September 03, 2007
Mexican Trucks On a Highway Near You
The Teamsters Union's request to halt a Bush Administration plan to allow trucks from Mexico on U.S. highways has been rejected by the 9th U.S. Circuit Court of Appeals. This move will affect both union and non-union truckers further shaking up the labor market and U.S. trucking firms. The Bush Administration's plan will also compromise border control and highway safety. I am a bit surprised there isn't more of an uproar over this.
The plan will only be in effect for a year as a test or experiment. I guess next year at some point they will tally up how many fatalities were caused by unsafe trucks from Mexico and then decide on whether or not to expand the program?
I don't know the full extent of the program i.e. how will they ensure these vehicles meet U.S. standards, what labor laws will govern these drivers etc but I will look into it.
October 18, 2005
Interview With Delphi Boss
Yesterday's Wall Street Journal featured an interview with Delphi's boss.
Here is the link and brief excerpt:
Reassembling Delphi (WSJ Subscription Required)
WSJ: Can you elaborate on those forces?
Mr. Miller: Globalization is a fact of life these days. What has been brought into sharp relief is the differing value the global market places on knowledge workers versus basic manufacturing workers. I was struck by what I saw when I visited our Delphi operations in Mexico last week. Our average hourly worker makes about $7,000 a year, while the average salaried worker makes about $35,000 a year. A spread of five times. The same spread, or wider, exists in all low-cost countries. The implications for America are enormous, and it boils down to this. If you want your kids to enjoy the great American dream, get them a good education. The days when manual unskilled labor can deliver a $65-per-hour wage are disappearing.
My recent experiences have been with industries that are undergoing profound change What they have in common is a social contract, worked out over the past half-century with strong centralized labor unions, to elevate their work forces with elaborate defined-benefit retirement programs. Back in the days when you worked for one employer till age 65 and then died at age 70, and when health care was unsophisticated and inexpensive, the social contract inherent in defined-benefit programs perhaps made some economic sense.
Today, defined benefit programs are an anachronism. First off, they force people to stay with one employer, even though we have a much more mobile and flexible population these days. Second, the notion of having all your retirement eggs in one basket -- your employer -- is a concentration of risk that is simply inadvisable for anyone in today's fast-moving economy. Finally, people are living longer these days. Of course, that is a good thing. But the question is, how can we afford it?
October 15, 2005
Chapter 11 Weapon
FInancial Times Columnist John Gapper blows the Delphi Chapter 11 wide open in his most recent column. I provide a link and excerpts below:
John Gapper: The Danger of Rewriting Chapter 11 (Financial Times subscription required)
Steve Miller, chief executive of Delphi, was in New York this Monday to explain why he was putting the Michigan automotive parts supplier into Chapter 11 bankruptcy. “We are broke,” he said, holding his hands in the air. “I am sorry to be the one delivering that message.”
Mr Miller did not look very sorry. In fact, he seemed like someone whose bargaining position with his employees had just become a lot stronger. Instead of having to wheedle unions into accepting cuts in pay and benefits for Delphi’s 34,000 hourly-paid US workers, he can threaten them with the company defaulting on its defined-benefit pension plan.
Organised labour, meet organised capital. Chapter 11 of the Bankruptcy Code used to be regarded as a bizarre US arrangement allowing a troubled company’s managers to stay at the helm and restructure instead of being kicked out by the creditors. Eastern Airlines went into Chapter 11 in 1989 and remained there for two years losing money before collapsing.
These days, managers and creditors are often on the same side from the start. Chapter 11 has become a device for reasserting management fiat over workers with the backing of bankers. Financiers have forced steel industry employees who were used to being highly paid to accept lower wages and fewer benefits. Delphi’s Chapter 11 filing suggests Detroit’s workers and retirees are next in line.
The way that Delphi is handling its bankruptcy shows how things have changed. David Skeel, a University of Pennsylvania law professor, says the interests of managers and creditors have been aligned by two things: companies are supported – and controlled – with specialist financing and managers are given very large financial incentives to act rapidly and to take tough decisions.
All of this carries a price. They say you should not visit a sausage factory if you like eating sausages and in this case the ingredients being ground up for profits are health and (perhaps) pension rights. It does not take a union activist to be disturbed by the prospect of Delphi workers losing benefits that they dedicated their lives to gaining by working there.
The stark contrast between workers’ losses and managers’ gains was one reason for changes to Chapter 11 in the bankruptcy reforms that come into effect next week. The new law bars companies from paying managers Chapter 11 bonuses and limits the time during which they have the sole right to propose a restructuring plan. Managerial prerogative, as well as wealth, is taking a haircut.
October 11, 2005
Losing Hearts & Minds or Lack of Political Power
Many progressives, liberals and unionists would probably say that our problems stem from lack of political power. But our lack of power has its roots in something even more important and that is our inability to capture the hearts and minds of the people. Strategy is important, tactics are important but fundamental to all of this is having answers to peoples problems that make sense and are easy to understand.
Recently I had a conversation with a Professor who asked my opinion of what has been happening in the labor movement. I responded by telling him that I think our main problem is that we are coming up with answers to the question 'what do unions need to do to increase membership?' rather than asking the question 'what do workers need in today's economy?'.
Answers to the first question can lead an institution to do many things, even come up with strategies to increase membership, while at the same time having little or no impact on the daily lives of workers. I think labor unions on both sides of the Change to Win/AFL-CIO split are essentially only looking out for what is in the best interest of their particular institution. To be sure these unionists (on both sides) do believe that what they are doing is ultimately in the best interests of their membership but they are viewing the terrain through the lens of the existing institution.
The second question is much more difficult to grapple with. While the unions in Change to Win have been making a big deal about how bold a move it was to leave the AFL-CIO in reality, major unions have been moving in and out of the AFL-CIO throughout the 50 years of its existence. A move which was truly bold would be one that fundamentally reorients and alters the institution. Such a change could only occur if unions asked "what do workers in today's economy need?"
But it is not only unions which are losing the battle, it is the entire progressive project. An article in today's NY Times highlights the problem:
Liberal Hopes Ebb in Post-Storm Poverty Debate (NY Times-Free)
As Hurricane Katrina put the issue of poverty onto the national agenda, many liberal advocates wondered whether the floods offered a glimmer of opportunity. The issues they most cared about - health care, housing, jobs, race - were suddenly staples of the news, with President Bush pledged to "bold action."
But what looked like a chance to talk up new programs is fast becoming a scramble to save the old ones.
Conservatives have already used the storm for causes of their own, like suspending requirements that federal contractors have affirmative action plans and pay locally prevailing wages. And with federal costs for rebuilding the Gulf Coast estimated at up to $200 billion, Congressional Republican leaders are pushing for spending cuts, with programs like Medicaid and food stamps especially vulnerable.
Once again the conservative agenda wins. It is not only because they have political power but it is also because the progressive agenda is just not capturing the hearts and minds of people. The best progressives have to offer is "saving the old agenda."
And many of us still don't get it:
"We've had a stunning reversal in just a few weeks," said Robert Greenstein, director of the Center on Budget and Policy Priorities, a liberal advocacy group in Washington. "We've gone from a situation in which we might have a long-overdue debate on deep poverty to the possibility, perhaps even the likelihood, that low-income people will be asked to bear the costs. I would find it unimaginable if it wasn't actually happening."
The most important clue in this article is the following and hopefully our arrogance doesn't cause us to miss it:
"This is not the time to expand the programs that were failing anyway," said Stuart M. Butler, a vice president of the Heritage Foundation, a conservative research and advocacy group influential on Capitol Hill.
While the right has proposed alternatives including tax-free zones for businesses and school vouchers for students, Mr. Butler said, "the left has just talked up the old paradigm: 'let's expand what's failed before.' "
There is a real sense among people that yesterday's solutions are just not up to today's task which leaves them open to new or different methods of treating what ails. Our problem is that the right wing has not only out-strategized us, but more importantly they are the ones providing a vision, providing alternatives and providing answers.
A typical response from many in the left is epitomized in the following paragraph:
Doubt about the effectiveness of some programs is only one factor shaping the current antipoverty debate. Another is political muscle: poor people do not make campaign contributions. Many do not even vote.
It seems to me this is more of an assumption than fact. The effects of Katrina and Rita affect people across the board. Sure, the experience of the poor was much worse because their lives were endangered, but the economic destruction and the eventual reconstruction affects an entire swath of the population even beyond the state's borders. The problem has nothing to do with whether or not poor people vote in large enough numbers or not(did they ever?), it is whether people are excited and convinced that there are solutions worth fighting for. The right has given new solutions and visions that are exciting more people, the left has only responded with trying to defend old institutions that no longer inspire.
A case in point is when Bush did away with labor and wage protections after Katrina. How many people, even in labor, knew or cared? There is almost a complicit silence that yes maybe it is better that these rules are relaxed. If even the core base which has benefited by these regulations are left uninspired how do we expect the broader population to care? Or maybe prevailing wage laws never affected enough people in Louisiana so defending them never entered people's minds? (We cannot just blame people here, it seems more and more unions themselves are looking out only for their particular union's interest).
As long as progressives spend their energy defending 20th century institutions and unionists ask themselves how to strengthen their institutions we will be one step behind. That doesn't mean we throw away our principles and the moral foundation of our project but that we reorient them towards a 21st century economy.
October 01, 2005
Avian Flu & The Economy
Stories on a possible outbreak of Avian Flu can be seen in the news almost daily. Recently the blog Future Pundit posted about a Canadian brokerage firm warning its clients of a second global depression in the event of a flu pandemic.
It is something to think about.
There is also a blog dedicated to tracking news about the Avian Flu run by a professor at George Mason University.
September 23, 2005
Struck Hospital Uses Katrina Victims as Scabs
As Nathan Newman states on the House of Labor blog this is just unbelievable:
Katrina Victims Replace Strikers (San Fransisco Chronicle -free)
.."It's such an extraordinary irony,'' said Sal Rosselli, president of SEIU United Health Care Workers West.
"SEIU is sending nurses and psych techs to New Orleans to care for people there. We're engaging the government to establish training programs there for workers who are unemployed."...
September 03, 2005
How the Free Market Killed New Orleans
How The Free Market Killed New Orleans (free-Zmag by Michael Albert)
seen first on Freiheit Und Wissen
The free market played a crucial role in the destruction of New Orleans and the death of thousands of its residents. Armed with advanced warning that a momentous (force 5) hurricane was going to hit that city and surrounding areas, what did officials do? They played the free market.
They announced that everyone should evacuate. Everyone was expected to devise their own way out of the disaster area by private means, just as the free market dictates, just like people do when disaster hits free-market Third World countries.
It is a beautiful thing this free market in which every individual pursues his or her own personal interests and thereby effects an optimal outcome for the entire society. This is the way the invisible hand works its wonders.
There would be none of the collectivistic regimented evacuation as occurred in Cuba. When an especially powerful hurricane hit that island last year, the Castro government, abetted by neighborhood citizen committees and local Communist party cadres, evacuated 1.3 million people, more than 10 percent of the country's population, with not a single life lost, a heartening feat that went largely unmentioned in the U.S. press
On Day One of the disaster caused by Hurricane Katrina, it was already clear that hundreds, perhaps thousands, of American lives had been lost in New Orleans. Many people had "refused" to evacuate, media reporters explained, because they were just plain "stubborn."
It was not until Day Three that the relatively affluent telecasters began to realize that tens of thousands of people had failed to flee because they had nowhere to go and no means of getting there. With hardly any cash at hand or no motor vehicle to call their own, they had to sit tight and hope for the best. In the end, the free market did not work so well for them.
Many of these people were low-income African Americans, along with fewer numbers of poor whites. It should be remembered that most of them had jobs before Katrina's lethal visit. That's what most poor people do in this country: they work, usually quite hard at dismally paying jobs, sometimes more than one job at a time. They are poor not because they're lazy but because they have a hard time surviving on poverty wages while burdened by high prices, high rents, and regressive taxes.
The free market played a role in other ways. Bush's agenda is to cut government services to the bone and make people rely on the private sector for the things they might need. So he sliced $71.2 million from the budget of the New Orleans Corps of Engineers, a 44 percent reduction. Plans to fortify New Orleans levees and upgrade the system of pumping out water had to be shelved.
Bush took to the airways and said that no one could have foreseen this disaster. Just another lie tumbling from his lips. All sorts of people had been predicting disaster for New Orleans, pointing to the need to strengthen the levees and the pumps, and fortify the coastlands.
In their campaign to starve out the public sector, the Bushite reactionaries also allowed developers to drain vast areas of wetlands. Again, that old invisible hand of the free market would take care of things. The developers, pursuing their own private profit, would devise outcomes that would benefit us all.
But wetlands served as a natural absorbent and barrier between New Orleans and the storms riding in from across the sea. And for some years now, the wetlands have been disappearing at a frightening pace on the Gulf? coast. All this was of no concern to the reactionaries in the White House.
As for the rescue operation, the free-marketeers like to say that relief to the more unfortunate among us should be left to private charity. It was a favorite preachment of President Ronald Reagan that "private charity can do the job." And for the first few days that indeed seemed to be the policy with the disaster caused by Hurricane Katrina.
The federal government was nowhere in sight but the Red Cross went into action. Its message: "Don't send food or blankets; send money." Meanwhile Pat Robertson and the Christian Broadcasting Network---taking a moment off from God's work of pushing John Roberts nomination to the Supreme Court---called for donations and announced "Operation Blessing" which consisted of a highly-publicized but totally inadequate shipment of canned goods and bibles.
By Day Three even the myopic media began to realize the immense failure of the rescue operation. People were dying because relief had not arrived. The authorities seemed more concerned with the looting than with rescuing people. It was property before people, just like the free marketeers always want.
But questions arose that the free market did not seem capable of answering: Who was in charge of the rescue operation? Why so few helicopters and just a scattering of Coast Guard rescuers? Why did it take helicopters five hours to get six people out of one hospital? When would the rescue operation gather some steam? Where were the feds? The state troopers? The National Guard? Where were the buses and trucks? the shelters and portable toilets? The medical supplies and water?
Where was Homeland Security? What has Homeland Security done with the $33.8 billions allocated to it in fiscal 2005? Even ABC-TV evening news (September 1, 2005) quoted local officials as saying that "the federal government's response has been a national disgrace."
In a moment of delicious (and perhaps mischievous) irony, offers of foreign aid were tendered by France, Germany and several other nations. Russia offered to send two plane loads of food and other materials for the victims. Predictably, all these proposals were quickly refused by the White House. America the Beautiful and Powerful, America the Supreme Rescuer and World Leader, America the Purveyor of Global Prosperity could not accept foreign aid from others. That would be a most deflating and insulting role reversal. Were the French looking for another punch in the nose?
Besides, to have accepted foreign aid would have been to admit the truth---that the Bushite reactionaries had neither the desire nor the decency to provide for ordinary citizens, not even those in the most extreme straits. Next thing you know, people would start thinking that George W. Bush was really nothing more than a fulltime agent of Corporate America.
-------Michael Parenti's recent books include Superpatriotism (City Lights) and The Assassination of Julius Caesar (New Press), both available in paperback. His forthcoming The Culture Struggle (Seven Stories Press) will be published in the fall. For more information visit: www.michaelparenti.org.
September 02, 2005
Katrina's Impact on the Economy
I'm posting links to a few articles and blogs that are taking Katrina's economic impact into consideration:
- Daniel Yergin (bio) The Katrina Crisis (Wall Street Journal- subscription required)
- SLATE: The Katrina Premium (free)
- LEX: Hurricane Damage (Financial Times - subscription required)
- Impact of Katrina (Econbrowser Blog)
- Coping With Gasoline Shortfall (Econbrowser Blog)
- Wall Street Absorbs Katrina's Shock (Financial Times - subscription required)
- Few Commodities Left Untouched (Financial Times - subscription required)
Katrina & Wal-Mart's Donation
Wal-Mart has announced a 15 million dollar donation towards the Gulf Coast relief effort in the wake of Hurricane Katrina. (notice the press release states they are collecting donations at their stores, will they claim the money being given by their customers as donations as coming from Wal-Mart?)
15 million sounds like alot of money. However, the donation needs to be put in perspective. Last year Wal-Mart earned 288 Billion dollars in sales and 10.3 Billion in pure profit. For 2004, the average per capita income in the United States was 32,937. Wal-Mart's donation equals .005% of its revenue.
If the average American citizen were to gauge their donation by the benchmark set by Wal-Mart they would donate only $1.65 to the relief effort.
some labor blogs on Katrina:
Working Life - Aftermath (especially see comments)
House of Labor - Numerous Posts
September 01, 2005
Business Week Comes Down on AMFA's Northwest Strike
The latest Business Week features a critical article on the strike against Northwest. I provide a link and excerpts below:
This Hardball Union Is Striking Out
Since founding an airline mechanics union behind the ongoing Northwest Airlines strike four decades ago, labor leader O.V. Delle-Femine has built its membership on a core principle: Make no wage concessions to management. For years that position worked, allowing the Aircraft Mechanics Fraternal Assn. to raid existing unions at such airlines as Southwest Airlines (LUV ) and United Airlines (UALAQ ) to swell its ranks.
Now the Northwest (NWAC ) walkout seems likely to spell the death knell for hard-line labor positions in the troubled airline industry. Many of the mechanics who quit the much larger International Association of Machinists in favor of AMFA's tough approach probably won't get their jobs back. Their likely defeat will reverberate among other unionized airline workers, too, dampening any idea that Delle-Femine's go-it-alone tactics are worth emulating.
Instead, airline workers at most major carriers will continue to face painful wage and benefit adjustments as their employers struggle to cope in a fiercely competitive, loss-plagued industry. The Northwest strike "will cause the collapse of AMFA," predicts Ray Abernathy, president of Abernathy Associates, a Washington (D.C.) consulting firm that advises unions on strategy.
CRAFT POWER. More broadly, AMFA's uphill struggle illustrates just how weakened organized labor has become across the economy. True, airline unions operate under special federal laws that don't apply to auto workers or most other labor groups. But the ease with which Northwest has replaced 4,300 skilled mechanics shows how vulnerable virtually every kind of employee has become.
AFMA has tried to re-create worker clout based on an outdated notion of craft power more suited to the early 20th century than to today's globalized, deregulated economy. "Workers have to organize in bigger unions across whole sectors" or they will fail, says Bruce Raynor, president of UNITE/HERE, the needle trades and hotel workers union.