A Conversation With VP Biden on Trade

Senator Hollings, you nailed all the high notes with your commentary on the Huffington Post. Thanks for your insight and persistence. I wish voters could catch your drift and quit buying into this business about free-markets and free trade.

Since May, I've been working way too much (a blessing) to read your posts, but I'm catching up now.

I have to quote a few key sections of your post, so they appear on my blog...they need emphasis.

"After adopting a seal, the first bill to pass the Congress in its history on July 4, 1789, was a protectionist tariff. And we financed and built these United States into an industrial power with "protectionism." We didn't pass the income tax until 1913. In 1900 the colony was richer than the Mother Country by $25 billion and had a GDP double the GDP of Germany and Russia combined, causing Teddy Roosevelt to exclaim: 'Thank God I'm not a Free Trader.'"

"The Obama Administration says the solution for jobs is educate, educate. We in South Carolina need a lot more education, but we have enough to create jobs -- producing the "ultimate driving machine" for BMW and the most advanced aircraft, the "Dreamliner," for Boeing. It's Washington that needs education."

And yes, bring on the VAT to promote domestic industry and exports.

Now, they're blaming President Obama for being anti-business and for not paying down deficits. He should eliminate the corporate tax and replace it with a 2% VAT. This will make him pro-business; bring in more revenues to pay down deficits, and promote exports. The vote in the Senate against McCain's VAT was an increase in taxes. The corporate tax beginning at 39% averages at 27%. A 2% VAT cuts corporate taxes for production 25%. And please call it for a vote. Now! Don't worry about a filibuster. Any voting against a 2% VAT to replace the corporate tax will be voting against the major reason to off-shore jobs; be voting against jobs; against cutting taxes; against promoting exports, against paying down the deficit, and against business. 

All truth, as far as I can tell. Why can't truth ever get traction in the morass of our political and media environment?

Read the Article at HuffingtonPost

While GM Brags About Its Comeback, Auto Workers Go Begging

Articles in the New York Times (Detroit Goes From Gloom to Economic Bright Spot), and the Economist (GM prepares its getaway), praise GM's recovery, but the truth is, GM chose to retreat, rather than to fight to recover lost ground in terms of market share, salaries, or wages. In other words, they favored shareholders and executives over hourly workers, the people who actually earn the profits GM is so eager to brag about.

The auto industry shed 330,000 US jobs since 2008. And how many did they shed back in the eighties and nineties? And how many supplier jobs were lost that aren’t counted here?. I live in the suburbs of Detroit, and I can drive for miles past shuttered tool and die shops, and manufacturing plants. You can't swing a dead cat without hitting a guy who had a well paid, skilled union job, and now he’s retired at fifty, or swinging a hammer for a living with no benefits. And these are the guys who actually know how to build things. Their fathers and grandfathers built our manufacturing base, and without their skills we’ll never re-build it. And if we don’t rebuild it, we’ll never have a real rebound in our economy that yields broad prosperity. We’ll just continue to get what we’ve been getting, a narrowing band of wealth at the top, and vast legions of un- or under-employed, under-skilled poor.

And now the big three brag they trimmed wages (starting wage in an American UAW plant is around $14). Adjusted for inflation, I bet that's less than the $5 a day Henry Ford offered workers when he reasoned that employees won't be consumers if you don't pay them a decent, livable wage.

The new CEO, GM board member, Dan Akerson, has worked recently for the Carlyle Group, the bottom feeding private equity firm that has spent the last twenty years burying US manufacturing firms in debt, and then selling off the firm's assets (asset stripping) for pennies on the dollar, to yield healthy profits for Carlyle's well-heeled, capitalized investors, and a decimated manufacturing base for the rest of us. What sort of future for GM's domestic employment does that portend?

So what does the average, hourly-wage, taxpayer get for their bailout of GM? More competition for fewer jobs at a lower wage. And who gains besides shareholders and executives? A skeleton crew of engineering and management staff who glance over their shoulders every day, with the grim expectation that their job has been outsourced to someone in India earning 1/100 as much.

No, NAFTA Was Not President Clinton's Idea

(A reply to a comment on an article, "Rebuild America, Don't Sack It," by Robert L. Borosage, at the Huffington Post.)

Yes, Clinton signed NAFTA into law, but it was largely an initiative by Republican politicians, with George H.W. Bush out in front signing the initial draft. Republican politicians then positioned NAFTA as do or die for the American economy, and anyone who opposes it is an un-American, big government, anti-jobs, socialist.


I'll quote a bit of Wikipedia (http://en.wikipedia.org/wiki/NAFTA):

"In the U.S., Bush, who had worked to 'fast track' the signing prior to the end of his term, ran out of time and had to pass the required ratification and signing into law to incoming president Bill Clinton. Prior to sending it to the House of Representatives, Clinton introduced clauses to protect American workers and allay the concerns of many House members. It also required U.S. partners to adhere to environmental practices and regulations similar to its own."

And this was after the private equity, leveraged buyout, asset stripping frenzy of the tax and tariff-cutting Reagan years during which much of the U.S. industrial base was sold off for pennies on the dollar, and its jobs sent overseas by capitalized investors, who tend to vote Republican.


(And no, not everyone who votes Republican should be demonized, but it mostly Republican politicians who legislate in favor of a minority: capitalized investors; at the expense of the majority: hourly workers)
Read the Article at HuffingtonPost

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.

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.

Why Bankers Love Bonuses

I'll poach one more story from the DailyKos, which gives an outstanding historical perspective on the current financial predicament of the United States and Europe. It neatly clarifies the migration of funds out of the industrial base and into the coffers of financial firms over the last thirty or forty years, and the inciting de-regulation initiatives by vested politicians.

Anyway, here 'tis if you're so inclined toward feasting on anti-free market elucidation:

Goldman Sachs Vice-Chair: Tolerate the Inequality

by NBBooks

Go, Senator Hollings -- End "Free" Trade

My comments on a post by Senator Fritz Hollings on the Huffington Post: "Perfect Desertion"
Good stuff, Senator Hollings.

I'll put in my two cents, and reiterate some of your previous arguments:

Free trade is bad policy unless the foreign businesses we trade with adhere to exactly the same labor and environmental rules (and incur the same costs) as businesses in the U.S.

Wages may be lower elsewhere, but when they are, it is also generally true that workers have little or no collective bargaining rights, few or no worker safety rules, little or no worker compensation for on the job injuries, and little or no health care. Low wage countries also often ignore the environmental impact of unsound manufacturing processes, rendering air and drinking water toxic. All this eventually leads to civil unrest and global environmental impact. Both of which cost everyone when supply chains are disrupted, and landscapes and species are destroyed.

A VAT is preferable to corporate taxes, as you point out in earlier posts, since most corporations only pay about 3% corporate income tax on profit -- not the mandated 27% -- because they hire lawyers and accountants to move profits offshore. So, lawyers and accountants benefit instead of U.S. citizens who subsidize the corporations with infrastructure and defense investments (not to mention property tax rebates, and other incentives, paid for relocation). Plus, any economist will point out that corporate income tax is passed on to consumers in the form of higher prices. With a VAT, at least, taxes paid by consumers go into public coffers instead of personal incomes for accountants, lawyers, and executives (27% levied minus 3% actually paid = 24% retained by corporate entities).

Further, a VAT benefits the national economy by discouraging consumption (tax on final sale -- regressive, but remember, corporate taxes are passed through -- equally regressive), while encouraging production (no taxes on manufacturing supply chain costs, just "value added" -- corporate profits). This, in turn, reduces prices to the consumer (demand is down), and encourages exports (price is down because domestic demand is down). Plus, most nations refund all or some VAT taxes paid by manufacturers when a product is exported (China, Europe, etc.), which further encourages exportation rather than leveraged (credit card debt) consumption at home. Finally, to alleviate regressive impact, we need not charge VAT on necessities like food, utilities, and medical care.

I hope all that reads true. I'm sure many will take issue, but I think the arguments against free trade and for a VAT are indisputable. Someone just needs to sell 'em. Go, Senator! (visit former Senator Hollings' web site: www.citizensforacompetitiveamerica.com.

United States Domestic Manufacturing vs. Free Trade

Domestic Manufacturing vs. Free Trade
This post is prompted by comments posted here and here, so if you haven't read those, two references might elude you: "Darwinian Capitalism" and "obsession with manufacturing." Not to worry, you'll get the point.

I have never witnessed “Darwinian Capitalism,” nor has anyone else that I’m aware of, so I can’t comment on it. What I can comment on is the variant I live under, and the variants that I witness, directly or indirectly, around the world. All of these flavors of capitalism are manipulated to the advantage of the most powerful participants -- the capitalized (those who derive incomes from investments), as opposed to wage earners. Such manipulation takes the form of favorably lax regulation and regressive income taxes, and these tend to stratify society by concentrating wealth at the top. Rather than thinking about “safety nets” for the poor, we should think about “restraining nets” for the rich to minimize the corrupting influence of wealth.

One way to do this is through progressive taxation, which provides government with the resources to monitor (regulate) the creation of wealth, compensate (educate) victims of exploitation, and clean up the environmental disasters visited on us all by the heedless behavior of amoral business ventures. Another way to minimize the corrupting influence of wealth on an industrialized economy is through trade unions. Through collective bargaining, trade unions counter the leverage exerted by management and give wage earners some of the same insurance against boom/bust cycles that the capitalized enjoy, i.e. a cushion of resources: unemployment and health insurance for workers, investments for the capitalized.

As far as an “obsession with manufacturing,” I can’t comment on the views of others, but for myself, manufacturing is not an obsession. In fact, I’m not that fond of the idea of a “consumerist” society inundated by cheap, throwaway crap. But manufacturing is a means to an end: survival. So are agriculture and hunting-gathering. None of which, by the way, are mutually exclusive, so I don’t really see them as a linear, evolutionary progression with one replacing the other as some describe it. We still have plenty of agriculture, though now on a much larger, unsustainable scale. And we still have hunter-gatherers. OK, hunter-gatherers are fewer in number, but they exist, even in industrialized countries -- witness various forms of squatting, trash sorting, and scrap metal recycling.

And as a means to an end slightly more desirable than mere survival -- broad prosperity -- manufacturing has done reasonably well, provided we have strong trade unions, muscular regulation, protective tariffs, and progressive taxation. When those constraints on capitalism are in place, our society has flourished, and by flourished I mean nearly everyone benefited, not just a miniscule subsection at the pinnacle of the food chain. Think of the constraints as a sturdy fuselage to hang the wings of capitalism on. Without one, the other is useless. (Except to wing builders who profit from the mess created by flimsy aircraft falling out of the sky.)

In a balanced economy, with some hunter-gatherers, some agriculture, some manufacturing, some service and finance every reasonably industrious member could find a niche. Sure, productivity and efficiency gains fostered by improved technology would eliminate some jobs in every sector, but improved technology would create new jobs in other sectors, notably manufacturing. Technology continuously obsoletes one manufactured device in favor of another, whether it’s a consumer toy like a DVD player, or a machine used in a plant that manufactures DVD players. Thus, manufacturing plants are continuously re-tooling to manufacture the latest product at the least cost (provided there is fair competition to insure the necessity of such investment).

Since the 1970’s the middle class and poor have been the victim of diminished domestic manufacturing and exports replaced by foreign manufacturing and imports. Since the 1980’s, most of the new wealth in the U.S. has been generated in the finance sector, where salaries are disproportionately -- insanely -- high at the top, and poverty-line low at the bottom (and not that numerous, and not unionized). This does not represent a natural economic evolution of society. It is a trend induced by an affluent minority who depend on investments for their income.

Since this affluent minority traditionally invested in American manufacturing, and with tariffs on foreign imports low, and with manufacturing capacity restored in post WWII Japan (followed by Hong Kong, S. Korea, Singapore, Indonesia, Malaysia, Thailand and finally China), investors pressured management to increase short-term profits. The best way -- the only way -- to yield these short term profits was to eliminate expensive, well-paid, unionized, pensioned, health-insured, worker-safety protected, environmentally responsible jobs in favor of cheap, underpaid, non-unionized, un-pensioned, un-health-insured, workers with unsafe jobs in environmentally catastrophic overseas plants. That is, a return to the conditions that existed in the United States and Europe at the turn of the 19th century before trade unions and environmentalists fought long hard battles to improve our lot. How come off shoring didn’t happen sooner? Because, throughout the industrial revolution, up until about WWI, the U.S. maintained tariffs that protected U.S. manufacturers against a flood of overseas products. Then we had WWI, followed by the Great Depression, followed by WWII, all of which discourage imports, and, or decimated manufacturing capacity everywhere but in the United States. So, it wasn’t until the 1970’s that imports began to nibble away at our manufacturing primacy.

So, yes, as a whole, the United States has grown wealthier as manufacturing declined, but that wealth is now nearly as concentrated at the top as it was before the industrial revolution -- the middle-class is dying on the vine. So we have cheaper consumer products, but steadily flat or declining middle-class incomes and standards of living, and more two-income households that barely survive.

And, we’ve sold off our creative prowess. Sure, we still have the movie industry. We can export a few movies. And sure, we still have Boeing (barely); and Caterpillar (barely); and a bunch of pharmaceuticals and banks and niche manufacturers. But those are a drop in the bucket compared to all the stuff we need to survive -- manufactured stuff. Stuff manufactured overseas. Hence, our huge and economically menacing trade deficit. On the “free trade” governed world market, we buy tons of stuff, but we don’t sell much. So, it’s not so much free trade that we participate in, it’s free shopping. And if you keep shopping without any income, you’re gonna go broke -- which we are.

Imagine now, instead, that we manufacture our own shoes and shirts and dresses; and electronic components and cell phones, and TV’s and cars (preferably trains and buses); and electricity generator components; and cables and wires to connect all this high-tech stuff; and... you get the idea -- we manufacture stuff here, our income stays here. And we continue to invest in broad prosperity -- elevating the middle class, and poor. And we preserve our intellectual capacity to design the manufacturing plants and products of the future. Skills that now, to our collective shame, we are allowing to atrophy (skills, such as machine tooling, I assure you, most bankers can not even conceive of).

And yes, if we manufacture stuff here, and pay people reasonable wages, and insure them against old age and health catastrophe, and protect our shared environment, we will pay more for stuff. But, we will have a constant supply of well-paid jobs for everyone, not just essayists with PhD’s who promote free trade, and creative financiers who sell hedge funds to insulate the wealthy against tanking domestic markets. Besides, if free-trade worked as advertised, that stuff we buy overseas should cost a lot more soon enough as foreign manufacturers...wait for it... pay people reasonable wages, and insure them against old age and health catastrophe, and protect our shared environment... or will they? Not likely, considering the state of governance in most of the countries we buy from. Anyway, it hasn’t happened in the thirty years since off shoring got so popular.

Make whatever predictions you want about the rosy future under free trade, but we do not yet have the much touted and oft-promised highly educated workforce of the future. We have a partially highly educated workforce, a partially moderately educated workforce, and a partially not that well educated workforce. A large fraction of those folks will always be content to clock-in at an assembly line, and bang out their eight-hour day in return for a reasonable living standard and reasonable protections against bankruptcy induced by the vagaries of human health. What’s wrong with that? Every immigrant wave that came here and built this country started there? Why pull the rug out now, when all we get in return is a really rich upper crust with big houses for the rest of us to admire from outside the gates?

My preceding free trade post is here: Free Traders: Friends or Foes?

Here's a bracing rundown of NAFTA's caustic effects from Robert E. Scott at the Economic Policy Institute (www.epi.org): The high price of ‘free’ trade

Former Senator Fritz Hollings seems to concur:
We Are in Real Trouble
Politics Like Cancer

Here's a nice roundup of NY Times articles on NAFTA: http://topics.nytimes.com/top/reference/timestopics/subjects/n/north_american_free_trade_agreement/index.html

And here's a nice little Wiki history of tariffs in the United States: http://en.wikipedia.org/wiki/Tariff_in_American_history
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Free Traders: Friends or Foes?

I'm astonished that otherwise reputable economists continue to promote free trade dogma.

Free-trader enthusiasts consistently decry the horrors of tariffs, yet throughout U.S. industrialization (early 1800's to WWII), in fact, until Ronald Reagan's administration in 1980, we had broad protective tariffs on manufactured products as high as 48% and frequently averaging in the 30% range. And during this stretch of 150 years or so we saw consistent, profitable expansion of U.S. manufacturing, despite depressions, recessions, and a civil war intermittently impeding growth.

Since Reagan's income tax and tariff cuts, we've liquidated our industrial base for quick profits, dismantled the middle class and the unions that fostered it, eroded wages for wage-earners, and cemented in place an uber-wealthy, capitalized oligarchy. Our post-manufacturing banker class continues to sell out un-capitalized, wage-earners for a quick buck importing cheap junk from overseas and outsourcing design, manufacturing and service jobs. (John Jacob Astor would have been proud.) What's left? Retail, tourism (hawking Chinese t-shirts, hotel hospitality, rental desk clerks, etc.), health care, food service, and...wait for it...landscaping and gardening at the expansive homes of affluent bankers.

If free trade were such a godsend, would we not be seeing some real benefits, aside from cheap imported junk and profitable job outsourcing, by now? Benefits such as sustained and broad prosperity? Appealing employment opportunities? Health care for everyone? Education for everyone? Something besides cheap junk and a proliferation of rich bankers propped up by tax dollars?

Here's a revealing and contradictory take on free trade:
Thom Hartmann's review of Ha-Joon Chang's 'Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism'

Here's a Senator from South Carolina who recognizes the flaws in free trade: The Failures of Free Trade

The sooner wage-earning Americans wise up to the baloney we're being fed by our caviar-nipping, banking brethren, the better.

Here's a bit longer thing I wrote in response to comments on this and another post: Domestic Manufacturing vs. Free Trade

Here's a bracing rundown of NAFTA's caustic effects from Robert E. Scott at the Economic Policy Institute (www.epi.org): The high price of ‘free’ trade

Former Senator Fritz Hollings seems to concur:
We Are in Real Trouble
Politics Like Cancer

Here's a nice roundup of NY Times articles on NAFTA: http://topics.nytimes.com/top/reference/timestopics/subjects/n/north_american_free_trade_agreement/index.html

If you don't read all of the above, read this at least:
Free Trade Accord at Age 10: The Growing Pains Are Clear

And here's a nice little Wiki history of tariffs in the United States: http://en.wikipedia.org/wiki/Tariff_in_American_history
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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...

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.
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