Trade War vs. Culture War

A comment on Senator Fritz Hollings article in the Huffington Post, "Can we sustain?":

Bravo, Senator Hollings. I wish the President would impose that 10% tariff as Nixon did.

But with a feckless and cowardly Democratic Congress failing every time to get his back, I think there's little chance the President will succeed with any intelligent measures to combat the relentless offshoring of our prosperity and economic future. Too many greed-motivated bankers, and their Republican toadies, stand to benefit from it. Ever since President Reagan ran up record deficits and began the sell off of manufacturing jobs, we've been on this path toward impoverishment of the middle class, and concentration of wealth.

And still Republicans manage to align voters in their favor with division and distraction, while picking the pockets of wage earners and handing the ill-gotten gains over to the capitalized rich (as tax cuts). Middle class and poor Republican voters are being done to, but good, and Democrats still can't figure out how to tell that story. Trade wars just can't compete with culture wars in the minds of an intellectually lazy and ill-informed electorate.

Republicans and the Deficit Reduction Tragedy

     Since President Reagan's days, Republicans have capitalized on the disasters they've created, and our national debt disaster will be no different. Reagan laid the groundwork for our collective bankruptcy with his "starve the beast" tax cuts, and leveraged-buyout, manufacturing job off-shoring, pro-sweatshop, tariff cutting, import-everything, union-breaking, pseudo-free-trade initiatives. Through these means, Reagan managed to blithely foster the sell off of our proud, thriving industrial base that was built with the blood, sweat, and tears of union labor. These venal initiative enriched bankers a hundred times over, but shattered unions, wage-growth, and future prospects for the middle-class. This was trickle down economics.
     Now, Republicans will trot out the same old, tired war horses: more tax cuts for the capitalized rich, and more off-shoring of the anemic remains of our manufacturing infrastructure (private equity funds, anyone?), while singing the praises of a free-market economy that never existed, and the virtues of free-trade that depends on the silent complicity of overseas, penny-a-day, wage-slaves working amidst environmental degradation that recklessly afflicts the entire planet with deadly toxins.
     As long as Republican campaign contributors can make a quick buck in the sell out of our hard won middle-class avenues of prosperity -- manufacturing jobs and fair home mortgages; and as long as bought and paid for Republican politicians can secure the promise of bonus-padded sinecures when they bail out of politics, it's all good to them. They'll be safe in their gated communities, right?

Bread & Circus

First thing I see while sipping my home made 20cent cappuccino this morning? This: "Banks Prepare for Bigger Bonuses, and Public’s Wrath." Well, well. Prepared for wrath, are they? Their car service bundles them to and from the office in Hummers, now, so they can run down any protesting riffraff? They've converted unused bedroom number four in their Park Avenue triplex into a food pantry stocked with beluga caviar, triple-creme brie, english biscuits, and Moet et Chandon.

Nobody earns $600,000 dollars a year (average Goldman-Sachs payout), much less $68 million. They steal it. There's no other explanation. It's just a question of not getting caught. Yet. These folks are a state sanctioned mob, a government sponsored Cosa Nostra, and one day the riffraff will wise up just like they did in France back in 1789.

Picture a very talented carpenter who does quite well -- he earns $60,000. How is it conceivable that the average trader at Goldman works ten times as hard -- much less more than 1000 times as hard like Mr. Blankfein does -- without ever creating anything tangible?

“There is nothing I’ve seen that gives me the slightest feeling that these people have learned anything from the crisis,” Mr. Reed said. “They just don’t get it. They are off in a different world.”

And that's from a from Mr. Reed, a founder of Citigroup.

These folks pick our pockets, leaving our country a battered, impoverished wasteland. One day we'll figure out (remember?) that to create real wealth, you have to create something real, or directly facilitate the creation of something real, and then export it (see industrial revolution, China, India, S. Korea, or -- feeling optimistic -- renewable energy technology). For now, it's bread and circus.

Free trade's a tough sell even to the WTO

An article in the WSJ, "Blame Goes Global at WTO
Officials at Trade Talks Say Fears of Lost Jobs and Political Fallout Block Progress," by JOHN W. MILLER, describes foot dragging on free trade at the current WTO meeting in Geneva.

In all countries, "people are afraid" of another trade deal, says U.S. Trade Representative Ron Kirk. "Trade has provided a way for people to have fresh produce, cheap T-shirts, available electronics, but the pain of trade is very real."

Yeah, I don't see much evidence of the benefits of free trade in the U.S.

Low inflation? (Inflation can be controlled without running a huge trade deficit.) Cheap consumer goods? (And dubious quality; and diminished consumer income and job security) Fewer wars? (Not much evidence of that.)

I'd really like to see a convincing defense of free trade as it relates to the U.S. economy. Not just the same old hollow tropes that get trotted out about an evolving, white-collar trending economy, but a real defense.

I doubt it exists. But so many economists seem to have a desperate stake in the empty notion of free trade. I say, until someone comes up with convincing argument for selling out our industrial base (and engineering know how, and labor rights), let's go back to mercantilism. At least the benefits, along with the faults, are clear.

Give the Big Three A Break

Give the Big Three A Break

I happen to have the good fortune of being a homeowner in the Detroit suburbs and former employee of an automotive supplier. I quit that job four years ago disgusted by the hyper-conservative (by conservative I mean eager to preserve the status quo, not necessarily politically conservative), hyper-cautious, cowardly decision-making practices that inevitably prevail (I managed a small electronics engineering group). Automakers always want to stick with whatever makes money today, and never want to take a chance on what might be profitable tomorrow. And they are relentlessly (mindlessly?) focused on cutting production costs at the expense of investing in innovation. I had smart, hard-working engineers in my group who were eager to attack tough problems. But they hardly ever got the chance because my bosses just wanted to wring every dollar they could out of the products we already had and offer nothing new even when our customers (Ford, GM, Chrysler, Audi, VW, etc.) specifically asked for it. We perpetually tried to re-sell the customer a product that wasn't up to the customer's demands by repackaging and "repositioning" it -- that is telling the customer the product was something it wasn't. So we spent a lot of time tweaking superficial details instead of getting in front of the real problem that confronted us: an aging product line.

A lot of smart talent was wasted because it was underutilized even when we had the money to act. Now the money is gone, and most of the talent that could leave did. What's left are those that couldn't get out (not necessarily because they're incompetent, though some are, but perhaps their families are settled here and they didn't want to bail on the devil they knew in exchange for one elsewhere they didn't know; or maybe their homes are "underwater" and moving is no longer an option).

I remember visits to the assembly lines where our products were used, and sometimes failed. I would accompany engineers on troubleshooting missions. The people I encountered on the assembly lines worked hard -- physically hard -- often in a noisy, rank environment. Many were older than I, and looked a lot more tired. But they were always eager to help us geek engineers get our product working, even if it meant added work and inconvenience for them. And they didn't do it because someone told them to. They smiled and offered to help, and they offered useful suggestions for how to make the product better and in turn improve the quality of their product. They care about what rolls off the line, I have no doubt about that. They earn their pay, and they earn the profits that pay much larger salaries to others, too. Standing next to a cacophonous testing bay where cars slid every thirty seconds onto rollers and were accelerated to 70 m.p.h., surrounded by eye-watering smoke from burning rubber, I realized pretty soon where the money came from for my cushy salary. The line workers always knew it, yet they never seemed to make that an issue, they just wanted to keep working. (And this wasn't considered a tough place to work, try slamming heavy, unwieldy dashboard assemblies into place all day.)

So, while my group spun its wheels making cosmetic changes on an outdated product, and assembly line workers busted their humps three shifts a day, management followed the quick buck doing the same thing my engineering group did: repackage and reposition. They produced the gas guzzling SUV's that indulgent consumers awash in credit demanded. There never seemed to be a plan for what to do if gas prices suddenly spiked and consumers decided they preferred something less profligate. And we all knew gas prices would spike.

And then gas prices did spike and I thought, "Hallelujah!" Detroit's finally going to start selling their little cars. And there was a brief blast of enthusiasm for them. Until the economic crisis kicked in and sales dropped 30%, 40%, 50% compared to just a year ago (WSJ: Auto Sales).

Well, the assembly line workers didn't induce the economic crisis; neither did the engineers. Sure, the Big Three would have been in trouble if gas prices remained high, but they would have bumbled their way along as they always have. They would have contracted, as they have been for years, but they wouldn't have gone over a cliff. It was not the Big Three that suddenly did themselves in (although executive incompetence was slowly dragging them down) it was a bunch of criminally greedy bankers and securities traders that sent us all over a cliff. But the criminally greedy bankers are not the ones crashing on the rocks. And to add further insult to injury, unions -- the only thing that ever moved working stiff living standards in a positive direction -- are being demonized. In the past, union wages might have gotten out of hand for some workers who could rack up a lot of overtime, but those are exceptions, and management -- hungry for for quick profits -- often made incremental wage concessions to unions while at the same time outsourcing thousands of their jobs (see UAW Timeline). Pensions got out of hand because management and politicians (bankrolled by management) wouldn't support Walter P. Reuther's plan to consolidate and nationalize pensions so younger workers would subsidize older ones. I agree union negotiators sometimes overreached, but it was while they watched executives overreach several orders of magnitude more severely. Still, unions are not, and never were the problem with American industry. It's greedy incompetent, lazy, parasitic executives that sold us out for a quick buck and brought American hope for future prosperity to its knees. more...

The Stimulus Plan

The Democrats took a dive. For the benefit of three Republican shills sent in to hijack the Stimulus Plan, the Democrats permitted the most transformative items in the stimulus plan to be torpedoed: funding to build new schools, health care for the legions of unemployed, funding for our moribund intercity and local rail service, and the pittance thrown to the anemic National Endowment for the Arts. All of these things would have offered real, progressive, symbolic stimulus for our teetering economy and psyches. Why not stand up to Republicans? Let 'em filibuster. Let 'em take the heat of the spotlight for a few days as the mean-spirited, venal spoilers that they are. No, Pelosi and Reid found it more expedient to just roll over, as always. Our Democratic "leaders" need to get out of the way and let some folks with the courage of their convictions take over.

Update:$8 Billion Added for Transportation at the last minute (still a dollar short and a day late, though.)

Auto Industry Bailouts

A letter that I sent to the New York Times and my representatives in Congress:

Re: New York Times
”Back on Capitol Hill, Auto Executives Still Find Skeptics “
By DAVID M. HERSZENHORN and BILL VLASIC
Published: December 4, 2008

It is unfortunate that Congress and, according to polls, the rest of the nation are willing to let the auto industry wither and die. Of course, the execs have mismanaged the business. That’s what American business has done for the last forty years in the pursuit of unrealistic short-term profits. The tragedy is that the execs will, as always, walk away with piles of cash to sustain them while they search for new prey to bleed dry. It’s the assembly line crews I worry about. I live in Detroit (well, one mile north) and I worked in the automotive industry (engineering & management) long enough to understand the hyper-conservative, me-first attitude of management that prevents the great ideas of engineering peons from becoming great products. But if you visit an assembly plant, you will meet men and women who work hard every day -- I mean with their arms, legs, and backs -- and know the manufacturing process as well as anyone and are eager to help wayward engineers find answers.

When I visited plants, the thought I always came away with is that my cushy salary was carried on the backs of these folks. Assembly line workers procured union benefits through long and violent battles with management. Perhaps union leaders overreached, but to let the auto industry wither and further undercut unions would roll American labor relations back to the brutal first days of the industrial revolution.

There are lots of ways the engineers and assembly line workers could be productive, Congress just needs to be imaginative. Detroit is a vast repository of industrial know-how, a national asset we can not afford to lose. Save the auto industry today, and if they still can’t sell cars tomorrow, put these smart people to work building the windmills, photovoltaics, and public transportation of the future. We put a man on the moon; we can put men and women to work building a sustainable and proud future for this country.
more...