A TALE OF TWO SYSTEMS

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.

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30 Responses to “A TALE OF TWO SYSTEMS”

  1. Tim H. Says:

    The catch is, the first entity in a race to the bottom reaps large profits, each succeeding entity progessively less. At this point there's not that much left to bleed out, and still be a first world country. One wonders what the hell kind of drink they serve where the .01% hang out.

  2. Jude Says:

    The rubes the Germans are exploiting aren't the rednecks with the big patriotic t-shirts. Hell, 15 bucks an hour outside of Birmingham is an excellent paycheck.

    No.

    The Germans know their marks (oh god–sorry about that), though. And they're the politicians in Alabama and South Carolina. They're the idiots who will give away tax breaks in perpetuity and pay for factories to be built; the jackasses who take pride in destroying viable industries in other parts of the country so they can "break the power of Big Labor," whatever the hell that means; the dipshits who will ignore or overturn every environmental regulation to get some of those sweet, sweet kickbacks.

    Those are the people who make this kind of shit happen. If you're just some schmo wondering why gas costs three bucks a gallon and cigarettes are eight bucks a pack, fifteen bucks an hour in a place where you used to be lucky to get half that is like heaven on earth.

  3. * Says:

    The Germans know their marks (oh god–sorry about that), though. And they're the politicians in Alabama and South Carolina. They're the idiots who will give away tax breaks in perpetuity and pay for factories to be built; the jackasses who take pride in destroying viable industries in other parts of the country so they can "break the power of Big Labor," whatever the hell that means; the dipshits who will ignore or overturn every environmental regulation to get some of those sweet, sweet kickbacks.

    -Jude

    (I couldn't have said it better myself, so I didn't.)

  4. Major Kong Says:

    "American autoworkers are constantly told that high-wage work is an unsustainable relic in the face of a hyper-competitive, globalized marketplace."

    I'm still trying to figure out how the path to prosperity is for everyone to make less money.

  5. Ryan E Says:

    Creditors (secured and bond holders) do get paid. It's the equity holders that are entitled to absolutely jack shit.

    http://www.investopedia.com/terms/a/absolutepriority.asp

  6. c u n d gulag Says:

    "They know a rube when they see one, wrapped in a XXL-sized "These Colors Don't Run" t-shirt and clutching a Bible."
    Nice!

    They power-that-be in the country have also spent decades propagandizing the rubes that "Socialism = Un-American = EVIL!!!"

    And then go about defining socialism as anything and everything that helps the 99% and doesn't benefit them or their cronies.

    The average American has a much chance of defining "Socialism" as they have of explaining Quantum Physics.

    Americans – We Are a Very Proud and Powerfully Stupid People!
    You know – rubes!

    And there's nothing Americans love more than winning.
    Even if it's the race to the bottom. 'As long as we beat them black and brown people, the women-folk, non-Christians, and them gay non-people, while racing to "win" it. Because "we" deserve to "win!" They don't!!!'

    USA! USA!! USA!!!

  7. Major Kong Says:

    I think Gene Wilder said it best:

  8. buckyblue Says:

    High wages for the workers are unsustainable but high corporate profits and insane CEO compensation are? Blow me. Every factory should be owned by the workers.

    XXL t-shirt, a Bible and …… a gun.

  9. Todd Ernst Says:

    I think NikeWorld's sum up the situation nicely. Nike can't afford to pay American wages so they ship thier factories overseas, but Nike can afford very expensive retail outlets that seem to have very little to do with selling shoes.

  10. cat Says:

    " 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."

    I read that piece as well. I like how the writer calls it an 'environment' trying to infer its some cultural issue rather then what it really is, a legal requirements that workers or their representatives have seats on company "boards". Germany companies don't want unionized labor anymore then anyone else.

    That article also overlooks that germany supressed their wages after re-unification. German workers real wages from 2000-2010 fell 2.5% to 4% ,depending on source, even though they went to full employment and had a 25% increase in GDP over that time. Almost all other Euro countries saw real wage growth. That sure smells like a race to the bottom to me.

  11. Bernard Says:

    as my favorite movie/not/ says,"Stupid is as Stupid does." Prescient for its' honesty, lol. Maybe it is a generalization in accepting almost all White Southerners are THAT Stupid, but….. Come to Alabama, Mississippi, Louisiana and all the rest of the Old South and see how "stupid is as stupid does" operates.

    reality being what it is, what else is there to say.
    after 40 years of the same successful PR by the Republicans in their "race to the bottom" of the cesspool, Americans truly deserve what they voted for. Especially Southern Americans. too bad the rest of America/us/ went down the drain with them.

    sow the wind and reap the whirlwind.

    God, Guns and no Gays, the America Way, aka Southern Values.

  12. Chris Franczek Says:

    RE: "total compensation" argument

    They like to be all-inclusive when comparing worker compensation, but when it comes to comparing taxes, they like to only talk about income tax and avoid any direct comparison of total taxes (income, sales, fuel, "user fees", etc -all of it) paid by an individual expressed as a percentage of that person's total income (again, all income – paycheck, capital gains, shares of stock, etc).

  13. Major Kong Says:

    @Bernard

    We're right behind you here in the Midwest.

    There's a reason we call it the "heart-land". It's because the brain isn't here.

  14. bb in GA Says:

    Forrest:

    Most of the boxes come with a code sheet that tells what each type of candy is usually by shape and identifying marks on the chocolate surface.

    Love,

    //bb

    P.S. – y'all had your chance after the Wo-Wah – could've fixed us, maybe, but wasn't worth the effort. Remember, no A/C back then. Blame your great^2 granddaddies (g^2-grannies couldn't vote!)

    P.P.S. – I think the recession has taken care of most of the influx, but thanks for the help to keep down uneeded growth.

  15. Carrstone Says:

    It's hard to believe, I know, but increased pay doesn't automatically result in improved product quality and that's what customers buy. Anyway, in Germany the workforce often has a seat on the company board, is concerned about the future of the company and doesn't see the owners as "The Enemy".

  16. Nate Says:

    And decreased pay does, Carrstone? That's the horseshit the Milton Friedman's of the world would have us believe.

  17. RT Butte Says:

    Increased worker pay may not directly correlate to improved product quality, but they do follow in the other direction: reduced worker pay often leads to reduced product quality. Which job would you feel more invested in and try harder to do well at, one that pays $10/hr or the same job at $20/hr?

    If you cared about the product you were making and made $20/hr doing it, would you care as much about it if your pay were reduced by half? Of course, there's always something to be said about pride of craftsmanship and the reward of a job well done, but you can't eat a job well done nor can you sleep on pride.

  18. bb in GA Says:

    Has Maslow been thoroughly discredited by this generation?

    I would think that pride in work would be high up on the pyramid in the self actualization part of the needs deal wouldn't it?

    I don't imagine you give too much of a rat's rear if you're sweatin' the house payment/rent or feeding your babies.

    //bb

  19. Major Kong Says:

    I think there's a name for well-paid workers – it sounds something like "consumers".

    It's not a new concept. Henry Ford had this figured out 100 years ago.

  20. Chris Says:

    I also don't understand why workers have to be paid less, yet CEO's are allowed to earn millions of dollars a year. This is total 1% propaganda. The 1% wins, the other 99% bend over and take it: where have I heard this before?

    People are consumers, and companies want to limit their ability to buy stuff? Is this not insanity?

  21. blinded by science Says:

    "I also don't understand why workers have to be paid less, yet CEO's are allowed to earn millions of dollars a year."

    Corporations have to pay CEOs exorbitant salaries in order to "attract the best talent." Why the opposite is true for the actual workers is indeed a mystery, though it appears to go something like, "Because we say so, you shit-eating prole." I think Alan Greenspan said that.

  22. kentropic Says:

    Rattner is a "jagoff"? Your Pixburgh roots are showing, & `at.

  23. xynzee Says:

    @Mjr: "I'm still trying to figure out how the path to prosperity is for everyone to make less money."
    Thanks for that. Clear, succinct, I'm stealing that.

    @Carrstone: "It's hard to believe, I know, but increased pay doesn't automatically result in improved product quality and that's what customers buy."
    Exactly!! I'm still trying to understand how CEOs earn the big $$ when they strip the guts out of a company, cut R&D, authorise the use of crap raw materials, insist on shoddy workmanship and in effect drive a company to its knees if not its grave.
    My last pair of Doc Martens lasted *2.5 yrs* daily wear, harsh environment (my co-workers buy cheaper shoes at 1/4 of the price that lasted 3-6months), and the soles outlasted the upper. They were worth *every* premium penny I paid for the product! Sketchers bought DM and make them in China. This pair needs to be replaced after 1yr. Ergo *not* worth the premium price. So do you think I'll purchase their crap product again??

    "Anyway, in Germany the workforce often has a seat on the company board, is concerned about the future of the company"
    WT…?!! What makes you think workers aren't interested in the future of the company?? Are you naturally this stupid or do you practice? Again, was it the decision the guys on DM's factory floor to off-shore their jobs to China and lower the standard of production quality? Sounds like an executive decision to me. How will this work out for the company's future as I've already mentioned?

    "and doesn't see the owners as "The Enemy"."
    Uh, perhaps the reason workers see the owners as "the Enemy", is specifically for reasons mentioned in the post. Just sayin'.
    Case in point the people I work for will start spinning like tops, and spitting invectives at us for the stupidest of reasons ie doing our jobs. We're then told to perform 3 mutually exclusive activities and get sworn at for not getting 2 done. Pity the poor fool if a 4th more pressing concern comes up ie helping a customer and delivering "good customer experience" of our establishment which prevents us from doing the 1st 3 priorities.
    Newbies *quickly* learn that it's really *not* in their interests to value add to the customer's experience. When I was a customer I'd always wondered why there was a simmer, "here's your f—in' beer, drink the f-up, and get the f-out!" hostility towards customers. Now I know, and frankly it's in response to the owners treatment of staff. Staff can hardly wait to get out as fast as they can, only reason we're there is money. The reason for the place's success: location, location, location. Employee loyalty? Zilch! I have never worked in a place where the staff have actually thought about how to bring the owner to his knees. Believe me, we certainly didn't feel like that when we started.
    There's something about being called an "F—in idiot!" for asking for the key to access things you need for set-up, and because you didn't get the key set-up isn't completed on time and you take another bollocking because some how this now your fault, tends to really demotivate the staff. Funny that. Oh, and you don't have to take the staff's word for it, the customers are always amazed that they treat us this way *in front* of them.
    The owners are convinced that all of us are thieves, yet the irony is that because of the attitude and treatment staff feel compelled to steal small items where they probably wouldn't have, just to get back at the owners. Hell, we're not even allowed to drink water during our shifts. No really, guys have been threatened with being fired for drinking water, you try not drinking water when it's 43°C and 85% humidity doing physical work. So yeah, management certainly is shaping up to being "the Enemy" don't you say.

  24. Bears Fan Says:

    cuindgulag wrote The average American has a much chance of defining "Socialism" as they have of explaining Quantum Physics.

    I wonder which term is misused more Socialism, or Fascism.
    Seriously, I do this all the time, ( but be warned make sure if you do it to a friend that you present it in a way that doesn't convey the message that you think the person your speaking with is a clueless moron, even if they are) if someone starts spewing the fascism claim, ask the if they know what a fascist is. I guarantee you that the best that they come up with is something about Nazis or Mussolini, and think that knowing which countries were fascist is the same as knowing what fascism is. Regardless, they have no concept of the basic tenets of fascism, whether they are the ridiculously tainted definition provided by Mussolini himself, or the more mainstream definition developed by Historians and Political Scientists over the years.
    So to most people Socialism, Communism and fascism are all basically the same thing. They know it must be bad because they have been told it's bad. Yet they really couldn't tell you anything meaningful about any of them.

  25. BobS Says:

    Isn't it the case that German auto makers are outsourcing work to low wage eastern European countries, and in the context of the EU wouldn't this be roughly analogous to their choice to locate in the essentially southern right-to-work states rather than the (marginally) more enlightened parts of the US?

  26. My Says:

    @Bears Fan:

    Amen. Here's a fun activity: When some maroon starts regurgitating hyper-Limbaugh-perbole about "socialism" et al, I like to start squawking terms and phrases as follows, "Yeah! Open heart surgery! NASCAR! Biochemical engineering! Upholstery!" and so forth.

    When they look at me and ask, "What the fuck are you talking about?" one replies, "Same as you. Aren't we exchanging soundbites and such about which we are almost totally ignorant?"

    End of "conversation"; point made. With any luck, they will shut their ignorant mouth and save their mis-/disinformed troglodytic emotivist tirades for behind closed doors, where such masturbation was intended to be practiced.

    Also, since it seems appropriate to share: http://www.rense.com/general37/char.htm

  27. Bears Fan Says:

    Another example is IKEA. They opened up one of their factories in the South and the company that in their own country pays the employees very well with great bens, and excellent working conditions sends a factory here, run by Americans, and they end up with crappy wages, little to no bens, and fairly crappy working conditions. I read this story and realized that holy fuck, as far as Europe is concerned, we are already Mexico.

  28. Gollum Says:

    @ Bears Fan : You are more right than you think. I'm from Europe, living in the US; my family and friends regularly ask why the heck I insist on "living in that third world country". Some days it's hard to argue against them… Sad 'cause I think this country has so much potential, but is missing out on so much of the quality of life/ good working conditions we take for granted in many parts of Europe.

  29. bb in GA Says:

    Gollum:

    Tell your relates that I'm sorry to say that in this 'Titanic' analogy they are closer to the bow and we in the US are closer to the stern. Likely they go first and that damn water is below zero for all y'all celsius fans.

    //bb

  30. Thery Says:

    my God, i tugohht you were heading to chip in with some decisive insght on the finish there, not leave it with ?we leave it for you to decide? Also welcome you!