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The Fix January 15, 2010

Posted by rogerhollander in Economic Crisis, Humor.
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There recently was an article in the  St. Petersburg Fl. Times. The Business Section asked readers for ideas on:  “How Would You Fix the Economy?”

I think this guy nailed it!
 _____

Dear Mr. President,

Please find below my suggestion for fixing America’s economy.  Instead of giving billions of dollars to companies that will squander the money on lavish parties and unearned bonuses, use the following plan. You can call it the “Patriotic Retirement Plan”:

There are about 40 million people over 50 in the work force.  Pay them $1 million apiece severance for early retirement with the following stipulations:

1) They MUST retire.  Forty million job openings – Unemployment fixed.

2) They MUST buy a new American CAR.  Forty million cars ordered – Auto Industry fixed.

3) They MUST either buy a house or pay off their mortgage – Housing Crisis fixed.

It can’t get any easier than that!!

Mr. President, while you’re at it, make Congress retire on Social Security and Medicare. I’ll bet both programs would be fixed pronto!

P.S. If more money is needed, have all members in Congress pay their taxes…

If you think this would work, please forward to everyone you know.

If not, please disregard.

Obama’s War on Labor April 6, 2009

Posted by rogerhollander in Barack Obama, Economic Crisis, Labor.
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Stephen Lendman

www.opednews.com, April 6, 2009

Voters expecting change keep getting rude reminders of what kind, none they can believe in reiterated again on March 30 in Obama’s remarks to the auto giants. While stating “We cannot….must not (and) will not let (this) industry vanish,” he laid down a clear marker. Labor, not business, is targeted. More on that below.

“We (won’t) excuse poor decisions,” he said. “We cannot make the survival of our auto industry dependent on an unending flow of taxpayer dollars.” In rejecting their aid request, he added: “These companies – and this industry – must ultimately stand on their own, not as wards of the state….What we are asking is difficult. It will require hard choices by the companies. (Their plan doesn’t go) far enough to warrant the substantial new investments these companies are requesting.”

Imagine the hypocrisy – open-checkbook trillions for Wall Street criminals v. a thinly disguised war on organized labor by scolding the auto giants for not forcing their workers to make greater sacrifices.

They’re needed, said Obama. Their “best chance for success” is a “surgical” bankruptcy lasting for as little as 30 days – meaning workers will lose everything while CEOs get seven-figure compensation for betraying them.

A March 31 New York Times Michael de la Merced/Johathan Glater article suggested that Washington may seek a “controlled” bankruptcy – somewhere between “prepackaged (and) court chaos by persuading creditors to agree” to divide GM in two pieces, sort of like a good and bad bank to create a healthier company, free of its troubled assets and liabilities.

Under the plan, GM would declare a prearranged bankruptcy. Then, the bankruptcy code’s Section 363 would authorize selling off desirable assets to a new government-financed company. Details are being discussed so it looks like a done deal, either prepackaged or through a bankruptcy court, either way very worker-adverse with UAW bosses pressured to go along, take it or leave it.

The administration also decided Chrysler can’t survive alone. It was given 30 days to ally with Fiat SpA or with another automaker if that fails, even though such a deal may combine two dogs into a bigger one with even greater problems than going it on their own.

Obama drew a line in the sand for “workers who have already made painful concessions to make even more” through additional restructuring sacrifices, including:

– permanent job losses;

– lower wages;

– gutted work rules, including health and safety protection on the job;

– forfeited security through lost benefits and pensions, including for retirees, on top of everything given up in fall 2007 negotiations when the UAW leadership surrendered to management, then muscled the rank and file to go along; and

– more sacrifices the Bush $25 billion bailout demanded, unreported in the mainstream: banned GM and Chrysler strikes, meaning effectively on the big three; more wage and benefits cuts; ending the UAW’s “jobs bank” that provided help to furloughed workers and more.

It’s a dark age for US auto workers and a prelude for what’s coming – compared to earlier times when they earned substantial wages, got cost of living and productivity increases, and had impressive benefits, including medical coverage with defined extras, employer-funded pensions, improved safety and health benefits, paid vacations, and supplemental unemployment insurance guaranteeing up to 95% of pay if laid off.

Replacing them was a two-tiered wage and benefit package with new skilled hires getting little more half the previous arrangement and for a new non-core category even less.

Much more was lost as well:

– plant closures resulting in permanent job losses; for GM alone it meant 85% fewer production jobs than in 1990 over a period when high-paying manufacturing ones disappeared, offshored, or were replaced by machines;

– for new hires, an ill-conceived 401k arrangement replacing employer-paid pensions with one dollar invested in company stock for each hour worked that turned out to be worthless two years later as the companies head for bankruptcy;

– major health care concessions under a union-run VEBA (voluntary employee beneficiary association) putting UAW bosses in the healthcare business for potential big profits at the expense reduced worker benefits and companies relieved of their obligations after putting up an initially-funded amount;

– employee buyouts, early retirements and other downsizing efforts to replace high-wage workers with cheaper new ones; and

– Chrysler workers getting even less overall than their GM and Ford counterparts.

A final coup de grace is planned with disturbing implications for all workers – after decades of hard won gains. The UAW alone lost almost one million jobs from 1979 through 2007 (from 1.5 million to about 512,000). At yearend 2008, membership stood at 431,000, and tens of thousands more may now go given industry conditions and administration demands. In addition, more major concessions are coming through the back door – by a prepackaged bankruptcy or court-appointed judge to relieve Obama of responsibility.

If GM and/or Chrysler go down either way, prearrangers or the court will do the honors. The current union contract will be replaced by new demands, meaning 60 years of gains will be lost with the stroke of a pen, and no negotiations can mitigate them. It gets worse.

Whatever’s decided will be a model for all industry. The idea isn’t to end unions, just neutralize them, then leave workers out in the cold with poor wages, few if any benefits, self-funded only retirement plans if any, and other management-demanded concessions in a new dark age for labor heading it back to its earliest days when all gains gotten were hard won and few achieved until the mid-1930s under the Wagner Act.

Labor always struggled and learned the hard way that winning meant organizing, pressing their demands, taking to the streets, going on strike, holding boycotts, battling police and National Guard forces supporting management, and paying with their blood and lives to get results.

They were impressive – an eight-hour day, a living wage, generous increases, good benefits, and pensions because strong unions went head-to-head with management and won. It’s world’s different today with government in bed with business, Democrats as bad as Republicans, weak unions under corrupted bosses, millions of high-paying jobs already lost, and a global economic crisis stripping workers of all bargaining power and heading them for sweatshop serfdom under a leader even more anti-labor than his predecessor.

He appointed an auto task force (headed by Tim Geithner and Larry Summers) to be judge, jury and executioner, then let them (quietly) or a bankruptcy judge pull the switch to absolve him of responsibility, be able to declare victory, and apply the same terms across industry as every sector struggles to survive, the result of a Washington/Wall Street-created crisis.

Their scheme is to:

– crush world economies;

– recapitalize the IMF to entrap developing ones in perpetual debt bondage, neo-feudalism, a virtual dystopia;

– structurally adjust their populations to a living hell – impoverishment through “shock therapy” loss of employment, essential benefits, and democratic freedoms;

– tank financial markets;

– destroy competitors;

– use trillions of taxpayer dollars to consolidate the FIRE sector (finance, insurance and real estate);

– buy other assets on the cheap;

– toxic ones from each other, mostly with public money paying the cost and assuming the risk;

– declare war on labor; and

– force companies to downsize, then strip workers of their rights and futures.

Social Security, Medicare, and Medicaid are next to supply more funds for Wall Street, selected corporate favorites, and generous amounts for military adventurism, global imperialism, and a homeland police state apparatus to quell restive opposition when it erupts. Obama’s promised change is betrayal of the constituency that elected him. Looking ahead, things appear very grim.

Promised Hope from the Employee Free Choice Act (EFCA)

EFCA legislation was first introduced on November 21, 2003 in the 108th Congress as S. 1925 (with 37 co-sponsors) to: “amend the 1935 National Labor Relations (Wagner) Act to establish an efficient system to enable employees to form, join, or assist labor organizations, to provide for mandatory injunctions for unfair labor practices during organizing efforts, and for other purposes.” It was referred to the Health, Education, Labor, and Pensions Committee but never passed.

It was reintroduced on April 19, 2005 in the 109th Congress as HR 1696 (with 215 co-sponsors) for the same purpose. It got as far as the Employer-Employee Relations Subcommittee but not passed.

It was again introduced on March 1, 2007 in the 110th Congress as HR 800 for the same purpose. It easily passed in the House (241 – 185), then was blocked in the Senate when supporters couldn’t get the required 60 votes to end debate and bring it to a vote.

On March 10, the 111th Congress revived it for the fourth time as S. 560 (with 39 co-sponsors), again for the same purpose. It’s been read twice and referred to the Health, Education, Labor and Pensions Committee where it’s pending.

Facts about EFCA

Change to Win aims “to unite the 50 million workers whose jobs cannot be outsourced and who are vital to the global economy. (It represents) seven unions and six million workers united….to build a new movement of working people to meet the challenges of the global economy and restore the American Dream (for) a paycheck that supports a family, universal health care, a secure retirement, and the freedom to form a union to give workers a voice on the job.” It strongly backs EFCA and states:

“EFCA respects that the right to join a union is a fundamental freedom, just like freedom of speech or religion, and that employees should be able to do so without interference from management (or government).”

If enacted, it will change federal law for the better at a time worker rights are in tatters. Overall, it would be a boon for organizing with a free and fair “card check” system under which workers merely sign them in support of a union. They may do it openly or in secret, their choice free of company coercion or intimidation. If a majority do, companies must recognize it. Unlike current rules, they presumably can’t veto the decision, coerce or bribe employees to vote “no,” or fire those who do.

Current law requires good faith bargaining. But it’s eroded to near worthlessness and become a mere shadow of the landmark Wagner Act. It guaranteed workers the right:

“to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in concerted activities for the purpose of collective bargaining or other mutual aid and protection.” In other words, it leveled the playing field to let workers bargain on equal terms with management, but never easily.

From the start, its provisions were attacked, then severely restricted under the 1947 Taft-Hartley Act. In the “national interest,” it lets presidents stop strikes by court-ordered injunctions for 80 days, and it’s been done numerous times, 10 alone by Harry Truman who opposed the law but used it against labor.

It also allows stiff penalties for union violations but minimal ones for companies. It enacted a list of “unfair (union) practices prohibiting jurisdictional strikes (relating to worker job assignments), secondary boycotts (against firms doing business with others struck), wildcat strikes, sit-downs, slow-downs, mass-picketing against scabs, closed shops (in which employees must join unions), and more while legalizing employer anti-organizing interventions.

It eroded worker power that continues to this day. It’s so weak that employers can (illegally) fire union sympathizers with only minor fines if proved. They can fire workers for any reason or none at all, and, of course, offshore high-paid jobs, freely move to low-wage “right-to-work” law states that restrict organizing under Taft-Hartley, and use those threats to extract more concessions from unions, easily intimidated or coerced to go along.

The result is that union membership declined steadily from the 1950s, and since the 1970s, worker wages and benefits have eroded under rigged market-based rules against them.

EFCA aims to restore labor rights affirmed by the Supreme Court in decisions like Virginian Railway Co. v. Railway Employees (March 29, 1937) when it ruled that “employees (have) the right to organize and bargain collectively through a representative of their own selection, doing away with company interference and ‘company union.’ “

It reaffirmed the right in National Labor Relations Board v. Jones & Laughlin Steel Corporation (April 12, 1937) by ruling: “the corporation (engaged in unfair labor practices by) discriminating against members of the union with regard to hire and tenure of employment, and was coercing and intimidating its employees in order to interfere with their self-organization.”

It added that:

“Employees have as clear a right to organize and select their representatives for lawful purposes as the respondent has to organize its business and select its own officers and agents. Discrimination and coercion to prevent the free exercise of employees to self-organization and representation is a proper subject for condemnation by competent legislative authority. Long ago we stated (that) labor organizations were organized (of necessity); that a single employee was helpless in dealing with an employer; that union (representation) was essential (to resist unfair treatment and) give laborers opportunity to deal on an equality with their employer.”

We’ve come a long way from a friendly High Court. The current Roberts one is “supremely” pro-business. It’s why passing EFCA is essential even given enough congressional votes to kill it and an anti-labor president who won’t mind.

Today, over 90% of employers oppose unions with government on their side. Nearly 50% threaten to close plants or other work sites. Many coerce, threaten and/or bribe workers to be union-free, and around 30% illegally fire pro-union employees and get away with it.

Current election law mandates secret ballots one month after organizers collect enough signatures, but in the interim, companies can discourage, threaten and/or coerce employees to vote “no.” They can also deny union recognition even if 100% of them want it.

EFCA turns the tables by enforcing fair collective bargaining under the following procedure. Federal Mediation and Conciliation Service (FMCS) arbitrators get to write first contracts (for a two-year period) covering wages, benefits, and work rules. NLRB union certification will be based on “card check” majority votes. Employers must then make “every reasonable effort to conclude and sign a collective bargaining agreement” within 10 days of the union’s request. If none is reached in 90 days, either party may ask FMCS to intervene. If resolution fails after 30 days, an arbitration board “renders a decision settling the dispute” – binding for two years, unless both sides agree in writing to amend the contract.

The NLRB will be empowered to take legal action to immediately reinstate workers fired for union activity and enforce triple damages on companies.

EFCA levels the playing field by letting workers vote up or down on whether to form a union – freely by majority vote without fear of employer retribution. Overall, it’s the first pro-labor law since Wagner, if only a first step at a time their rights are greatly eroded. It’s high time Congress reinstated them, but don’t bet on it or that Obama will exert pressure to do it. Business fiercely opposes it with good reason. They’ve got it all their own way and resist change. EFCA will force it for the better at a crucial time for workers.

Stephen Lendman is a Research Associate of the Center of Research on Globalization. He lives in Chicago and can be reached at lendmanstephen@sbcglobal.net.

Also visit his blog site at sjlendman.blogspot.com and listen to The Global Research News Hour on RepublicBroadcasting.org Monday – Friday at 10AM US Central time for cutting-edge discussions with distinguished guests on world and national issues. All programs are archived for easy listening.

Even More than Race, the South Is About Exploiting Workers March 16, 2009

Posted by rogerhollander in Labor.
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By Joseph B. Atkins, Progressive Populist. Posted March 13, 2009.

The heart of Southern conservatism is the preservation of a status quo that serves elite interests.

Cheap labor. Even more than race, it’s the thread that connects all of Southern history—from the ante-bellum South of John C. Calhoun and Jefferson Davis to Tennessee’s Bob Corker, Alabama’s Richard Shelby and the other anti-union Southerners in today’s U.S. Senate.

It’s at the epicenter of a sad class divide between a desperate, poorly educated workforce and a demagogic oligarchy, and it has been a demarcation line stronger than the Mason-Dixon in separating the region from the rest of the nation.

The recent spectacle of Corker, Shelby and Mitch McConnell of Kentucky leading the GOP attack on the proposed $14 billion loan to the domestic auto industry—with 11 other Southern senators marching dutifully behind—made it crystal clear. The heart of Southern conservatism is the preservation of a status quo that serves elite interests.

Expect these same senators and their colleagues in the US House to wage a similar war in the coming months against the proposed Employee Free Choice Act authorizing so-called “card check” union elections nationwide.

“Dinosaurs,” Shelby of Alabama called General Motors, Ford, and Chrysler as he maneuvered to bolster the nonunion Mercedes-Benz, Hyundai and other foreign-owned plants in his home state by sabotaging as many as three million jobs nationwide.

Corker, a multi-millionaire who won his seat in a mud-slinging, race-tinged election in 2006, was fairly transparent in his goal to expunge what he considers the real evil in the Big Three and US industry in general: unions. When the concession-weary United Auto Workers balked at GOP demands for a near-immediate reduction in worker wages and benefits, Corker urged President Bush to force-feed wage cuts to UAW workers in any White House-sponsored bailout.

If Shelby, Corker, and McConnell figured they were helping the Japanese, German and Korean-owned plants in their home states, they were seriously misguided. The failure of the domestic auto industry would inflict a deep wound on the same supplier-dealer network that the foreign plants use. The already existing woes of the foreign-owned industry were clearly demonstrated in December when Toyota announced its decision to put on indefinite hold the opening of its $1.3 billion plant near Blue Springs in northeast Mississippi.

The Southern Republicans are full of contradictions. Downright hypocrisy might be a better description. Shelby staunchly opposes universal health care—a major factor in the Big Three’s financial troubles since they operate company plans—yet the foreign automakers he defends benefit greatly from the government-run health care programs in their countries.

These same senators gave their blessing to hundreds of millions of dollars in subsidies to the foreign automakers to open plants in their states, yet they were willing to let the US auto industry fall into bankruptcy.

In their zeal to destroy unions and their hard-fought wage-and-benefits packages, the Southern senators could not care less that workers in their home states are among the lowest paid in the nation. Ever wonder why the South remains the nation’s poorest region despite generations of seniority-laden senators and representatives in Congress?

Why weren’t these same senators protesting the high salaries in the financial sector when the Congress approved the $700 billion bailout of Wall Street? Why pick on blue-collar workers at the Big Three who last year agreed to huge concessions expected to save the companies an estimated $4 billion a year by 2010? These concessions have already helped lower union wages to non-union levels at some auto plants.

The idea of working people joining together to have a united voice across the table from management scares most Southern politicians to death. After all, they go to the same country clubs as management. When Mississippi Republican Roger Wicker warned of Democratic opponent Ronnie Musgrove’s ties to the “Big Labor Bosses” in this year’s US Senate race, he was protecting the “Big Corporate Bosses” who are his benefactors.

The South today may be more racially enlightened than ever in its history. However, it is still a society in which the ruling class—the chambers of commerce that have taken over from yesterday’s plantation owners and textile barons—uses politics to maintain control over a vast, jobs-hungry workforce. After the oligarchy lost its war for slavery—the cheapest labor of all—it secured the next best thing in Jim Crow and the indentured servitude known as sharecropping and tenant farming. It still sees cheap, pliable, docile labor as the linchpin of the Southern economy.

In 1948, when the so-called “Dixiecrats” rebelled against the national Democratic Party, Strom Thurmond of South Carolina declared war on “the radicals, subversives, and the Reds” who want to upset the Southern way of life.

Seven years later, Mississippi’s political godfather, the late US Sen. James O. Eastland, told other prominent Southern pols during a meeting at the Peabody Hotel in Memphis that the South will “fight the CIO” (Congress of Industrial Organizations) and unionism with just as much vehemence and determination as it fights racial integration.

Eastland, Thurmond and their friends lost the integration battle. Their successors are still fighting the other enemy.

 

Joseph B. Atkins is a veteran journalist, professor of journalism at the University of Mississippi and author of Covering for the Bosses: Labor and the Southern Press (University Press of Mississippi, 2008), a book that details the Southern labor movement and its treatment in the press. A version of this column appeared in the Hattiesburg (Miss.) American and the Jackson (Miss.) Clarion-Ledger.

Why You Can’t Buy a New Car Online February 13, 2009

Posted by rogerhollander in Economic Crisis, Environment.
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By Stephanie Mencimer, MotherJones.com. Posted February 13, 2009.

Blame two Republican presidents and the influential car-dealer lobby who worked hard to ensure that this will never happen.

Americans can buy virtually anything over the Internet these days — sex, booze, houses — everything, that is, but a new car. If you want to buy a new Ford Fusion, you have to go down to your local dealership and haggle with the car salesmen, an unpleasant and daunting task. The process usually subjects consumers to hours in the dealership hotbox and can add hundreds, if not thousands, of dollars to the price of the car. Wouldn’t it be nice if you could cut out the middleman and just order your Prius straight from Toyota?

But you can’t. And there’s one reason why: the car-dealer lobby, which has worked hard to ensure that this will never happen. Since the late 1990s, car dealers have used their considerable political clout to pass or better enforce state franchise laws that in many cases make it a criminal offense for an auto manufacturer to sell a new car to anyone but a state-licensed car dealer. The laws governing who can sell new cars are among the most anti-competitive of any domestic industry. By creating local monopolies for dealerships and prohibiting online sales for new cars, they constitute a major restraint on interstate commerce; in 2001, the Consumer Federation of America estimated [pdf] that the laws added at least $1,500 to the price of every new car.

These parochial state laws also make the distribution system for new cars incredibly inefficient and expensive, one factor in the financial problems facing the Big Three in Detroit. Online sales would help companies like GM and Chrysler align production to sales better by allowing more people to buy their cars built-to-order from the factory, rather than having Detroit send out truckloads of vehicles to sit around on dealer lots for months in the hopes that a rebate offer will finally entice someone to buy them.

Now that the federal government is bailing out GM and Chrysler to the tune of $13.4 billion, and Congress is demanding major changes in the way they’re run, consumer advocates think the time is ripe for Congress to clear the way for online sales as part of its effort to move Detroit out of the Stone Age. You’d think they would find a sympathetic ear among deregulatory Republicans who take great umbrage over any state interference with the free market, but you’d be wrong. Most free-market Republicans have no interest in taking on the car dealers, who are among their strongest local supporters. Since 1990, American car dealers have given more than $66 million to federal candidates, with more than three-quarters going to Republicans.

For decades, Republican governors have been some of the dealers’ biggest champions and have signed much of the legislation creating their bulwark against real competition. California legislator Mark Leno discovered just how entrenched these roadblocks are in 2005, when he introduced legislation to let consumers buy hybrid and other low-emission vehicles directly from manufacturers online. The bill came in response to evidence that local dealerships were price-gouging consumers seeking hybrids, which were then in short supply. Environmentalists believed the savings consumers were likely to get by purchasing online would spur more sales for the cleaner cars and encourage automakers to produce more of them.

The bill would have allowed people to order their Priuses online and have the manufacturer deliver them to their doors — or, alternately, they could pick them up at Costco or the local dealership. The bill would have even allowed people to buy the cars on eBay or Amazon. Leno’s office estimated that the bill would have little impact on the dealerships, because hybrids accounted for less than 1 percent of all new car sales. But he underestimated the power of the dealers, who were the reason legislation was needed in the first place.

Back in 1973, then-California governor Ronald Reagan signed a law that effectively prohibited any new car dealerships from opening within a 10-mile radius of another existing dealership selling the same make of car. The law was a gift to one of Reagan’s “kitchen cabinet” members, Holmes P. Tuttle, and decades later would have made it difficult for hybrid manufacturers to create pickup facilities (which required dealer licenses) for cars ordered online.

Tuttle had famously sold a car to Reagan when he was an out-of-work actor. Tuttle went on to create one of the nation’s largest car dealerships and helped fund Reagan’s first run for governor. Reagan repaid him by signing the dealer franchise law. “A statutorily created monopoly was signed into law by Reagan to help his friend Mr. Tuttle,” says Leno. He says Tuttle had been pushing for a law that prohibited the establishment of any new dealership without the majority support of the dealerships in that part of the state. Instead, he got the 10-mile exclusionary zone. Leno notes that the law was vigorously opposed by California state senator George Moscone, who was later assassinated, along with Harvey Milk, when he was mayor of San Francisco. Moscone labeled the bill “the turkey of the year,” and issued a prescient statement observing that the bill would “freeze, for all time, the ability of new car dealers to make money without worrying about competition…How in the name of free enterprise could the governor even consider signing a bill that shuts off any future competition?”

Moscone’s objections fell on deaf ears. Today, Tuttle’s son Robert, who still owns the family auto chain, is the outgoiong US ambassador to the UK, an indication of just how strong the political clout of the car dealers — and the Tuttle clan — remains. Needless to say, Leno’s bill to amend the franchise law never even made it out of a Democrat-controlled policy committee.

His experience isn’t unusual. In the late 1990s and early 2000, the auto manufacturers themselves, sensing the potential of the Internet, attempted to challenge state franchise laws that restricted their ability to sell over the Internet. They got clobbered, and in no small part because of Republican governors, who, like Reagan, counted local car dealers as political supporters.

In 1999, as governor of Texas, George W. Bush signed what was then the nation’s toughest law in the country banning new car sales online. Egged on by local car dealerships, state regulators invoked the law to help shut down Ford’s fledgling attempt to sell used cars online. Ford had started letting people buy used cars on its website; local dealerships delivered them. But Texas regulators cracked down, threatening Ford with $10,000 daily fines for allegedly violating a state law banning manufacturers from selling their products directly to the public. Ford tried to fight back in court, arguing that the state franchise law was a restraint on interstate commerce, but the court was no more sympathetic than the governor. The federal judge hearing the case wrote that if Ford were allowed to sell cars online, “all state regulatory schemes would be nullified” as they “fall before the mighty altar of the Internet.” Texas regulators, never known for regulating much of anything, also forced GM to abandon its foray into e-commerce. The automaker had bought a handful of dealerships in the state to use as distributors for cars bought online, but regulators refused to give GM a dealer license. GM gave up and sold off the dealerships.

Texas inspired car dealers in other states to seek similar protections from competition. Arizona, for instance, passed a law that not only blocked manufacturers from selling cars online but also restricted manufacturers from offering other services online, such as financing. Other states followed suit, as car dealers feared predictions that only half of them would survive the next seven years thanks to competition from the Internet. Since then, the manufacturers have largely given up the fight.

“We have a very good relationship with our dealerships,” says Charles Territo, a spokesman for the Alliance of Automobile Manufacturers, which represents 11 manufacturers, including the Big Three. “The dealers are the faces of the manufacturer.” Territo says that after their experience trying to change state laws in the 1990s, the manufacturers have no interest in picking a battle with the dealerships over online sales, which he considers unworkable anyway.

“What about sales tax?” he demands, suggesting that if people start buying cars over the Web, local governments would be deprived of revenue that supports their communities. He says that in California, fully 25 percent of state tax revenue comes from vehicle sales. Even if people could buy new cars online, he says, the nature of the sales means that the “dealer would still need to be part of the equation,” either because they would need to service the cars or arrange delivery of them.

Territo says that the lack of Internet sales is the least of the problems for the automakers right now, when the credit markets have made it virtually impossible for many consumers to buy new cars. “It doesn’t matter whether you buy it on the Internet or on a street corner — if you can’t get credit, you’re not going to be able to buy that car,” he says.

Territo’s argument mirrors that of the car dealers. Jack Fitzgerald, the owner of a chain of dealerships in Maryland who’s known as an honest broker among consumer advocates, calls online new car sales “a pipe dream.” From his perspective, the state franchise laws that prevent manufacturers from selling their own products “are what little protection dealers have against the abuses of the manufacturers,” which have a long history of beating up on both their own employees and their dealerships, which the companies force to assume much of the risk of the sales business, he says.

Fitzgerald suspects that if the manufacturers could sell new cars directly over the Internet, consumers would actually pay more for them than they do now. Right now, he says, dealerships actually pay about $2,500 more for a car from the manufacturer than they sell it for. Dealerships make their money elsewhere — on repairs and servicing, financing, and other products. Fitzgerald says that the manufacturers haven’t sold cars directly to the public in 75 years, since the days when you could buy a car at Sears. Those sales didn’t work out, he insists, because someone still has to service the car, and that’s usually the dealership.

Jack Gillis, the Consumer Federation’s executive director, says allowing online new car sales wouldn’t necessarily remove dealerships from the equation. It would just introduce more competition into the marketplace and reduce some of the inefficiencies in the distribution system. If Ford or GM could sell cars through Amazon or eBay, for instance, the dealerships could still handle the deliveries and warranty work. Indeed, Fitzgerald concedes that under such an arrangement, he might actually make more money than he does now.

“It’s unfortunate that the car companies have capitulated to the desires of the dealers,” says Gillis, noting that allowing online buying might actually stimulate sales. “The loser there, first and foremost, is the consumer, but ironically, so is the industry,” he says. “People would flock to the Internet.”

Crippling the Auto Union Is Just a Warm-Up December 17, 2008

Posted by rogerhollander in Labor.
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www.truthdig.com

Dec 15, 2008

By Marie Cocco

I must admit that when the danger of a global financial implosion became apparent in March with the taxpayer-backed takeover of Bear Stearns by banking giant JPMorgan Chase, I did not understand how all those worthless Wall Street credit swaps really could be the fault of an overpaid union welder at an auto plant somewhere in Michigan.

Heck. Despite having once listened as Republican leader Tom DeLay gave a House speech blaming the 1999 Columbine High School shootings on mothers who use birth control and the teaching of evolution in schools, I still underestimate the peculiar genius that conservative Republicans show in exploiting dire, even tragic, situations to wield a partisan cudgel.

Senate Republicans’ effort to break the United Auto Workers union as the pound of flesh they wanted in exchange for loans to teetering automakers—companies that are on the brink because of a credit crisis they did not cause—was over the top, even drawing objections from the Bush White House. The administration is now rushing to find money for Detroit somewhere in the huge pot of financial-industry bailouts, lest the automakers go down and take what’s left of the economy with them.

Understand that the conservative assault on the UAW is just a warm-up act.

The main event for these contemporary Pinkertons will come after Barack Obama is sworn in as president and Democrats seek to pass a measure that would make it easier for workers to organize unions. It is the Employee Free Choice Act, and its intent is to push back—at least a bit—on the multimillion-dollar union-busting business that has become institutionalized since the political assault on labor was juiced up with President Ronald Reagan’s 1981 mass firing of air traffic controllers. When Reagan supplanted the striking controllers with “replacement workers” (previously known as strikebreakers or scabs), business got the message: It was perfectly acceptable, if not advantageous, to bust unions or to keep them from being organized. From there, it was a small step toward the widespread use of unethical, and sometimes illegal, tactics.

“When it comes to workers’ right to form unions, loophole-ridden laws, paralyzing delays and feeble enforcement have created a culture of impunity in many areas of U.S. labor law and practice,” according to a 2005 report by Human Rights Watch. In the 1950s, a few hundred workers each year suffered reprisals for union organizing. By the early part of this decade, according to the report, about 20,000 workers a year suffered a reprisal serious enough for the National Labor Relations Board to order back pay or take other steps.

Academic research has demonstrated that much of the illicit anti-union activity is conducted after employees have signed cards indicating they want a union, but before a formal election is held. This is what the “free choice act” aims to eliminate: a waiting period during which three-quarters of companies hire consultants to thwart the organizing drive and engage in a variety of pressure tactics to keep employees from ultimately voting “yes.” About half of companies threaten to close the plant if the union wins the election, according to research by Kate Bronfenbrenner of Cornell University.

No wonder then that in a memo from which the author’s name was removed—but which is believed to have been circulated among Republicans last week during the auto industry imbroglio—lawmakers were told, “This is the Democrats’ first opportunity to pay off organized labor after the election. This is a precursor to card check and other items. … Republicans should stand firm and take their first shot against organized labor, instead of taking their first blow from it.”

But the blows of this economy have been harshest on average workers. Before the current recession began, paychecks still had not recovered from the 2001 recession. Wages and benefits have been eroding. One way to stanch the trend is to tip the scale—now tilted so heavily in favor of Wall Street and wealth—back the other way. Otherwise, when the economy recovers, the fruits will again trickle up to the executive suite.

“If workers are going to benefit from this recovery, they are going to have to have the ability to bargain for higher wages and higher benefits. We can’t depend on employers on their own to deliver the benefits of this recovery to workers,” says Bill Samuel, legislative director of the AFL-CIO. “We have to change the equation here.”

That is the kind of change conservatives just don’t believe in.

Marie Cocco’s e-mail address is mariecocco(at)washpost.com.

© 2008, Washington Post Writers Group

Bailout backlash December 17, 2008

Posted by rogerhollander in Economic Crisis.
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Posted: 12/16/08 05:17 PM [ET]

 

Americans have begun an angry backlash against bailouts that could become a national revolt in 2009.

The Federal Reserve has cut interest rates by some 500 basis points. Government agencies have poured close to $8 trillion into banking bailouts. The Treasury secretary has promoted massive government support of troubled, failed and corrupted institutions.

This program is a 100 percent top-down exercise involving the largest amount of money in history.

Virtually none of this money directly helps average Americans. Virtually none of it trickles down to the people who suffer the most and pay for the program.

After $8 trillion we are still debating whether any money should be used to directly help average Americans.

The Fed has cut rates dramatically. It is shameful that after all of these rate cuts and all of these bailouts, banks continue raising credit card interest rates, lowering credit lines, refusing to lend to creditworthy businesses and allowing the Grapes of Wrath-like foreclosure crisis to continue with minimal effort to address it.

The banks don’t trust the banks. The banks don’t trust their customers. Business does not trust the banks or the government. Taxpayers don’t trust anyone.

The only trust is from the Fed and the Treasury Department that transfer huge sums of money to the large institutions that caused the problem, often in secret, often involving complicated financial derivatives that neither Congress nor many CEOs understand, based on trust that these institutions will use this money wisely, which often they have not.

The Securities and Exchange Commission is discredited. The Federal Reserve has failed in its duty as banking regulator. Congress has failed in its duty of oversight. The most wise and citizen-friendly regulator, Sheila Bair of the Federal Deposit Insurance Corporation, is treated with contempt by the Treasury secretary.

The public backlash is only beginning. It will rise with every new scandal and Ponzi scheme and every new increase in credit card rates. It has already infected good judgment in the auto case, where major support is needed, tied to major plans for industry renewal.

I do not oppose bailouts, I oppose bailouts managed with banana-republic standards of secrecy and incompetence in which recipients of massive taxpayer largesse work against those who pay for this largesse.

Today the Federal Reserve Board refuses to disclose information regarding some $2 trillion provided to financial institutions. Bloomberg business news has filed a historic freedom-of-information case seeking disclosure. Congress and the president-elect should support it.

Bailout money is not a private account that belongs to Fed Chairman Ben Bernanke, Fed governors, the Treasury secretary or the banks. It is the people’s money. It should be used to benefit the people. It should be monitored through the checks and balances of the democratic process.

Secrecy is the enemy of equity, integrity and common sense. Secrecy is the friend of negligence, misjudgment and corruption. There are probably selected instances where the Fed should not disclose, but show me $2 trillion of secretly spent money and I will show you trouble.

In the coming days I will be writing about the Bloomberg case and offering specific bailout proposals on The Hill’s Pundits Blog. The backlash is coming. Time is short. The dangers are extreme.

America needs new thinking and an informed national consensus — and we need it now.

Budowsky was an aide to former Sen. Lloyd Bentsen and Bill Alexander, then chief deputy majority whip of the House. He holds an LL.M. degree in international financial law from the London School of Economics. He can be reached at brentbbi@webtv.net This email address is being protected from spam bots, you need Javascript enabled to view it and read on The Hill’s Pundits Blog.

Unions Aren’t the Problem December 9, 2008

Posted by rogerhollander in Economic Crisis, Labor.
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Posted on Dec 9, 2008

www.truthdig.com

By Marie Cocco

As Congress and the White House lurch toward possible approval of a loan package for the crippled auto industry, we are undoubtedly in store for more union-bashing. Note well that we did not hear any such tirades when vastly larger sums of taxpayer money—with fewer strings attached—were lavished upon the banks and financial industry wizards who created the credit crisis. 

Put aside for a moment the misinformation and outright untruths that characterize conservative attacks on the autoworkers’ unions. No one should be allowed to cast blame on workers who want nothing more than to maintain a middle-class life.

Unions aren’t the problem. They are the solution.

Creating a viable middle class has been the goal of organized labor since labor first became organized. And it is this goal that was abandoned outright by American political and business leaders as they did all they could over the past three decades to encourage a relentless race to the bottom in wages and benefits.

Strip away the financial mumbo jumbo and the credit crisis comes down to this: For decades, as wages and benefits for working and middle-class people stagnated or fell, the only way for them to purchase the goods that make the economy hum was through credit. This was true whether the item purchased was a home, a car—or all the unnecessary gizmos that retailers have been more than happy to tell consumers were the must-haves of the day. Until we understand that we are in the midst of two crises—one the short-term credit crisis and one the longer-term crisis in the failure to pay workers what they need to sustain themselves—we are doomed to repeat this horror.

“If you are a man with only a high school education … your chances of making a wage or salary as good as what your father was making in the late 1970s are not good,” says Gary Gerstle, a Vanderbilt University historian. “We are looking at a deterioration in their life opportunities and living standards, at the same time that an enormous amount of wealth has accumulated at the top of the income ladder.”

It is true that some individuals were reckless in taking on debt. But it is equally valid that American workers simply haven’t been paid what it takes for them to spend enough to keep the American economy growing. “The economy needed levels of expenditure and consumption that most Americans literally could not afford,” Gerstle says.

What do unions have to do with this? To start with, unionized workers make about $200 more per week than do nonunion workers, according to the Bureau of Labor Statistics. The great expansion of the American middle class and an unprecedented rise in living standards occurred between the end of World War II and the 1970s—when unions were far more common and powerful than they are today. Beginning in the 1980s, an ideology of deregulation and anti-unionism took hold, with free-market capitalists arguing that no intervention in the markets—including labor’s intervention—was ever beneficial.

“The promise of deregulation was that this would create so much energy and dynamism at the top that it would all trickle down,” Gerstle says. “Not only would people on Wall Street make all kinds of money, but people on Main Street would find that there would be more dynamism in their lives, more opportunity, more wages.”

Well, people on Wall Street did make all kinds of money. People on Main Street got depressed wages, the demise of guaranteed pensions and 401(k)s that crashed with the stock market. They got health insurance that is barely affordable, if they’ve got insurance at all.

We are engulfed by an economic morass that holds the prospect of being the deepest and broadest downturn of the post-World War II era. It is no coincidence that the percentage of private-sector workers in unions—about 7 percent—is roughly the same as what it was before the Great Depression. Historically, Gerstle says, social movements have needed direct and often unsettling action to capture the public’s imagination and take hold.

This is why we can only hope that events such as the unfolding peaceful occupation of a Chicago window factory by its newly laid-off workers is the start of something much, much bigger. 

Marie Cocco’s e-mail address is mariecocco(at)washpost.com.

Poll: 61% Oppose Auto Bailout December 4, 2008

Posted by rogerhollander in Economic Crisis.
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Survey shows that Americans think federal aid for the Big Three is unfair and won’t help the economy.

By Ben Rooney, CNNMoney.com staff writer


 

Map
Auto workers by state
More than 2 million workers in every state – including Alaska and Hawaii – draw their pay from the auto industry. »»

NEW YORK (CNNMoney.com) — A majority of Americans oppose a bailout of the troubled U.S. auto industry, according to a poll released Wednesday.

The CNN/Opinion Research Corp. poll, conducted by telephone on Dec. 1-2 with nearly 1,100 people, showed that 61% of those surveyed oppose government assistance for the major U.S. automakers.

The poll comes at a critical time for the American auto industry. Ford Motor (F, Fortune 500), General Motors (GM, Fortune 500) and Chrysler LLC are requesting up to $34 billion in emergency loans from the government amid the weakest auto sales in 25 years and persistently tight credit.

General Motors and Chrysler, burning through billions of dollars in cash, are the most imperiled. All three companies submitted plans to Congress on Tuesday that made their case for funding, and industry executives are set to testify Thursday and Friday as lawmakers debate whether to take emergency action.

But Wednesday’s poll suggests that Americans believe bailing out the Big Three is a bad idea.

A full 70% of respondents indicated that a bailout is unfair to taxpayers.

In addition to being unfair, the poll showed that a majority of those surveyed think a bailout would not help the economy.

Sandeep Dahiya, a professor of finance at Georgetown University, said the poll results were “quite surprising.” The large percentage of those opposed to the bailout “tells you much about how what is good for GM is not good for America.”

But the disapproval reflected in the poll may not result in the kind of public backlash that occurred in response to the $700 billion bailout package Congress passed in October, Dahiya said.

“The numbers are a lot smaller and there’s more apathy,” in the public following a string of other bailouts in recent months, Dahiya said. Still, public resentment is “festering” and an auto industry bailout is “not going to be an easy sell,” he added.

Despite being opposed to federal support of the industry, the possibility of a bankruptcy among one or more of the Big Three automakers is a concern for a significant number of poll respondents.

While only 15% of those polled think a bankruptcy in the auto industry would have an immediate impact on their families, 43% think a bankruptcy would eventually have an effect on them.

Dahiya pointed out that a bankruptcy does not necessarily mean an automaker will stop making cars. “Ideally, a bankruptcy leads to a fresh start,” he said.

The margin of error for the poll is plus or minus 3%. To top of page

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