Back to the Heartland

With my adopted state in financial collapse, what better time for a tour of the Midwest?!

It was a hell of a trip.  With an 8 AM departure, we decided to get a hotel at the airport last night.  You know, just take the hotel shuttle in the morning.  After two shuttles passed by all filled up, we flagged a taxi for the mile-long trip to the terminal … which had moved because Northwest has merged with Delta.  Then, safely through the curbside check-in we hiked to the end of the longest TSA security line I have ever seen.  So long, in fact, that we were diverted to the next terminal over.  Then after clearing security we had to run about a half a mile through an underground tunnel back to the right terminal.  All this before 8 AM, all this before two flights.  All the while cajoling two small children to alternatively hurry up, wait, and remain seated for extended periods.  I do believe that LAX is the worst airport I’ve ever used.

But that’s all behind us now and we find ourselves in the congenial environs of the south side of Milwaukee, Wisconsin.  Well, actually a Holiday Inn, but I’ll take it.

A fair chunk of history has passed since I last posted on May Day.  Chrysler and GM went through bankrupcy in record time.  My kids turned five.  And the State of California virtually defaulted while its action-hero governor sat in his jacuzzi smoking stoggies. Now here we are again in the so-called Heartland.  What impressions after a few hours?  It’s nice to have *a little* humidity.  Things are very green here.  The beer selection is amazing.

One of my projects for this trip is to return to a sideline interest on the genealogy of “heartland” as a regional identifier for the Midwest.  I’ve taken my other blog “Global Heartland” down, so I won’t direct you there.  The original nugget of research was based on a review of electronic newspaper databases that found a huge jump in the use of the term “heartland” in the 1980s and 1990s.  In other words, the region only became the Heartland in the wake of the ravages of globalization.  I hope to post a few commentaries on the topic as we traverse the region, talk to people, and sit in archives.

More later…depending on internet access.

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.

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.

A taste of things to come?

While Congress debates what to do about our economic crisis, a group of Chicago workers have taken matters into their own hands.

Last week managers at Chicago’s Republic Windows announced that the company would shut down in three days, and they promptly cut off workers’ health insurance. The reason? The slump in the housing industry and the withdrawal of a credit line by Bank of America. The short notice violates state and federal laws about advance notice for mass layoffs, and workers are due payment for their accrued vacation pay. Funny thing, apparently the company removed some heavy machinery from the plant over the Thanksgiving holiday leading to speculation that they plan to set up production in a more “business friendly” environment.

Rather than accept their fate, the workers (members of United Electrical Workers local 1110) occupied the factory and sent out a general call for support. And who should respond?  Not only Jessie Jackson.  Not only two powerful U.S. Reps.  But our President-elect himself.  According to the New York Times, Obama said of the occupation:

“The workers who are asking for the benefits and payments that they have earned,” Mr. Obama said, ” I think they’re absolutely right and understand that what’s happening to them is reflective of what’s happening across this economy.”

Ah, what a difference an election makes.  Granted, it’s not an outright statement of support for sit-down strikes.  But can you imagine Bush saying this?  Bill Clinton?  I can’t.  We’re talking about a group of people trespassing on private property and refusing to leave.  We’re talking about people taking direct action to confront the economic crisis on the ground.  True, all these workers want is back pay, vaction pay, and reasonable notice.  In a few days, this will be resolved and the occupation will end.  The real question is whether this event is a taste of things to come?

During the Great Depression, President Franklin Roosevelt famously quipped that if he worked in a factory he would join a union.  That message was immediately trumpeted by the labor movement to significant effect.  It wasn’t the only reason people joined unions in unprecedented numbers during the 1930s.  There was, of course, a major change in the legal structure of labor relations, and a hugely creative and determined drive by organizers and rank-and-file unionists.  But no one should underestimate the symbolic significance of even vague support from a very popular President.  The terrain of struggle is already shifting.

To follow the story beyond the MSM:

Pilsen Prole blog

Chicago Indymedia newswire

There is an interview with union leaders here on the Internet Archive.

Update: The UE announces victory.

Vindictive America Prepares to Push Itself Off the Ledge

People are pissed off, and for good reason.  The economy is in the tank.  And from the person-on-the-street perspective, the government’s only response has been to give unimaginable amounts of money to banks with little or no strings attached.  So it’s not too surprising that when American automakers came calling for a $25 billion taste of federal bailout sugar, folks are not all that eager to oblige.

But let’s consider some of the reasons being floated out there for letting the Detroit Big Three go down the drain.  There are of course, many things to be said about the poor management, the over-dependence on SUVs, etc. Managerial arrogance?  Oh yes.  All true.  But let’s get real folks.  We’re going to let GM collapse because Rick Wagoner flew to DC on a corporate jet?  Does anyone think for a moment that if the financial industry was based in, say, Peoria, that its leaders would fly commercial airlines to Washington?

Let me be clear.  I hate corporate jets.  I live in the flight path of the Santa Monica Municipal Airport, which means that corporate jets, landing gear deployed, rumble my house every day.  But are we’re going to throw 100,000+ people out of work because their managers are arrogant and tone deaf?

Let’s be very clear about the logic behind these arguments:  market fundamentalism.  True, it’s cloaked in populist outrage.  But the underlying argument for letting these companies go is that the market is always right and we need to “sweep out the deadwood.”  Guess what?  The “deadwood” are real people with mortgages, families, and hopes for a pleasant retirement.

There will be (continued) restructuring of the Big Three if they survive.  Chrysler?  Likely to merge.  GM?  Better get smaller.  But is it really wise to let them collapse right now?  If they do, we’ll go from a severe recession to an outright depression.  Whatever you think of the ultimate fate of these companies, it is more fiscally sound to move them through this crisis.  If they collapse in 2 years, when the overall economy is more stable, so be it.  We will have saved money by helping them limp to their ultimate demise.  Let them fail now, and we’re on the hook for much larger costs (pensions, unemployment, lost tax revenue, etc.).

[Brief reality check:  you may read that UAW benefits are the reason the Big Three are going down.  May I suggest this article that points out that hourly workers at the Big Three are making more or less the same as non-union workers.  (Agreed, this is not a great advertisement for unionism).]

Finally, in my opinion the mainstream media, especially TV, has no clue what they’re talking about.  I find some industry blogs more thought provoking.  The Truth About Cars is generally favorable to letting GM fail, althought I detect a little note of fear as the notion become more like reality.  The AutoExtremist supports a bailout, and along with others argues that Chapter 11 bankruptcy won’t work for the auto giants.  Among the economist-bloggers Dean Baker debunks the bull, and Paul Krugman redeems himself after a shameless winter and spring of Hillary promotion.