May Day: Stakeholders vs. Shareholders

In 1885 the group of labor unions that would later become the American Federation of Labor boldly declared that as of May 1st 1886, eight hours would constitute a day’s labor. This was at a time when 12 and 14 hour days were the norm for wage earners. And to the surprise of many, working people across the U.S. organized themselves and walked out of their factories to make that declaration a reality. Some succeeded. Most did not. It would be another 52 years before the Fair Labor Standards Act mandated the 8 hour day, overtime, and the minimum wage for most wage workers (with significant exceptions).

We’re on the far side of that history now.  The 8 hour day, the 40 hour week and the steady job are not even part of most workers’ living memory.  Most young workers (say under 30) are intimately familiar with what used to be called “nonstandard” work arrangements, self-funded health insurance and pensions, and a do-it-yourself approach to the labor market.  The current economic crisis, now more than a year old, has simply brought the ugly reality of contemporary work into the narrow focus, and short attention span, of the mainstream media.  The rise and fall of the 8 hour day was a long arc.  It took half a century to win the 8 hour day, and another 70 years to bring us to our own dismal days.

It is our distance from that long crisis of capitalism (or series of crises) that makes possible the return of May Day.  As some have noted, the when Republicans call Obama a “socialist,” the result is an increase in the number of people identifying as “socialists.”  They don’t even bother with “communist,” and their recent forays into “fascist” likely won’t fly either.  We’re in a new era.  Not a particularly nice era.  But a generational shift in personnel and in language.  If our political economy moves along through a series of crises, then we’re in a new form of crisis. And we’ve yet to see what forms of organizing, and what rhetorical appeals, really have traction.

One word to look for is “stakeholder.”  Without any legal definition, stakeholder implies a claim to participation in decision making and in a share of the benefits of society.  It conjures a world of competing legitimate interests, and implies negotiation and compromise.  If you look at the language of the union haters decrying the Chrysler and GM deals you can see their underlying argument is usually that workers don’t deserve high wages because they are lazy.  Shareholders, on the other hand are exempt from the charge of laziness frankly because they have money.  The argument of May Day, and the language of stakeholding, is that everyone deserves to make a decent living by virtue of living in a society.  Eight hours for work, eight hours for sleep, and eight hours for what we will.  There are only 24 hours in a day, and so many years in a life.  The eight hour movement sought to claw back some portion of that for people to decide on their own.

The language of stakeholding isn’t perfect.  It can be used as a cover for enforced cooperation (”we’re all in this together”) and one-sided “partnerships” between labor and management.  But it has several advantages. Because it is not a legal term, its content has to be defined, and redefined, in actual processes of organizing and negotiation.  It can transcend citizenship and legal status, as in: people working and living in a particular situation, whether they’re legally permitted to or not, are all stakeholders and should be consulted.  It’s not too far from how collective bargaining actually works, when it works.  And, strategically, it has favor with and leverage on our popular President.  So let’s watch for talk of stakeholding as we go forward and try to make opportunities out of our latest crisis.

Fake news more informative than real news

In these days of newspaper bankruptcies, one frequently hears the complaint that the younger generation doesn’t read newspapers and is therefore less informed than their elders.  The other day I heard a laid-off journalist on NPR turning that last supposition on its head.  Far from uninformed, the youngsters are better informed because they take their news from many, many sources and understand that a writer’s political position influences content.  And he likened the Daily Show to high quality editorial page material.

Audiences’ turn away from “objective reporting” to partisan sources and fake news (i.e., Daily Show, Colbert, and the Onion), was a sign that they were aware that our media system had been captured (or if you prefer, manipulated) by and for fairly specific political and economic interests.  And even as the press shakes off the torpor of the Bush years, fake news remains one of the few places in which “journalists” can get across in plain words what is happening to our economy.

This clip from the humor paper/site The Onion, Autoworkers Compete to Keep Jobs, Livelihoods on New Reality Show, is a good example (for the life of me, I can’t figure out how to embed it, sorry).  In all the reporting about the auto bailout, the gnashing of teeth about “nationalization,” “socialism,” and the allegedly lush life led by autoworkers and their fat benefits, little ink is spilled (digitally or in analog) detailing the grim facts for hourly employees at the Big Three.  Best case scenario:  10s of thousands lose their jobs, those remaining work harder for lower wages and fewer benefits, and one generation of working people is pitted against another.  Not a pretty sight.  The only thing to add is that the worker-against-worker competition has also spread to the white collar workforce in the industry.

Thanks to Michael M. for sending the clip along.

Bankers can’t build cars

Let’s just call it “fair and balanced.”  Yes, GM’s debtholders are crying to the media and the government that the offer they’re getting is not “reasonable” is “absurd,” and “amounts to using taxpayer money to show political favoritism of one creditor over another,” according to a report on Bloomberg.com.

That last one really made me laugh.  These people apparently believe their own rhetoric.  Political favoritism?  Who’s been on the receiving end of that for the last, say 150 years?  Bloomberg quotes an analyst saying, “You have a gun being put to your head saying that if you don’t take this, we have something that’s even worse for you.”  My heart goes out to them.  Their situation sounds remarkably similar to that of the unions who were asked to cut members’ pay, cull the workforce by a third, various work rule changes, and take stock instead of cash for their pensions.

Why should bondholders lose their shirt while the government gets a majority stake?  Perhaps because they made a bad investment, and continued to dump money into a poorly managed company.  So now they’re losing most of their investment. Last time I checked, the champions of capitalism said that’s how “The Market” works.  The government for its part appears to have made its continuing investment contingent on an actually viable business plan.  Is that socialism? Or smart business?

Did the UAW get a better deal than the bondholders?  Yes and no.  In addition to the bedrock capitalist principle mentioned above, it’s worth pointing out that GM was contractually obligated to pump something like $50 $20 billion into the Voluntary Employee Benefit Association (VEBA) that will relieve the corporation of its pension and retiree health care obligations.  Instead of cash, they’re getting GM stock.  The union-haters out there cry that those benefits are ridiculous and should be zeroed out.  That’s a fine opinion, as long as you don’t dress it up on fairness to non union workers or the moral rectitude of the free market.  Instead this is just some misguided desire to drive peoples’ wages and benefits down for no good reason.  It’s just mean spirited.

Unlike our great American bankers, the government (and likely GM management) seem to understand that you need autoworkers to build cars.  That is why the UAW may be getting an allegedly “good” deal.

Update:  The Washington Post reports Tuesday morning that the Treasury and Chrysler reached a deal with the company’s major debtholders for a stock swap.  If the deal holds it leaves the UAW as the majority shareholder via the union’s VEBA.

Monday, Monday

A few brief notes on the GM announcement and press conference and the auto bailout in general:

From the NY Times live blog

• After restructuring, GM will be 89% owned by the U.S. government and the UAW via the union’s VEBA (health care trust fund).  Feds to own about 50%.
• Bondholders are likely holding out in part because they hold credit default swaps that pay out in case of a GM bankruptcy.

That seems to suggest bankruptcy is going to happen and GM will be majority owned by the government with a minority stake by the UAW.  Very interesting.

…Update…  Now that I’ve dropped the kids off at school, I cant return to this.  A few thoughts about negotiations are rebounding in my head.  One glaringly obvious fact is the different way the financial and auto industries are being handled.  But I also wonder if we aren’t getting a preview here of things to come if the insolvency of CitiGroup becomes too difficult to paper over.

What’s happening with GM and even more so with Chrysler this week is the end game of multiparty negotiations. Now that the UAW and CAW have agreed to what’s been demanded, the bondholders remain as the only holdouts.  The bondholders are all big banks (esp. JP Morgan Chase), pension funds, and hedge funds.  The negotiations have been pretty classic back and forth with the debtholders going for the maximum they can get, naturally.

In the case of Chrysler, we’ll know by Friday.  Fiat is slated to get a 25-35% stake in return for management and engines for small cars.  The facts that Fiat is not paying cash, and that the government pegged Chrysler’s survival to an alliance seems to put them in a strong position.  One issue appears to be that the UAW extracted as a condition of approving its divestment that Daimler agreed to pay $1 billion to Chrysler if it went into bankruptcy and defaulted on its pensions.  According to the NY Times, the government “reached an agreement” about this and other tax issues with Daimler, whatever that means.  So the banks are hanging in the breeze, the last to come to the table and seemingly holding few bargaining chips since their investment is essentially worth nothing if Chrysler liquidates.

The question about credit default swaps that came up at the GM news conferences adds a twist.  If bondholders do indeed have swaps as insurance, who is going to pay out the swaps if either company goes bust?  If it’s AIG, that means it’s you and me (since AIG is 80% owned by the government).

For the UAW, this has to be an excruciating moment.  The Canadian Auto Workers, historically much more militant and less inclined to concession bargaining, caved in saying the negotiations were “torturous and unfair” and they chose to “life to fight another day.”  In other words, the choice was agree or face bankruptcy and potential wipe out of pensions and contracts.  That the unions are on board ahead of time means (I hope) that they got the government(s) to commit to protecting their contracts and pensions.

At GM, the UAW appears to have agreed to a large minority stake in a company that is planning to fire about a third of their working membership.  No doubt those laid off will be disproportionately high seniority workers, accelerating the downward trend of auto workers’ pay and finalizing the equalization of labor costs between the Big Three and the transplants. The level of trust between rank and file UAW members and their international representatives is not necessarily high.  How with a union ownership stake effect that?

But as bad as it is, imagine the damage if this had gone down under Bush.  Right into bankruptcy court.  Contracts abrogated, pensions shunted off on the taxpayer.  It’s too soon to tell what will happen with the UAW.  Likely as not, they’ve done all they could.  But it may be time for a merger with the United Steel Workers.  Certainly, the Task Force is following the example of the USW in the ISG and other deals.  Those deals have their able critics, but in the words of the CAW, the union lived to fight another day.

History in the Mix

We’ve all been watching and reading the denunciations, from the right and the left, of Wall Street and Obama’s alleged complicity in enriching the rich.  History has become something of a motif in these “debates.”  For instance, conservatives claim that the New Deal had no impact, or made the Depression worse.  (Don’t let facts get in your way, folks.)  And more recently, we have a series of allegedly grassroots anti-tax “Tea Parties” that aim to harken back to the American Revolution.  (Contrary to MSM belief, evidence points to these “tea parties” being a premeditated astro turf project).

On the left there is the implication that Obama is failing to take the kind of bold actions that FDR took in the 1930s.  Here it’s worth recalling that many of Roosevelt’s early actions were largely symbolic, or repackaged extensions of Hoover policies.  The boldest moves toward regulation, especially the National Recovery Act had complex impacts, often empowering employers more than workers.  Many left wingers considered Roosevelt a tool of big business, or worse, an American fascist.  It was the “Second New Deal,” beginning in 1935, that brought us an effective labor law, and the famous public works of the WPA. (And it was the war that ended the Depression).

For your enjoyment, I offer this little ditty from the July 1933 issue of the New Pioneer, the Communist Party’s youth magazine.

The Spirit of ‘33

We celebrate July the Fouth
With patriotic glory–
But have we got enough to eat?
Oh, that’s another story!

Yankee Doodle, fight to win
Yankee Doodle dandy
Until a workers’ land we’re in
Yankee Doodle dandy

Our President, old Franklin D.
So busy with his new deal,
Forgetting the forgotten man,
Is helping bankers to steal.

Yankee Doodle, march right on,
Yankee Doodle dandy
Until the long hard fight is won,
Yankee Doodle dandy

Morgan won’t pay income tax,
He hasn’t any money–
Will they put him into jail?
Come on, don’t be funny!

Yankee Doodle, shout on high,
Yankee Doodle dandy
We’re in this fight until we die
Yankee Doodle dandy

The bosses are in quite a mess,
They can’t find a solution–
Workers know the answer, though–
The answer’s Revolution!

Yankee Doodle, let ‘er go,
Yankee Doodle dandy
Here’s your friend and there’s your foe
Yankee Doodle dandy

by Sim Slim.

Here’s hoping Rush Limbaugh will pick this one up!  You can see an image of the page on my Flickr photostream.

You ought to give Iowa a try…

Justice moves slowly.  But in this case it was worth the wait.  In August 2007, an Iowa district court ruled the state’s Defense of Marriage Act unconstitutional.  Today, the Iowa Supreme Court upheld that ruling and same-sex marriage will begin in Iowa in three weeks.

To quote the court:

Therefore, with respect to the subject and purposes of Iowa’s marriage laws, we find that the plaintiffs are similarly situated compared to heterosexual persons.  Plaintiffs are in committed and loving relationships, many raising families, just like heterosexual couples.  Moreover, official recognition of their status provides an institutional basis for defining their fundamental relational rights and responsibilities, just as it does for heterosexual couples.  Society benefits, for example, from providing same-sex couples a stable framework within which to raise their children and the power to make health care and end-of-life decisions for loved ones, just as it does when that framework is provided for opposite-sex couples.

The decision explicitly moves to the forefront the distinction between civil and religious marriage.  After considering, and rejecting, each of the arguments against same-sex marriage the court turns to the “unspoken” argument, namely religion.  It was left unspoken because it is not constitutionally valid:  “Our constitution does not permit any branch of government to resolve these types of religious debates and entrusts to courts the task of ensuring government avoids them.  The statute at issue in this case does not prescribe a definition of marriage for religious institutions.  Instead, the statute declares, ‘Marriage is a civil contract’ and then regulates that civil contract.” (p. 65).

The state is also required to protect the freedom of religion.  But there are religious people on both sides of the issue, the court writes.  Therefore, the state is obliged to avoid establishing any particular religious belief.

A religious denomination can still define marriage as a union between a man and a woman, and a marriage ceremony performed by a minister, priest, rabbi, or other person ordained or designated as a leader of the person’s religious faith does not lose its meaning as a sacrament or other religious institution.  The sanctity of all religious marriages celebrated in the future will have the same meaning as those celebrated in the past.  The only difference is civil marriage will now take on a new meaning that reflects a more complete understanding of equal protection of the law.  This result is what our constitution requires. (pp. 66-67)

And so, the battle returns to the streets.  As they did in California, those opposed to same-sex marriage will organize and campaign.  The difference, as I understand it, is that it will take much longer (perhaps 2 years or more) to get a constitutional amendment before the voters.  So far, the forces of reaction have done pretty well in these battles.  Have the marriage-equality forces learned their lesson in California?  At least in this case, the separation of church and state is up front in the debate.  That may win some libertarians. Time is on the the side of marriage equality.  That’s no guarantee.  But it does give some breathing space.

The right wing will want this before the voters in a major election year.  If it’s on the ballot in 2010, Obama may be tempted to avoid too much commitment.  It’s a state issue, as they say.  But I think marriage equality forces can make it easier for Obama to lend a hand.  They can be united.  They can be strategic, and they can do real organizing.  There is enough time to begin with low key dialogue and outreach.  If they begin that process now, prepare for the inevitable ballot issue, they can give Obama enough cover to come in and lend a hand.  The Prez respects organizing.  For once, let’s have the left do a better job organizing than the right.

Some links:

Des Moines Register Story and Editorial

In These Times

Focus on the Family doesn’t like it.

Changes coming Monday for auto bailout

Not much time to post as I’m preparing for my first dissertation defense as a professor. Should be interesting.

But there is some big news coming on the auto bailout. GM will get 60 days to get their act in gear or fall into government funded bankruptcy. Chrysler gets 30 days to team up with Fiat or face the same.

A few industry news links to follow if you care: GM Inside News, Autoblog. Nothing yet from the UAW.  The Detroit Free Press already has posted the summary reports of the Auto Industry Task Force.  Apparently, the government will also partially fund a warrantee program for GM and Chrysler to reassure potential buyers.

Very good chance both companies are headed into a pre-packaged bankruptcy program.  Consider this from the summary:

While Chrysler and GM are different companies with different paths forward, both have unsustainable liabilities and both need a fresh start. Their best chance at success may well require utilizing the bankruptcy code in a quick and surgical way. Unlike a liquidation, where a company is broken up and sold off, or a conventional bankruptcy, where a company can get mired in litigation for several years, a structured bankruptcy process – if needed here – would be a tool to make it easier for General Motors and Chrysler to clear away old liabilities so they can get on a path to success while they keep making cars and providing jobs in our economy.

Bankruptcy would wipe out stockholders (not much value there anyway), but would also impact union contracts and bondholders.  Various reports suggest the government and the UAW would have the upper hand in bankruptcy, which is interesting.  Either way, the report sees Chrysler as not viable as a stand alone company, so bankruptcy would just be a process of making it more attractive to global partners.

The tone of the reports is interesting.  Might be refreshing to see something like this in the bailout of the financial industry.

End of an Era

About a month ago, the Fox News website (of all places) interviewed me for an article on historians’ assessments of Bush II’s legacy.  The reporter began with the well-worn idea that it takes a few decades to fully assess a presidency, an idea about which I’ve always been ambivalent.  Sure, some things take time to figure out.  But as I told the reporter: “It doesn’t take a historian to know that this is going to be a presidency that will not be seen favorably in retrospect.”

I also made the following claim:  “Higbie said the Bush term will be seen as the last presidency that the Reagan period opened, including dynamics such as a bolstering of the private sector and business amidst a weakening labor movement.”

I was pleasantly surprised to see that one of the high priests of global business agrees with that idea.  From an article on Bloomberg last week:

Billionaire investor George Soros said the current economic crisis has its roots in the financial deregulation of the 1980s and marks the end of a free-market model that has since dominated capitalist countries.

Liberalization of the financial industry begun by the Reagan administration has led to a series of breakdowns forcing government intervention, Soros told economists and bankers last night at a private dinner at Columbia University in New York.

It’s always nice to feel that you’re ahead of the curve, however, the notion has certainly been in the air since the 2006 elections so I don’t claim too much originality.

But what is very interesting in light of Soros’s comments is the speed with which the ideological hegemony of business, of neoliberal globalization, is crumbling.  A month ago, there were only a few voices in the media wilderness calling for the nationalization of banks.  In the midst of the fight for the stimulus bill, during which the Republicans called Obama a “Socialist,” Obama declared that nationalization unworkable and contrary to our “culture” (which in retrospect looks more like a hedge than a statement of principle).  The entire Republican game plan during the stimulus fight was based on the notion that we are in a “normal” recession that will “naturally” turn around if we can just “free the energies” of America’s “entrepreneurial spirit.” And much of the media seemed to agree that Obama had over-reached.  That his presidency was finished, a failure almost before it had begun.

Of course, the stimulus passed.  Then last week came word of Alan Greespan declaring bank nationalization a likely necessity, followed by a few members of Congress, and then Soros.  Now the lonely voices in the media wilderness (e.g., Nuriel Rubini) look like Casandras, and folks take a second look when they declare that the “Laizziez-Faire Anglo-American Model of Capitalism” is mortally wounded.  The reason, of course, is that the underlying economic realities are moving well beyond the ideological blinders.  Bank nationalization, however, distastful to our “culture,” is becoming a reality even if we don’t use the word.

The ground is shifting rapidly, and it’s hard to see how it can shift back any time in the next 12-18 months.  Onto that ground comes President Obama more productive after one month in office than many presidents after 4 years.   And still wildly popular.  Ahead of the curve.

Visualizing the Recovery (texts)

Lately, I’ve been enjoying the visualization tool Wordle, which was created
by folks at IBM Research Visual Communication Lab. Wordle creates word clouds of any text you supply. It can also draw text from a blog or rss feed. The tool has been around for a while, but this newer, simplified interface is great. So here are a few examples.

Text of the 1,000 page American Recovery and Reinvestment Act (i.e., the Stimulus), minus the word “section.”

To remix this cloud go to the Wordle Gallery.

Or consider the transcript of Obama’s recent town hall meeting in Elkhart, Indiana:

To remix this cloud go to the Wordle Gallery.

The appeal of these text clouds is that they provide an easy (maybe too easy) index of the contents of a body of text.  For the ARRA:  Act.  provided. funds.  For the town hall meeting:  Applause. people. get. going. Make. jobs.

It’s non-linear reading.  Not that one would give up actually reading texts, obviously (although I don’t plan on reading the whole ARRA), but it gives you a quick sense of the weight of particular words.  And it is not necessarily static.  Part of the instructive element of this technology, I think, is the ability to remix text clouds by adjusting the layout, font, color, and number of words.

Now I just need to figure out how to export the text of my book.

Hat tip to historying.

Auto bailout dead, for now

People's Bailout Now!

Tonight the U.S. Senate rejected the proposed loan package designed to stave off bankruptcy for General Motors and Chrysler.  The sticking point, according to various news sources, was a demand by Senate Republicans that the United Auto Workers union accept “wage parity” with foreign owned automakers by some time next year.  The UAW, having already made significant concessions in its last contract, wanted to wait until the next round of negotiations in 2011.

In the coming days you’ll likely read how the UAW sank the Big Three with their outrageous demands.  But there’s not much objective reality behind that narrative.  Rather, it was a mix of market fundamentalism and flat out anti-unionism that sank this effort.  Add to that a bit of sectional conflict between southerners and midwesterners.  The rejected bill was essentially a government sponsored Chapter 11 in all but name.  The Republicans was simply a much more punitive and miserly version of the same idea.

The markets in Asia are already tanking.  I would not be at all surprised to see a press conference tomorrow morning with Hank Paulson declaring a change of heart.  Money from the TARP will be on its way.  Otherwise, Bush owns this Depression as surely as Hoover owns that of the 1930s. (He owns it anyway, but he can at least imagine he’s passing the baton to Obama).

People in this country are understandably suspicious of corporate bailouts.  It’s not only that the Big Three automakers have made many obvious business errors, and are failing in competition with foreign companies (note: it is patently false to say that the Big Three produce cars that “no one wants to buy.”  These companies still have a significant, if shrinking, market share).  Nor is it that automobilies, rightly or wrongly, are symbolic of the fossil fuel economy that has brought on global climate change.  Those sins are significant.  But for those in the industrial heartland, the proposed bailout is just the latest episode in the systematic gutting of communities in favor of big business.

The dirty little secret of the “American” automakers is that they are global corporations that have given up on American workers even as the vie for the sentimental, home-team attachments of the American car buyer. The fact that CEOs have graciously offered to work for $1 if their companies receive federal aid is cold comfort for the thousands of employees who will receive pink slips as a result of the demands for “restructuring.”  The Republican demand that UAW members take yet another pay cut is just the bitter icing on this mud pie.

Despite all of this, I still support loans to the Big Three as a temporary measure to avoid catastrophic economic collapse, and to keep these companies alive until we have a real President in office come January 2009.  At that point, perhaps we can have a more rational discussion.