Class War and the Clash of Corporate Realities
To see the CEOs of the Big Three automakers fly into Washington to beg for money for their companies last week wasn’t nearly as disturbing as hearing who complained about it—notably conservatives who, just a few short months ago were arguing that the massive salaries and golden parachutes protecting heads of even the most poorly-run companies was just the free market determining the “value” of their “leadership.” These conservatives even contended that executive pay swelling to 400 times that of the average worker was just the cost of hiring the “best” and “brightest” even when the poor performance of companies from HP to GM proved that they were neither the best nor the most brightly led.
Washington’s refusal to cough up the cash to automakers might have been due to the bad publicity of the heads of Ford, GM, and Chrysler popping in on their corporate jets, not to mention the bad press lawmakers got from the sloppy application of the last bailout, that of saving quickly crashing Wall Street banks. But, of course, it’s not the executives who are being bailed out here: they’re unlikely to see the soup line anytime soon no matter what happens to the companies they run. Rather, the comparison between these two segments of the economy and who will really be helped if they’re bailed out is revealing of some deep class fissures long gaping in American life. After all, given that the failure of the Big Three will damage the lives of one in ten American workers, you’d think we’d all be for it, no matter how ugly it looks that their chairmen couldn’t give up their executive perks even for one day, even for the sake of appearances. The real problem here is that the heads of the Big Three run the wrong kind of company.
The $700 billion bailout of Wall Street happened virtually no questions asked. There was some consternation that not enough was being done for “Main Street” America, but we all agreed that the retirement investments of regular people were so tied up with big investment banks that these banks were “too big to fail,” no matter how dangerously sloppy their investment practices. Even though the dissolution of Ford, GM and Chrysler would no doubt be equally as damaging, it would have a few effects long sought-after by the investment and managerial classes: it would destroy the power of the blue collar worker, demolish a powerful union that he uses to get that power, and push wages down.
Corporate America has complained about the price of actually employing Americans at least since the 1970s, and the outsourcing of the last 30 years has pretty much been a vote of no-confidence in the American worker, even when it has meant a decline in quality, product safety, and, when fuel prices were high, profitability. The important thing to the investor was that fewer “expensive” Americans were being employed by the companies who dumped US workers, and the stock price would get a nice lift therefrom. The bankruptcy and restructuring of the Big Three would be a small price to pay for this class if it meant that the American worker held that much less power overall. There would be an ancillary decline in the power of the United Auto Workers, one of America’s biggest most influential labor unions. Not only has the UAW demand decent wages and benefits for its members, it has long been a thorn in the side of management and investors, who want free reign to pay their workers as little as they can get away with and employ the workers on terms demanded by the stock market, not the car market. One wonders, after decades of union/management battle, how much this is essentially personal, how much they want to destroy unions because they just don’t like them. Notably, the foreign car makers with plants in the US don’t employ union workers.
The effect on wages would be dramatic as well. With overtime, an autoworker in Detroit could make a very good, middle-class living, $60,000 plus. The non-union autoworkers in the South might be lucky to make $15 an hour, livable, and very good compared to the crappy part-time service industry jobs paying minimum wage that they had to take when traditional Southern manufacturing in fabrics and apparel ended in the 1970s and ’80s. Getting rid of one of the last well-paying manufacturing sectors in the United States would drive down wages overall, leaving unskilled workers with few options that pay better than, perhaps, $10 an hour—and few of these full-time. Thus letting the Big Three die would take millions of high-paying salaries off the books of corporate America, replaced with much more profitable low-end and part time ones, with, again, a bounce in medium-term profitability in those companies that survive.
That this might ruin the American economy is also not a major concern for the investor class. They follow the money, not the polity. If GM, Chrysler, and Ford disappear and Toyota and Nissan survive, all the investors have to do is make a call to their brokers to shift some stock around. If the US tanks, there’s always China and India, the internal markets of which are rapidly expanding.
The real reason conservatives wail against “class war” whenever progressives bring up helping the American worker is that fiscally conservative investors and their friends in both major parties have been waging it themselves for decades, and winning. And this policy of economic scorched earth is one they’d rather we didn’t see.