Sunday, January 11, 2009

What Henry Ford Knew

"An underpaid man is a customer reduced in purchasing power. He cannot buy. Business depression is caused by weakened purchasing power. Purchasing power is weakened by uncertainty or insufficiency of income. The cure of business depression is through purchasing power, and the source of puchasing power is wages." - Corporate Titan Henry Ford, 1926.

As Congress begins the dirty job of negotiating a stimulus plan to save the economy, the Hightower Lowdown reminds us of the barbed-dildo reaming Congress just gave American workers.

But the ongoing bailout battle is no longer about economics. It's about class in America.

Republican lawmakers, backed by a raucous chorus of right-wing pundits and corporate lobbyists, have turned Motor City's economic woes into an excuse for launching a mendacious and pernicious assault on America's hard-working, highly skilled, unionized working families--and on the middle-class ideals that they embody.


... while Congress squawked about the blue-collar crowd's relatively paltry request, it had totally caved in to the banking elite, who did not request money but demanded it. Lawmakers meekly rushed out $700 billion for them, a taxpayer gimmie nearly 30 times larger than the one Detroit was seeking. What plan did the bankers present? What explanation did they give of how they'd spend our money?

None. They simply dispatched their designated consigliere, Treasury Secretary Hank Paulson (formerly the reigning prince of Goldman Sachs), to hand Congress a three-page ultimatum. It contained not a single specific or promise of results. It was, in effect, a hold-up note.

But that $700 billion was just for openers. It has not been widely reported, but the total Wall Street bailout--counting government loans, stock purchases, debt guarantees, and backdoor handouts by the Treasury and the Federal Reserve--is nearly $8 trillion. That's eight followed by 12 zeroes!

What have we gotten for this gargantuan giveaway? Zip.


This is a flagrant usurpation of Congress's constitutional power and a kleptocratic transfer of public wealth by executive fiat. Yet it was met with barely a meow from lawmakers.

Roar of the kitties
Oh, but what tigers some of the congressional kittens became when Detroit showed up!

Right-wing senators from the South and West were suddenly baring claws and hissing furiously that to get aid these supplicants had to restructure their businesses in accordance with government dictates. These congressional onetime free-market holy rollers made a demand that was specific and blunt: Whack your unions.


In fact, it's not wages that burden the auto companies--it's the skyrocketing cost of health care in America. Japanese, Korean, European, and other carmakers don't pay this cost because their countries have national health care for all, financed by taxpayers. Curiously, none of the senators who now profess to be outraged by American labor costs have stepped forward to support universal health care in our country, which would drastically improve the global competitiveness of all of our industries.

There's one more number that union-busting senators don't mention: 10%. That's the share of a made-in-Detroit car's price tag that goes to cover all labor costs, including health care, pensions, etc. That's it. Ten percent. In short, labor is nowhere near the financial burden it's portrayed as being. To the contrary, unionized workers bring award-winning productivity to the industry. They are assets, not liabilities. Meanwhile, 90% of what we consumers pay for cars goes to bankers, bondholders, investors, executives, suppliers, dealers, and a myriad of others who are part and parcel of every vehicle we drive. The senators could force UAW members to work for free, but that would not begin to solve the industry's financial problems.


Speaking of pay, am I the only one who thinks it's ridiculous to hear senators chastise working families over earnings? Come on-Corker, DeMint, Kyl, and the others who're throwing hissy fits about UAW wage levels are drawing nearly three times as much from us taxpayers in base pay, plus getting platinum-level health care, golden pensions, and all sorts of senatorial perks. And, unlike autoworkers, senators don't have to have any real skill, do any heavy lifting, or produce any products.

Yes, these union workers make a good living--but what exactly is wrong with that? Indeed, they're a tremendous American success story. UAW members define our country's middle-class ideal. They can afford to buy homes (and cars), send kids to college, take vacations--and pay taxes, including those that cover salaries and benefits for U.S. senators.

Sustaining, expanding, and extending such a vibrant, productive middle class ought to be the top goal of economic policy makers. Yet, too many Washington officials keep pushing in the opposite direction, constantly pursuing a cheap-labor America that enriches the few at the expense of our nation's true economic strength. They are doing the bidding of a corporate elite whose only industrial idea of the past 30 years has been to kick labor in the shorts.


(What Henry Ford said 82 years ago) remains true today. Middle-class wages are the lifeblood of the American automobile industry... and of the American economy.

(I've been a Lowdown subscriber for the entire 10 years it has existed, and a Jim Hightower fan for years before that, so I hope Jim will forgive me for excerpting such a huge chunk of his January 2009 subscriber-only issue. As for the rest of you, a yearly subscription to the Lowdown is only $15, and a bargain at twice the price. Subscribe today.)

Cross-posted at They Gave Us A Republic ....