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Welcome to the Wal-Mart Society: Why Republicans Want Automakers to Fail
Mark Sawyer | Posted December 22, 2008 12:34 PMGeorge Bush, borrowing from author Jeff Gates, once trumpeted what he called the alm"ownership society." The ownership society was attractive in many ways. Given the decline in wages it suggested that wealth and participating in wealth creation and growth was the way to address massive inequalities and overcome the gap between the haves and have nots in the United States and around the globe. Work in the future would pay less and less against inflation, so something needed to be done to overcome the growing disparity.
Average people were to gain by owning a home, a 401K account and perhaps some other stocks. Thus, the power of the "new capitalism" driven by wealth and financial transactions rather than production was going to let all Americans and later all humanity participate in a world where the disparity between the income generated by wealth in comparison to work grew ever more distant. It was a nice idea. A society that I even -- given my lefty beliefs -- was willing to entertain, but there was something missing.
What they never told you was that your 401K was just along for the ride. CEOs would pay themselves first, and generate short term gains that they and investment bankers benefited from at exponentially higher rates than the average investor. The bankers and the CEOs and their stooges on corporate boards collaborated to generate phantom short-term gains while robbing the companies and the economy blind. What the average family would be able to do was own a home whose increasing value would allow them to borrow against it in perpetuity to sustain their consumption while their paychecks stagnated, while they piled on increasingly more debt. Bankers would make huge sums by selling these loans and creating a series of opaque financial instruments that generated tremendous fees and profits, but were ultimately sand castles.
We are now living in our sand castles. And the response by Republicans and some Democrats has been to continue to support the economy that produces nothing versus the real economy that does generate value. I don't dislike investment bankers. My brother was one. I smiled when he brought home his six-figure bonus, and in the days of the mid-nineties the financial instruments they created were perhaps creating wealth (most of it for themselves) where it did not exist. Homes, casinos, hotels, bridges, and on rare occasions low-income housing were built that might not have existed without these instruments. But later the instruments themselves became the product with no tangible thing behind them.Republicans are now on the march away from the ownership society to the Walmart society. Republicans have refused to rescue the auto industry if the United Auto Workers don't dramatically reduce their wages to those of workers for foreign automakers in non-union shops in the South. Anticipating the passage of a card check law that will make it easier for workers to organize themselves into unions and bargain collectively, the Republicans want to send a message that unions are bad, greedy and will cost you your job. The message is clear: We will let the American auto industry collapse so that foreign automakers can offer American workers substandard wages and benefits, to make cars for the US market while benefiting from government paid health care at home and paying their workers high wages without shouldering the burden of a broken health care system.
These are the same Republicans who balked at the controls on CEO pay -- "how can they work for a measly five million a year." They also put no wage controls on rank and file investment bankers who can still take home six-figure bonuses while their firms are awash in taxpayer money.
The unstated issue is that the ownership society has given way to the Wal-Mart society. In the face of a deflationary spiral, where demand is falling and workers are losing their jobs, Republicans want further wage cuts for working families. The idea is that wages and prices will fall so far that almost everyone will be forced to shop at Wal-Mart because that is the only place we can afford.
Of course Saks Fifth Avenue and even Macy's or Target will remain open for the bankers, but autoworkers need to say goodbye to health care, owning a home, most of the pay that sustains a middle class lifestyle. Or perhaps what the Wal-Mart society is offering is a "new" middle class where everyone is one paycheck away from homelessness, college tuition is out of reach, health care is rationed based upon what we can afford (need a kidney-sorry that's not on the menu). Smile, it won't be so bad, Wal-Mart will "slash prices" while your wages are being slashed. You will hardly feel it.
The supposed high-flying CEOs or "smartest guys in the room" got us here. The leaders of Tyco, GM, Enron, Lehmann and now the jackals at Bank of America who have taken billions of your dollars while slashing jobs, buying up banks and pulling back lines of credit to medium and small businesses rubs its hands with the hope the economy falls so far that what Wal-Mart does not own Bank of America will.
So what is to sustain the Wal-Mart society that Republicans are offering? Why will we put up with it? First it takes a healthy dose of attacking anyone who is smart, questions authority or seeks a better life as "elite." It does not have to be smart just say it. For example, the usually thoughtful David Brooks traded in this nonsense when he suggested working class folks can't identity with anyone who they can't imagine walking up to the salad bar at Appleby's. Of course Brooks has never himself been to Appleby's, otherwise he would know Sizzler has a salad bar and not Appleby's. But all of this is a smokescreen for what is the real agenda, perhaps one that Brooks probably does not support.
The real story is they hope to use the envy of workers against one another to facilitate the race to the bottom. Poorly paid southern autoworkers are not supposed to want the wages and benefits of their northern counterparts but to drag their higher paid counterparts down to their level. Workers who lose health care are supposed to be angered by the "Cadillac" benefits enjoyed by other seemingly undeserving workers. The message is rather than worry that we might spiral to the bottom and fight against workers. They are suppose to revel in the joy of seeing others fail more miserably than themselves. We are supposed to let out a cheer as our neighbors homes are foreclosed on. Weren't they irresponsible? We should not pay attention to what that foreclosure does to our own property value.
In the Wal-Mart society we suffer individually but hope that others suffer more. Why should anyone have health care benefits if I don't? Why should anyone be able to afford a home or pay for college tuition if I can't.? Meanwhile Wal-Mart will slash prices and wages and Bank of America will buy America with our money while we demand that autoworkers and all workers slip below the middle class.
In light of this I have a few modest proposals for the Republicans:
Banks who took bailout money must only pay bonuses that are no larger than half of the average yearly take home pay of an autoworker. And banks must refrain from laying off workers and paying dividends to stockholders until they increase lending levels.
Republican members of Congress who think autoworkers have "Cadillac" health care benefits should give up their health plans and take up a Wal-Mart plan. Better yet, they should go without insurance and a five thousand dollar tax cut so they can consume the health care services they truly need and nothing more.
All of the Republican Senators who received favorable mortgage terms from Countrywide should have their mortgages changed to subprime mortgages with high resets.
The Wal-Mart society should be for everyone. These are just a few ideas to share the joy.
Mark Sawyer is an associate professor of political science at UCLA.
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2008-12-22 16:07:57
2008-12-22 17:00:09
2008-12-22 17:13:41
2008-12-22 17:35:05
Reading your post, I understand that you are interested in an ineffecitve tit for tat. That's your thing. I don't see why payback is in order when discussing massive job losts. This is especially true when the payback is in the form of a foreign company.
The basic premise of the auto bailout opposition is that republicans wanted the UAW to concede portions of their salary and benefits by a specific date. Labor costs account for only 10% of what it costs automakers to make a car. The "average joe" works at these unionized american companies. Asking Joe the middle class hero for concessions based on 10% payout projections seems political and self-interested at best.
Here's a link to the article breaking down the costs of american manufacuring vs. foreign manufactures. You asked the author to be on his A-game when discussing this issue. I implore you to meet him there.
http://www.nytimes.com/2008/12/10/business/economy/10leonhardt.html?em
While you are gunning for a payback, most others are concerned about millions of layoffs.
2008-12-22 18:17:37
2008-12-22 19:43:35
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2008-12-22 22:28:50
2008-12-22 23:51:38
2008-12-23 04:17:21
2008-12-23 08:32:12
2008-12-23 11:34:05
2008-12-24 00:19:11
2008-12-27 13:55:47
2008-12-31 17:54:01
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