A TALE OF TWO SYSTEMS

Posted in Rants on December 28th, 2011 by Ed

You know how little I like the "Here, I'm gonna copy someone else's writing rather than generating original content" posts, but I've been trying to improve upon this ("A Tale of Two Systems") for the past week and I don't think I have much to add to it.

American autoworkers are constantly told that high-wage work is an unsustainable relic in the face of a hyper-competitive, globalized marketplace. Apostles of neo-liberal economic theory — both in the public and private sectors — have stressed the message that worker adaptation is necessary to survive. Indeed, Steven Rattner, President Obama’s “car czar” during the restructuring of General Motors and Chrysler in early 2009, spoke last week of his regret that the federal government had not required the United Auto workers to take a wage cut at that time to enhance the competitiveness of those companies, comments similar to those he made in a recently published book (after the outcry created by last week’s remarks, Rattner yesterday backed away from them, though reiterating his view that more “shared sacrifice” would have bolstered American competitiveness).

Governments, too, the globalists have contended, should not think that markets can or should be controlled. As Remapping Debate reported earlier this year in an article about the role of large consulting firms in the promotion of the notion that national policy can and must allow global capital a free hand, McKinsey & Co. was already arguing back in 1994 that “a national government has no choice but to move forward to embrace the global capital market unless it wants to harm its own citizens, its economy and its own purposes.”

But the case of German automakers — BMW, Daimler, and Volkswagen — tells a different story. Each company produces vehicles not only in Germany, but also in “transplant” factories in the U.S. The former are characterized by high wages and high union membership; the U.S. plants pay lower wages and are located in so-called “right-to-work” (anti-union) states.

It turns out that “inevitability” has nothing to do with the differing conditions; the salient difference is that, in Germany, the automakers operate within an environment that precludes a race to the bottom; in the U.S., they operate within an environment that encourages such a race.

OK, two things.

First, "Car Czar" Rattner is a jagoff, despite the fact that I greatly enjoyed his book Overhaul. He apparently believes that the UAW should have taken bigger wage cuts so…so what, so that the bondholders could take a smaller haircut? The GM bondholders got more than half, when in any other bankruptcy they'd be entitled to (and receive) exactly jack shit. Convenient fact to omit with all the sweet talk of "shared sacrifice".

Second, as always the elephant in the room is the cost of private health insurance and health care overall. American neoliberals and assorted other Heritage-affiliated pud pullers love to whip out the "total compensation" canard to make wages look equal across borders. Of course Americans make a fraction of their European counterparts in terms of actual, you know, money. But I guess we should feel well compensated because the few employers that still provide insurance have to pay out the ass to do it. Awesome.

Gotta love the moral of the story, though: German auto manufacturers can obviously afford to pay workers in their American factories $30+ hourly…but why bother when people in Alabama and South Carolina are stupid enough to do it for half that? They know a rube when they see one, wrapped in a XXL-sized "These Colors Don't Run" t-shirt and clutching a Bible.