The progressive weekly, The Nation, has some articles on the bailout and Detroit that are worth reading.
In the Dec. 8, 2008 issue (at 11), Alexander Cockburn suggests the administration should just "Nail that Double Standard to the Mast." Bankers have gotten a great deal from the "TARP" bailout program--Wall Street, after all, is close to K Street and close to the heart of all those folks on Capitol Hill, especially Bernanke and Paulson. Financial institutions generally come under the rubric of "bailoutable", as Treasury considers extending the TARP program to cover the big insurers that are buying up ailing S&L's so as to qualify for TARP's seemingly bottomless bucket of dough-for-almost nothing. But Cockburn notes, "Whenever the issue is one of giving money to big industrial corporations employing real, live workers, particularly workers in labor unions, the commentariat hauls up the Double Standard and nails it to the top mast...." So the McLaughlin Group, making "at least $200,000 a year[,] deplored the unconsciounable wages of line workers in Detroit." The Wall Street Journal is content letting "law of the capitalist jungle" rule to allow workers and farmers in Latin America to fall to bankruptcy or suicide but the bankers must be saved--TARP can't "be a honey pot for any industry running short of cash." Cockburn thinks, as I do, that the reason the Wall Street Journal and others support bailouts for the big banks and not for the auto industry is basically support for billionaires and antagonism to people with union cards. Finance capital wants all of the TARP funds, Cockburn notes, but a little bit of that money could do a good deal towards helping ordinary Americans--$25 billion to the FDIC to help mortgage holders and $25 billion (now about $31 billion) to the automakers to keep them in business and save 5% of the American workforce. Cockburn's warning line to Obama and the incoming administration--"A government seeking a sane manufacturing policy, a sane housing program and a well-considered strategy for investment and recovery cannot hope to move in this direction with Wall street financiers in the control room." Take heed, Obama, and make sure Geithner, Summers and the rest of your economic team also take heed.
Marissa Colon-Margolies has another take on the GM bailout in the December 15th issue of the magazine (at 20). Bankruptcy is risky, she notes, in the current credit climate. It would likely deteriorate into a chapter 7 bankruptcy--total liquidation of the US auto industry. So a bailout is "the most viable solution", but one that should be undertaken only with a commitment to "systematic reform" informed by insights from academe. (Sounds like one of my prior postings on this issue.) Nelson Lichtenstein, at the University of California at Santa Barbara has called for bailout of the automatkers as part of a larger economic recovery plan that includes a jobs program, infrastructure projects, universal healthcare (which would go a long way to "alleviating headaches" for domestic manufacturing) and a seat on the board for the public sector, moratorium on golden parachutes, agreements on fuel efficiency standards, and oversight to prevent use of funds to prop up shareholders or allow bond brokers to cash in. Gary Chaison at Clark University considers there to be clearly a current of "thinly cloaked antiworker narrative" in the debate over the auto bailout, with unionized workers being blamed for the problems. Fact is, though, that the GM workers have already taken significant concessions--saving GM $500 million in labor costs since the signing of the 2007 agreement and $4 billion annually beginning in 2010.
The corporatist agenda, I would argue, wants CEOs to get the high pay that they are deemed to need to entice them to undertake the grueling work of commanding a major corporation, while workers on the line are supposed to be content with the crumbs--deteriorating retirement security, limited health benefits, and falling salaries that are pittances compared to the millions CEOs are presumed to merit. If anybody doubts the anti-worker agenda, just look at Bush's last-minute executive order banning collective bargaining for 8500 federal employees who currently have collective bargaining agreements with the federal government.
Colon-Margolies points out another interesting paradox about GM in particular. This is worth excerpting directly.
GMAC, GM's auto loan company, is the parent company of the nation's fifth-largest mortgage lender, Residential Capital, which is teetering on the brink of collapse under the weight of toxic assets and plummeting revenue because of the crippled housing market. ResCap lost $1.9 billion last quarter alone, putting significant strain on GM, which owns 49% of GMAC. The flailing GMAC--majority owned by Cerberus Capital management, John Snow [Bush's one-time Treasury Secretary] and Dan Quayle's [Father Bush's VP's] privte equity firm--has recently applied for bank holding company status. Becoming a bank holding company would provide much needed oversight and transparency, but GMAC must also be compelled to reform. The loan company markets a high-risk investment to GM employees called Demand Notes. These offer check-writing privileges and a 5.25 percent return... GM workers have $3.9 billion sunk into these...; should GMAC go down, they stand to lose retirement funds, college savings, the works. This dangerous arrangement deserves careful attention. As Robert Scott, an economist at the Economic Policy Institute, put it, "We cannot have another Enron.""
As quid pro quo for the bailout, the government could ensure that research and development moves us into a "green car" age. Colin-Margolies mentions the work already being done on this by engineers in Detroit and the technologies that could be supported to expedite this process while creating jobs in related industries. Mass productiof of lithium-battery charged cars like the GM Chevy Volt "could entail opening factories on US soil [and the] battery could become a niche product for the United States." in other words, a bailout for the auto industry could potentially do double duty by "reindustrializing" the country and "generating well-paid jobs for American workers while moving domestic industry away from its reliance on fossil fuels."
And, online, there's Jane Hamsher's, Forget GM's Plan. Where's the Government's Plan?, Nov. 26, 2008. Here's how it starts off:
When Harry Reid and Nancy Pelosi sent the Detroit automakers away and told them to come up with a plan, it made me want to put my head through a wall. Not because the automakers didn't need one, but because they're operating in a black box unless and until the government comes up with their plan.
Then she goes on to quote Jeffrey Leonard's piece:
Like it or not, a major reason that American automakers have built the cars that they've built for the domestic market is that they've had to contend with highly misleading long-term market signals based on cheap gas.
And, she adds:
We can sit around and wax rhapsodic about highways covered in green cars, but until the government adopts policy that creates demand for them, there is no evidence that anyone will buy them. ... [So] You can ask them to be profitable, or you can ask them to be energy efficient. If the government wants them to be both, they have to create the market conditions for that to happen.