’s good for the country is also good for GM?
I think there’s feedback between the two. Synergy?
Bob in HI
Yes, indeed.
I do zillions of payroll audits, and the best paying are manufacturing
jobbers. They bolster local economies.
My solution is anti-global, simplistic, and probably won’t work — never farm out manufacturing to other countries…
I agree with that. God forbid we should have another great war, but if we did, we wouldn’t be able to fight it because we don’t have the manufacturing infrastructure to do it anymore.
The secondary market in the automotive industry is important. Driving past used car lots the prices on some of these used vehicles can be a big number. There are also car leasing companies and rental companies. What happens to their business models if their fleet value takes a big hit when they go to replace their inventory. The average owner will also take a hit if he or she goes to trade or unload a vehicle. The impact of this on banks could be significant if they start getting keys in the mail from borrowers who have lost a job and can’t sell or companies that cannot unload their inventory.
A GM in every garage? GM like Chrysler failed to produce energy efficient cars, in part because of consumer demands for gas eating SUV’s and pick-ups, driven by marketing, but also due to lack of vision and an inbred management. While GM promises the Volt for 2010, can the unemployed afford them, or the employed feel confidant in their continued employment to buy one. Chrysler has nothing to offer except a reduced product line. No US car manufacturer offers fuel-efficient diesel or natural gas or offer retrofit conversions to same. Perhaps the Government will subsidize car purchases to stabilize Detroit or just pay workers directly, in lieu of work.
Our population continues to grow while jobs prospects shrink; our schools fail to produce citizens and workers in critical thinking or being adept in a smaller market. Economists use 20th century theories to fit the 21st century conditions, measuring economic health as increased GDP and increased worker productivity, not factoring declining wages, health care and wealth. Increasing population, automation, competition for jobs and market share, diminishing natural resources, especially potable water require new thinking, not just reboxing old ideas. Any economist out there thinking outside the box?
What are you suggesting?
It is hard to say. The world economy, but more particularly and specifically ours, is based on ever expanding pools of consumers who, at least in the US, are continually asked to buy more, to keep up with the Jones or have more than your neighbor or have better or newer. Our culture, since the 1960’s are steeped in consumerism and since the 1980’s in consumer debt (credit cards). Our manufacturing, from shipbuilding and textiles to auto parts and electronics has moved off shore. As we are less able to pay for these goods because of shrinking income and expanding want, we buy on credit, refinancing or second mortgages and credit card debt paid from loan proceeds, if you’re lucky enough to own a home.
Our American dream of unlimited future income and promotions is severely, if not completely stymied, at least for 5 to 10 years, waiting on new real estate developments and the employment of skilled and semiskilled workers. While many employees will retain their job and new jobs and some new sectors will be created by Obama’s plan, how many people, directly effected or not, will be spend money (incur debt) as they did. Using current thinking, only consuming will reduce the recession, but where do we get consumers with money except by increasing immigration. We can change the rules with an income/savings requirement, expecting the immigrants to become big consumers. We still have the problem of manufacturing offshore. Only a taxation policy of disincentives will cause industry, other than commodities like chips and disk drives, to move to the US; of course then prices will go up.
All I can see is changing our consumer thinking, buying better, longer lasting products that are recyclable similar to Germanys requirement, and made in the USA. Since being totally economically isolationist wouldn’t sell to the World, mandate a 1 to 1 balance of trade with our partners while requiring equal and better pay and benefits for workers world wide, thereby expanding the consumer pool.
Since the world is running out of natural resources, especially water, better stewardship of the earth and population caps are required. That too will be a hard sell.
Anyway I look at it, a lot of consumer retrenching is happening and will continue until someone figures how to handle the massive imbalances in poverty, income, employment, governance and resource management. Good luck with that!
From what I just recently heard from a lawyer friend here in Ohio who is a close friend of Senator Browns (one of Brown’s daughters works with the SEIU)….there will soon be a big push here in Ohio by the SEIU for nursing home workers.
From what I have seen the back of the health care industry are these aides who are underpaid, understaffed and not represented.
Organized health care workers may be the next big union wave…but they generally need cars to get to work.
The GM workers that still have jobs are not going to be put out to pasture quietly
There is no doubt in my mind that the jobs created by GM, Chrysler, or any other manufacturing enterprise are vital to our future economy. There are those who are standing on their heads and screaming about dollars devoted to mass transit — but improvement of rail lines equates to JOBS! Most businesses are so obsessed these days with placating shareholders with dividends that they are spending very little on real infrastructure improvements that would help drive a resurgence in our economy.
Our US economy has been obsessed with the concept of saving money on labor to create shareholder value — to the point of shipping most of the manufacturing aspects overseas. This so-called “outsourcing” has become a major factor in our economy’s looming failure. Why?
Fundamental economics talks about the so-called “multiplier” effect — a dollar earned in wages is actually worth more because that money is spent by the wage earner on other goods and services. In other words, the goods and services that are purchased also create jobs.
The obsession with saving money on labor by shipping jobs overseas has become a major wound in our economy, I fear. Our economy appears to be based more on financial services now — and I recall reading an article last year that said something to the effect that the multiplier associated with financial services is far less than the multiplier associated with manufacturing jobs.
One final thought… The concept of a “free market” that Republicans espouse and want so much to protect has become a symbol, at least for me, of “anything goes.” Thus, we have the high level of greed that is becoming more and more evident in the form of multi-billion dollar frauds a la Madoff and Sanford (and those not yet named). The greed and fraud associated with economies such as we have today serve only those who can steal their wealth. They do nothing for the economy as a whole. Instead, the money goes into a black hole (read: Swiss bank account).
I was trying to explain this the other day, to a guy on my train. He said he was taught that the best stimulus was investment. (I’d just about bet he votes GOP.) The idea that spending money on unemployment and food stamps does more good than tax cuts just boggled him.
I’ve tried explaining to people that spending money on this (or on space exploration) is good for the economy, but they really have a hard time understanding that money isn’t going into space (or down a rathole), it’s moving around the country as paychecks and purchases of parts and labor and food.
Isn’t investing in people worthwhile
I have to admit that years back, I was a strong proponent of David Stockman’s “trickle down” economics theories through massive tax cuts, etc. The rich want to do something with the money so they invest in new enterprises that create jobs. On paper, they make sense and everyone should be fat, happy and sassy as a result.
The truth, as I see it and how I think it played out over the last 30 or so years, is the Republicans and free-marketers succeeded in getting major taxes reduced to create more money for investment, etc. Apparently what Stockman and his ilk did not count on was that the money available for investment got sent overseas to invest in offshore enterprises and faster returns on investment. And I guess right there is the big issue — ROI. No one is happy these days making a decent return on investment over time. It has to be bigger and faster than anyone else’s — GREED enters the picture.
Our former Prez, Dubya, made some major tax cuts early on as a means of stimulating an economy that did not really need a whole lot of stimulus. But, it made his free-market friends and Republican constituency happy. I think we began hearing that giant sucking noise that Ross Perot once referred to… And, here we are!
Yeah, all the poor and middle class want to do with that money is spend it trying to stay alive. No jobs created doing that at all.
I guess I learned my lessons well from my father and uncles who made me understand that all “trickle-down” economics was, was someone pissin’ on my head trying to tell me it was raining.
Ha! I had forgotten that expression!
Here is one more interesting thing to think about… Years back, I was in oil and gas exploration. We were working hard to get some price controls taken off of natural gas to help pay for drilling deeper wells. The cost for drilling at that time increased almost exponentially with greater depth because of much greater risk factors.
One independent gas driller went to visit a congressman from a northern state to try to explain the economics and risks involved (such as dry holes). The congressman proceeded to ask him point blank why in the world he would drill a dry hole! (Many smaller independents drill so-called ‘wildcat’ wells — true exploration! However, the odds are (or at least used to be) 9 to 1 that he will find anything…)
Out of that conversation, though, came a realization for that congressman that yes — dry holes get drilled, and there is no production. However, the activity of drilling and supplying the needs for drilling create jobs.
Fraud, greed and overseas bank accounts constitute the ratholes for our economy… Money that is being spent that creates jobs is what matters!
You just pointed to what is likely the biggest single problem that nobody is talking about.
The entire business school curriculum in the U.S. and the world is built upon Friedman and the Chicago School of Economics.
That’s why the person you referred to said what they did.
Until the entire business curriculum is rebuilt, we are going to have idiots who are indoctrinated in the free-market-uber-alles crap.
I have similar questions. I know what the auto industry produces — a useful car which I can drive. My car has a market value of some $12,000 dollars. The workers who actually produced the car and its components, once received a certain percentage in wages, another percentage went to the company’s administrative overhead, and its profits to its shareholders.
What do the workers in our financial industry produce? The profits that the CEO’s make don’t come from the workers adding value to the pieces of paper that used to go from desk to desk, but now fly electronically through the Internet, perhaps never to be reduced to even hard copy.
Financial institutions take money from investors, presumably to give the investors more money back than they deposited by lending the money to others, presumably to earn interest from the loan re-payments which may flow from producing valuable goods in this country but also may come from interest on mortgages paid by wager earners.
It seems our financial institutions merely act as agents transferring the money earned by others around. If other companies aren’t producing valuable goods for sale, there is nothing to pass around.
Are banks any different than insurance companies, taking enormous profits for transferring money around without producing anything of real value?
Therefore, wouldn’t our economy be better off, not only doing away with health insurance companies to allow the government to handle the transfers, but also doing away with the financial companies and letting the government handle the investing and loans without taking the multi-million dollar bonuses off the top and otherwise consuming expensive overhead costs? The government could take deposits, invest them in businesses and mortgages, give a certain percentage back to the depositors, a certain percentage to their costs, and a certain percentage to the general tax fund.
Can anyone tell me why we are allowing parasite organizations, such as health insurance companies and financial institutions to exist?
Gosh… this is deep! My copay for a doctor’s visit under the health plan that I had was $15, which is what I paid 20 years or so ago for an office visit — the WHOLE visit.
I agree with your observations… I was at a meeting this evening in which the guest speaker stated that only 1 in 5 workers today actually produce something tangible. Stated another way, 4 of 5 workers deal strictly in knowledge. Is knowledge a tangible product?
One more observation and then I am off to bed. If interest equals the time value of money then I would suggest that it equates to the so-called multiplier effect of money. Years back, I think the estimate of the multiplier effect was something like 1.23. For every dollar spent, it created $1.23 worth of value and jobs.
My local bank is offering CDs for something like 2.75%. That would equate to a multiplier of 1.0275.
What is wrong with this picture??
Financial “intermediaries.” Same service as wholesale and retail trade industries.
I still think that the heart of this problem is not fully brought to light without including a discussion regarding how GM and GMAC ended up in the business of finance as a result of lending so people could buy cars. (and then mortgages) I continue to maintain that large scale fraud has been perpetrated on this nation by the finance industry and it is what has contributed to the demise of GM more so than big cars or a heap of other bad moves.
I would like to see you interview William K Black, writer of the book, “The Best Way To Rob A Bank Is To Own One”. He also testified before the Agriculture and Finance Committee and testified that full scale fraud is behind our current financial crises. This was part of his testimony on Oct 8th 2008.
“4. “Control fraud.” Control frauds are frauds in which the person that controls the corporation (typically, the CEO) uses its apparent legitimacy and power as a“weapon” to defraud. Accounting and securities fraud is their weapon of choice during the ongoing crises. The FBI has been warning since September 2004 that there was an “epidemic” of mortgage fraud. The FBI also reports that lenders induce 80 percent of all mortgage frauds. There has been no effective law enforcement response to the epidemic (and statutory changes and hostile court decisions have made it increasingly difficult to bring meritorious accounting fraud cases and recover appropriate damages). Accounting control frauds optimize by growing rapidly, covering up losses (e.g., by refinancing bad loans)and making the worst loans. They grow by leveraging – increasing their debt far faster than they increase their (reported) capital.1 The primary function of credit default swaps (CDS) and collateralized debt obligations was to allow banks to increase their leverage substantially. This causes bubbles to hyper-inflate.Collectively, this causes fraud losses to be disproportionately large – and hidden. The defining element of fraud is deceit. One first creates trust in the victim and then betrays it. As a result, fraud can corrode trust, and this can cripple markets long before fraud becomes endemic.”
I think that until we get to the bottom of this fraud, we cannot solve the problem. It’s true that without GM, and the jobs it provides we face catastrophe, however, right now, we are throwing money at the perpetrators of a crime. Somehow we have to separate out the finance sector from the car manufacturing. We must bring the issue of fraud to light because until we do, the behavior will continue and it won’t matter what we produce or how many jobs we save. Right now GM and GMAC are hiding behind our need to keep them alive and this is just enabling the crime. We will simply be working as slaves to pay off the perpetrators of this fraud-no matter what job or sector of society you work in.
When I asked – rather pointedly – a while ago why GM was in the business of financing, ew said that it was necessary to sell cars. I bit my tongue then, but won’t now, since you started it.
By the logic that GM can or should be in the financing business because people need to borrow money to buy cars, then the makers of just about any “durable good” can or should be financing. So everyone from Boeing to Maytag should also be banks.
And why stop there? Many people live a mile or more from their “local” grocery store. Should groceries sell cars and, therefore, also be banks?
I’m sorry, but I don’t agree with this at all. Just because you sell something that requires something else and/or probably requires you to borrow money to buy does not mean that you should be involved in those other areas. GM should never have gotten involved in financing. My local grocery should not start selling cars.
I know we’ve talked about the GM/GMAC model here at EW before, and why having a financing arm makes sense for a automaker.
The problem isn’t GM or GMAC, though GMAC does need to be cleaned out just as all other financial organizations that dealt in one way or another with mortgages and CDO’s need to.
The problem is that which Ian Welsh points to: there was inadequate regulation to prevent this from happening the first time, nor is there any attempt to keep this from happening again.
Until Glass-Stegall is revisited and Gramm-Bliley-Leach undone, it doesn’t matter if it’s GM/GMAC or NewGreenCarCo/NewGreenFinanceArmToBe. It will happen again.
Agreed, but we are still ignoring it. I don’t think it’s bad that they started a financial arm but that they were sunk when they began to engage in fraudulent and illegal behaviors in regard to the finance arm.
Until we deal with this criminal element, we are bailing water from a sinking boat.
Did you watch FRONTLINE’s special
http://www.pbs.org/wgbh/pages/…..brink.html
yes…pretty sickening…That made me feel better but even Obama didn’t mention fraud as he discussed his help for those in foreclosure. We need cram down legislation to regulate the fees.
That was the first time that I became aware of the fight for the greed that went on between Lehman Brothers CEO Fuld and Former Secretary of the Treasury Hank Paulson was with Goldman Sachs. In that Frontline Special they made it sound like they were arch rivals. Made me wonder if there was any below the surface reasons for Paulson letting Lehman Brothers die.
I mean Dick Fuld did get “punched in the face” why not Bears and Stearns, etc? Why Lehman Brothers?
http://consumerist.com/5060063…..n-the-face
…..I want all rich, greedy fat cats treated the same way. You know social justice for mostly white male fat cats
So who does at scale, and how are they managing the associated risks?
Even if we do fix it, as was largely done during FDR’s and HST’s presidencies, in another 70 or so years when we are all long since ten toes up people will once again have forgotten the lessons of history and the descendants of today’s wingnuts will emerge from under their rocks and screw it all up again. That is assuming that their hiding places were at high enough altitudes to survive the rising seawaters of global warming.
I sell precision machining tools made in Oregon to countries all around the world. Our business employs 150 people. They are paid wages which will support a family. And that’s because their skill and expertise at cutting and assembling metal components into our tools provides extraordinary added value. Better mousetrap and all of that….
The business transaction is simple to understand. We have tools that make it simpler to do repairs in the field. They save time and money. Think about driving that CAT ‘dozer into the dealer repair shop and you can see the incentive. So a foreign company gives us money and we deliver a tool. Money comes in from the foreign country and our value added work exports.
In a very simplistic form if this transaction is the majority of economic activity, we end up with a surplus of dollars at home and American products all over the world. Remember the Singer Sewing Machine.
As an added benefit, the demand for trained and capable talent drives the education and transfer of knowledge to the next generation.
And there are dollars saved at home to be used for the support and investment in projects for the common good. Say, an upgraded electrical infrastructure.
Eisenhower funded the INterstate Highway system through Bond issuance. The US had money available within the country in the form of savings to deliver to the project.
Now we have a tiny manufacturing base. We have much smaller trade of value-add product for dollars. We have much less demand for skilled wage earners. And we have no savings. With no savings, projects for the common American good go looking for capital in foreign lands.
This all creates headwinds to the successful development of American knowledge and assets as instruments to address the common good.
Wonderfully stated and succinctly put. Can you elaborate on how you see a plan looking to crrect this imbalance you have described and to take us forward?
bmaz, this looks really important and I’m grateful that you are raising it.
I’ll have to catch up on this thread later today, but here’s a start:
I can’t wait to see what bobs, randiego, JohnL and some of the others around here have to say about that.
Here’s one thin slice of my experience: trying to figure out online ’services’ and how to provide info to people in the simplest way, both in presentations and online, you have to ‘engineer’ things. You have to sit back and say, “Do I have all the right pieces? What have I missed here?”
Then, after that, you have to test, test, test — and what works on one machine (or one browser) is a bizarre, unworkable mess on another. So you have to redesign and test, test, test. All of that takes time, energy, etc.
Well, about 10 years ago, I worked briefly for a very sweet little company that produced some niche products and had a good reputation and a nice market. The engineering on one product took about 2 years; then, there was a dip in the economy — plus, the marketing/sales dept made some strategic mistakes, and then the support crew for that new product got some things wrong. Not a good situation, but if the economy had been better things would have worked out over a period of about 8 months.
Along came the money guys, to do an IPO on the company.
Mercifully, I was nowhere near those conversations but my second-hand info was that basically they were going to make about 3 times what any of us were going to make on it.
They did not have to THINK through the following:
1. Who are the customers?
1.1. What do they need?
1.2. What can they afford?
1.3. What kind of support will they need?
1.4. How do we teach them to use this thing so they master it and the support team has fewer calls?
1.5. How do we get feedback from them?
1.6. How will we track whether they’re using it/like it?
… yadda, yadda….
2. Where do we get the engineering skills, and if we have a multinational workforce, then how do we try to minimize confusions and misunderstandings?
2.1. H.R. is not my field, but just saying that it’s more art than science IMHO.
2.2. Once you have engineers (and sales people) how in hell do you keep them if someone else is going to come along offering them a sweeter deal — especially in an era where there’s very little job security, and therefore very little loyalty to a business?
– My point here is that engineers, sales reps, etc, don’t just grow on trees — not that the money guys seem able to recognize that fundamental fact. NOR do the money guys seem to have a flipping clue about the caliber of the employee pool — something that I’m willing to bet some of the coders around these parts can speak to far better than I can…
Anyway, that’s just a start.
But this is actually a really big problem in the US, as I see it.
In the 1980s and 1990s, and MBA was the golden ticket, and that has in my view completely skewed our culture — NOT in a good way!!!!!
Engineering takes time, revision, careful specs — it’s a very rigorous thought process (and not my main task in life, but I needed to pick up some of the basics to be able to do other things, so I have developed a real admiration for good engineering — Apple being kind of my personal Gold Standard).
Our political culture is flipping clueless about engineering.
The only Cabinet level person that looks like he can translate engineerese to the rest of the policymakers is Chu.
But this basic appreciation for why the process of designing, building, and testing things is really hard needs far more discussion.
(And then, even when you have a great design, you have to obtain the best quality materials… whole OTHER topic…! But money guys don’t seem to be able to connect all these key dots. They just want to turn on the computer, or turn on the ignition. They don’t appreciate how much went into making that HAPPEN!)
** and God help, failing time after time after time and having to revise, revise, revise…. 8-p
Errr.
I beg your pardon.
I have a rather weak MBA from a non-prestigous College which
I’m forever grateful…
Huge opening for manufacturing.
I saw my first vertical axis wind turbine in front of the Botanical gardens in D.C. during the inauguration Has to be new was not there a year ago
http://www.windpower.org/en/tour/design/horver.htm
vertical axis wind turbines
http://www.ecobusinesslinks.co…..rbines.htm
Manufacturers of Roof Mounted Vertical Axis Wind Generators – Free Listings
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Windterra Systems
USA Residential, farm & small business rooftop & pole mount VAWT (Vertical Axis Wind Turbines).
Aerowind Systems Ltd.
China We are specializing in the design and manufacturing of small wind turbines (both vertical-axis and horizontal-axis) for use in the most harsh working environments and extreme weather conditions.
Reno firm’s wind turbine a huge success
In a small warehouse space on Rock Boulevard, a start-up company called Mariah Power is assembling the first affordable, wind turbines small enough to fit a backyard.
Company President Mike Hess, his staff of six and temporary workers in June started selling 30 wind turbines to produce electricity for $4,995 each and plan to build 30 more in August. The parts are built in machine shops in Carson City.
Without much publicity, the company already has a backlog of 2,500 orders. The two-foot blades of Mariah’s Windspire rotate around a vertical 30-foot pole, using patented technology to maximize the energy produced.
Hess projects the company will produce 18,000 units in its first year at a retooled factory in Youngstown, Ohio, starting this winter. The expansion plans hinge on getting $7 million to $10 million in financing. “We’re on the verge of busting out,” Hess said.
Wind Power front and center at Inauguration
there is a picture of Mariah Power’s Windspire (vertical axis design at this website. It is in front of Botannical gardens in D.C.)
http://www.mariahpower.com/ima….._15_09.pdf
And if you are an enginer, god help you keeping your job at 40, and good luck having a job after you are 50. If you do, it probably isn’t engineering.
This is a good thread, Bmaz. The notion that this is just a little cyclical glitch in our economy is the kind of stuff that the repubs are pimping, with their “Just let it roll; the marketplace will take care of it…” drivel. Or, of course the idjit mantra of “Bigger tax cuts!”.
Anyone with a grain of honesty and intelligence knows that this is the result of the repubs letting some of the largest corporations in the country run hog-ass wild, plus the icing on the cake of that $2.5 billion a week disappearing down the Mesopotamian urinal, along with the concomitant cost of the OTHER cluster d’phuque.
And now we’re back to the old fight of trying to keep congress from using Social Security to cover the bailout. As Digby puts it, with laser accuracy:
“Why they want to do this, I can’t imagine. It’s a zombie theme they are very stupidly re-animating and it’s going to take precious political energy to put it back in the ground.”
Just think how hard the repubs worked to hand the keys to the SS lockbox to Wall St., and think what the result would have been, if they’d done it.
You’re worried about lack-of-confidence? Let’s watch Social Security tanking, and by God, we’ll SHOW you lack-of-confidence!
Obama shouldn’t even ATTEND a meeting where anyone, repub or democrat, is trying to put this insanity back on the table.
See? We are capable of agreement!
Gee, bmaz and tanbark are agreeing.
And, being as I agree with tanbark @ 34 as well, and bmaz throughout (and seconding his comment @35) my only question is this.
Can we just agree to agree?
(I’ve been noting an outbreak of agree-ability, today, here at FDL, on a number of threads, and find it to be most … agreeable.)
this is an excellant post, I want to make an added point;
not only is that what this country was built on, it was also built on the reality that local economy MUST be protected
“the boston tea party”, the poweder keg that began this country did not begin becuase the king “raised taxes”, it did not begin becuase there was “taxation without representation”
this country began becuase the king LOWERED taxes on imports
one of his contributors, (East India import Company ) couldn’t compete with the locals unless the tariffs were lifted, the king obliged (which would put the locals out of business) and those locals went balistic
thus a new nation was born
that’s right, this country was founded as a result LOWERING taxes and REMOVING protectionism.
the oposite priniciples of the republican party
I also want to point out that long before this land became a country there has ALWAYS been a “global economy” and using the excuse that “protectionism can’t work in a global economy” is rediculous, that’s exactly when you DO need protecitionism
a little off topic but on point I think
“local economy must be protected” this is the argument I used to have with my father (teamster) when he would repeat “buy American” back in the 60’s. I would agree that this made sense…but would argue that the fat cats were saling the American worker down the pike, tossing them over board as they left our shores for cheaper labor. My father used to go on and on about welfare recipients..my response was “you are looking the wrong way” to those at the bottom of the ladder.
I believe this is a method knowingly used to keep the hard working middle class beating down on those less fortunate…don’t look at Corporations leaving the country, the fat cats on Wall street etc. Blame those less fortunate
you make my point leen;
that was my point, we MUST have protectionism, when an industry buys labor overseas becuase they can hire children a penies on the dollar and equiptment that severs limbs and wages not high enough to put food on the table or provide health care
then that product MUST face a tariff.
that’s what protect local industry means it does not mean “buy local” it means we insist on proper working conditions for product to be imported to this country
Pertinent to the concerns in this thread is a project started by my friend Rep. David Bly of the Minnesota State House. He has started a campaign to enact a Middle Class Amendment to the U.S. Constitution. You can read about it online or purchase bulk copies of the booklet here. From a policy standpoint I believe he’s right on target. My concern is how to write amendment language that will be effective and yet not constraining when it comes to meeting unanticipated future challenges.
When at University, my sister was a Stockbroker in the City. As I was taking an engineering degree, I was intrested in industry. My sister’s stockbroker collegues said outright “we won’t invest in industry, too many labor issues.”
The financial people seem to believe they are the be all, and end all of any economy, so the attitude described here is neither new, nor a surprise.
Money for nothing and chicks for free. They both believe it and are determined to keep on going down that road. So far, the Administration financial gurus Geithner and Summers seem to be traveling the same road.
Bingo.
I wish this were in flourescent letters 20 feet high all over the Internet.
I’ve seen this dynamic several times. Really offensive IMHO.
I’m sure that there are good finance people — the people in finance that I’ve personally encountered have all worked in the public sector and can explain budgets and finance issues.
But I think they’re a different group than the brokers and the IPO guys who couldn’t make enough, fast enough in the dot com era. Total narcissists.
———————–
BayStateLibrul, didn’t mean you – nor did I mean to insult your education, nor your skills. It was more a slam at the larger political culture, of the GWBush end of the spectrum: using economic arguments as an ideology that divorces economic decisions from the rest of life. I’ve never, ever had the sense that you separate the two — I meant the larger political culture of Paulson and GWBush, where ‘bottom line’ is used as a rationale for terrible decisions and a way to ignore the external costs.
this:
Should have included this:
I’m sure that there are good finance people — the people in finance that I’ve personally encountered who I’ve been favorably impressed by, (but who also do not understand engineering) have all worked in the public sector and can explain budgets and finance issues.
In my limited, admittedly small experience ‘the money guys’ have had very inflated views of their value in the process of generating products, services, or anything other than a cut of the pie simply because they had ‘capital’.
Capital is necessary, but all the capital on the planet will not:
1. Write specs for
2. Prototype
3. Redesign
4. Build
5. Test
6. Refine
7. Produce
8. Sell
9. Support/maintain
a-n-y-t-h-i-n-g.
Capital, in and of itself, does not build a toothbrush, a popcorn popper, a hub cap, a fish tank, or a sink. Only engineering, skills, decent management, and workers do those things.
Capital is hugely overrated.
And — with due apologies to BayStateLibrul — that is partly because too many MBAs started running too many things.
You have such old fashioned ideas about economics. After all, once the money arrives with the MBAs, everything just happens now.
Didn’t you take that course?
Just shoot me…
/s
8^0
…BTW: Long time, no see your screenname — and wow, do you belong on THIS thread!!
Well, yes, I’ve been here and there, at least until recently. Being able to post at Oxdown has made FDL a bit more interesting lately.
I wish I had more of a handle on what industry is doing in the U.S. Sad fact is, I fell behind years ago, and now I’m trying to catch up. Looks like there’s less to catch up to, at least.
Hope all is well…
Let’s approach this by looking at the implicit policy implications in the stimulus package. (Unfortunately, Republicans laughed out the provision for beginning to replace the Federal fleet with energy-efficient vehicles. Guess what companies could get the contract under “Buy American” preferences?)
Back to the American Recovery and Reinvestment Act of 2009.
There are tax credits, loans, and grants for industries to develop alternative energy capabilities. Where is the equipment and components for this going to come from, if not manufacturing? Are we going to be dumb enough to put this manufacturing out to China again? The where are those “green jobs” that will pad that 3 million or so jobs created or saved going to come from?
Same for transit. Who makes buses? Who makes transit railcars? Who makes the equipment for controlling railroad switches, signals, and so on?
The same for health information technology. Who makes the handheld units that doctors and nurses are going to enter patient information into? Need they be made in China or India?
There is a lot of subsidization for rebuilding the manufacturing capability of the US in the stimulus appropriation. If that manufacturing is developed in the US, it will create manufacturing jobs.
If the Employee Free Choice Act passes, those will be union jobs.
The other part of the equation is international. Until there are harmonized international labor and environmental standards, the continued rulings of the WTO will mean a race to the bottom. The diplomatic problem is in convincing low wage countries that such standards will in fact improve the prosperity of their countries. Which it will.
Okay folks, most excellent discussion. As an update, the author above, William Holstein, will be joining us live for an extended discussion tomorrow afternoon sometime after 12pm PST/FDL time (after 3pm EST). I will further update when I know the exact time. We will be discussing all of the above, with a focus on the new products and craftsmanship that GM and American automakers are producing, both now and in the pipes for release soon, that will lead the American auto industry back to relevance and profitability in the future.
Great discussion bmaz. I am still “chewing” on the comments in the thread. Sorry I have been away. The kids have been fighting the flu.
You are doing a great job.
Considering that GM is disbanding their High Performance Vehicle Operations program, it’s probably best to take Old Yeller out back to put him out of his misery…
Y’all are way ahead of me, and I haven’t yet read the entire thread. That being said…on the issue of GM cars being not fuel efficient enough, there are kits available, I believe, that can be used to turn an old gas guzzler into a bio-diesel or electric car. Maybe GM could re-tool to make those kits, or to retro-fit their stock, making them more attractive for buyers. Or maybe the laid off GM work force could be put to work doing this. It’s not turn-around-on-a-dime stuff, but I can’t think of any good reason for GM workers (or any others) to be out of work, when there’s SO MUCH WORK TO BE DONE FIXING THIS MESS! The managers act like they have all the solutions and have to do all the work, while workers are supposed to stand around with their thumbs in their butts.
And WHAT is up with GM asking for billions more on the promise that they will be laying off tens of thousands of workers?? Shouldn’t one of the things taxpayers expect for their bailout money is that the automakers WON’T be laying off all those workers??
Well, the problem is that the representatives of “the taxpayers” i.e. Congress, has demanded the actions toward the workers.
THEY’RE LAYING OFF THE WRONG PEOPLE!!! Oops, sorry for shouting… but they SHOULD be laying off the management idiots who sank the company into this mess to begin with….
Funny how there is never one mention of the false flag war on terror bearing significant responsibility here – both as a cause (George Bush) of the economic nightmare we face, but also a solution – stop the war – the fix will follow.
I doubt it.
Isn’t part of the problem that cars have become very durable, able to last 150K mi or longer, while the makers continue to behave like everyone needs a new car? Also, automobile innovations used to have significant impacts on our lives (power steering, automatic transmission), but the traditional car (even electric) seems to have reached the limits of its usefulness a few decades ago, which is fine, and now it’s as much (or more so) an economic/finance dingus as a vehicle.
Looks like most everybody is gone, but for what it’s worth, Bmaz, I must say THANK YOU for this post! I’ve learned so much from this, from so many thoughtful and experienced people here. It’s all so interconnected, and WE are all so interconnected… This has really opened up new avenues of thought and possibility for me. Blessings…
The discussion’s over, unfortunately, but I still wanted to comment about this, to make an obvious point everyone who discusses it seems to miss:
The costs they’re referring to are obligations. The government has to pay them. In contrast, the aid that the auto companies are asking for are loans. Assuming the companies survive, those loans will be paid back. Little, if any, cost will be borne by the taxpayers in the long run.
Thus, if you look at the potential expenses over a couple of decades, it’s nothing if we successfully bail out GM and Chrysler, versus tens of billions of dollars, maybe more, if we don’t.
I’d love it if some day I saw someone besides me mention this.
P.S. All whining aside, bmaz, you make good points.
I just added Hanes wearing apparel to my boycott list.
Last night’s PBS news hour had a clip on the Hanes underwear manufacturing plant in Viet Nam. The average take-home pay for workers, mostly seamstresses, is equivalent to $80.00 per month. The minimum take-home pay per month is $50.00 (about 26 cents per hour). Work week is 6 days of 8 hours each.
The spokesman for the Vietnam factory stated the plant is “close to their fabric supply in China”.
This news segment also switched to the former Hanes factory in NC. Part of their plant buildings is now a counseling office for the unemployed. We all know that the textile industry was large in NC for about 100 years – gone to China.
As long as the corporate CEOs, managers, and shareholders tolerate the
useabuse of slave labor, there is no hope that I can see for the many in America who make up the ‘laboring class’.Fortunately I can sew and have a roomful of fabric made in America. I’ll read all labels and purchase only those made in USA. A real move to boycott Hanes could shut them down!
I’ll also send a letter to that SOB spokesman for Hanes who gave his oily justification for moving the Hanes factory to Vietnam. He and his ilk should be deported.
The Hanesbrands Inc. is the 2nd segment at http://www.pbs.org/newshour for Thursday, 02/19/2009.
Hanes is/has opened 5 new factories overseas – 2 in VietNam, 2 in Thailand, 1 in China. Hanes has closed 30 plants, putting 19,000 workers out of jobs in USA and S America.
The Hanesbrand spokesman on the program is Richard Noll, CEO of Hanesbrand, Inc.
Link to pbs newshour program on Hanesbrand Inc move to Asia
The link at bottom of my #76 produces weird flashing black box.
The first link at my #76 gets you to the program, ‘Amid Global Economic Slump, Trade Policies Carry New Clout’. Click on Livestream. The Hanes segment is the second part.
with all due respect bmaz, how you get from Ian’s…
to your comment:
… is a leap over…
* entire systemic dysfunctioning of gov institutions
* banking ineptitude, misdirected purposes, and in many cases outright fraud
* massively fraudulent investment houses… eg: the trustees of managing more or less collective accumulated $$ of everyone else’s labor… poof, up in smoke, gone.
* accounting firms & practices supporting & enabling all of the above
* media… MSM but even more impactful, financial… utterly misrepresenting practically everything along the way that got us here.
* corruption of near incomprehensible breadth:: k-street pass-through-bot approval of “laws” by bought and paid for prez/congress, handing keys of gov institutions and perverting their purposes from protecting citizens to facilitating fraud
* “shareholder” influence to produce earnings over quality product, to the extent that fraud is nearly guaranteed component to realize desired earnings (and it’s all alchemy)
* management making decisions benefiting management vs. health of the enterprise and viability of same’s product
* after initial round of GM bailout discussions late last year where “industrial policy” issues came to the forefront, they’ve now entirely slid off the radar (at least in DC), replaced by TARP, $T bailouts etc.
… bypassing all this simply as reference to “financial sector” is kind’a like referring to the ocean’s as a bit of water.
Summarizing Ian’s expressed concern: in essence, Obama has sent myriad signals belying an un-stated policy which put’s Wall Street 1st… above all else. Instead of digging out the rot which precipitated/facilitated our slide, BO has apparently chosen to “bet the bank” the same folks who stole very substantial proportions of America’s (and the world’s) wealth can/will fix the problem.
Again, with all due respect, we had the GM bailout debate… people said what they had to say, and GM got what it wanted. They’ve had huge layoffs since, closed several factories and furloughed several others, and now asking for another large round of fed $$ to get ‘em through.
Whatever one’s POV on this, sure seems evident at this point that our problems/challenges far more systemic than helping Detroit… seems obvious that, at best, guaranteeing GM’s survival is a component of US economy that will play a part in things only after a recovery begins… if such a recovery begins.
For me, it’s quite frustrating to see much of blogosphere’s Progressive best so reluctant to expand their context so that larger mechanisms of US (and really now, world) economy as a whole are considered. We (US) really don’t have functioning institutions capable of doing what’s needed to ensure that, should things start to get turned around, the same o’le players don’t stick their buckets in the cash spigots and do what they’ve done under Bush years.
Sure seems clear at this point that whether GM gets more $$ or whatever happens longterm w/them, their contribution to any kind of recovery is ancillary. The trillions spent in TARP and now BO’s programs… there’s not that much left in the well to tap. Neither program has hit any bull’s eyes, nor has (as Ian says) any of systemic (eg: “built in”) built in fraud mechanisms been uprooted.
I read comments here, people talking about universal HC and such… really folks, honest to geebeezus, we’re laying off teachers and fireman all over the US. Obama’s gon’a lower mortgage payments for millions… fine, but this all further drains those dwindling retirement funds across America that already are faultering because…
* declining wages & unemployment are dwindling contributions
* US investment producing, after inflation, negative returns
* the capitol in those funds further eroded every time one of “securities” said fund’s invested in is further devalued. EG: if value of mortgage is lowered, that money is taken out of someone’s bank account somewhere.
Who you kidding? There’s no money for federal funding/subsidizing of HC for the masses at all, not even close. If anything, unless all this other fundamental stuff get’s fixed, the more likely outcome is default on, in order:
* Medicaid
* Medicare
* Soc Sec
“Conservatives” have already started ramping up efforts to do just this, arguing “entitlements” are cause of our econ woes. And given massively mis-informed US public, selling this notion seems very doable to me. William Greider (The Nation) writes about this (although mis-stating several facts IMO), his focus on Peter G. Peterson’s efforts is accurate: I’ve heard Peterson pitch exactly what Greider suggests at UNM Law School sponsored Federalist Society events twice since last October. Listening and seeing the room full of young republicans applaud this stuff sends a chill down my spine.
Applauding and supporting unions for their own sake just isn’t enough. In this environment, we need a labor force that’s smart and educated… that understands the environment and understands what needs to be done. I am all for labor getting it’s fair share, but I would hope a good portion of that pool understands how to evaluate and choose the efficacy of endeavor(s) it is laboring to further.
As it is now, given what BO had done so far and appears committed to… he may throw a few sops to unions here and there, but he’s allowed control of everything that determine’s labor’s fate to remain in the hands of hucksters who don’t give a rip about labor whatsoever. If these fuckers find another cheap labor pool in jungles of Borneo, the won’t hesitate to ship manufacturing of their products there at expense of everything else they’ve forgone doing this exact same thing the last 8+ years.a
We need some major “change” that hasn’t yet begun. We need transformations in labor’s awareness, knowledge and purpose and an economic system that recognizes them fairly & equitably, just as it does all the rest of economic participants. This reform hasn’t begun, nor I have seen any signals there is an intent to do so.
Krugman (for 1st time that I’m aware) sort’a kind’a points to all these seemingly ignored realities… eg: the “black hole” emptiness of US economy I keep referring to, in his OpED today:
Personally, I think he’s pointing to (w/out defining) the discussion we need to be having. And by implication, the answers to questions he ask are the same as I (and many, many others in the wilderness) have been screaming for Obama to address: what is most usefull (productive) target of Fed Gov $$ to invest in? What human economic activity can our nation direct itself towards that addresses the very historically unique challenges of our time?
And just in case it needs saying bmaz, I’m not trying to pick a fight (hope you don’t think that). Just seems awful clear to me that we aren’t having meaningful discussions on what matters. The rapidity w/which economy here (US) and worldwide is failing is a cascade, and it’s all happening in rear view mirror… just as affects of BushCo’s 8 yr. crime spree is hitting the collective realities of nearly everyone’s standard of living & work opportunities.
Our cultural problem is immense. The public discussions most people rely upon (TV, local news papers) are not even close to being in a domain of accurate accounting of our realities. Our paper’s only syndicated “econ” guy is Robert Samuelson.
In recent printings of his opinions, this idiot submits arguments pro & con around Shawn Hannity’s take on causes & relevance of Japan’s “lost decade” to Obama’s challenges. Shawn fucking Hannity… world economic guru.
Or Samuelson’s summary of what got us to the brink:
So China saved to much, and we spent all that savings they loaned us w/no means to pay it back ’cause we shipped our manufacturing sector (and much more) over there for a quick buck.
This is the stuff US public gets to chew on as means to understand their $$ woes. And what has Obama had to say to correct this kind’a crap?… or to establish a factual record of how we got here to, at minimum, counterweight beyond absurd GOP memes of “fiscal responsability” representatives? Anything at all… did I miss it?
It’s really quite depressing.
Billmon has a damn well worded commentary on all this up today @ KOS:
Highly recommended read, I’d encourage all to consider his premises… IMO, Billmon’s as close to accurate summary of things as I’ve seen anywhere.