Amy Traub
Auto Bailout Drives off a Cliff (And Takes What’s Left of the Economy with It?)
The right-wing spin machine is working overtime telling fairy tales about the cause of nation’s economic crisis. Blame for the home mortgage crisis lays on the doorstep of poor people who had the audacity to want to buy their own homes – and lacked the expertise to see through the complex new financial products being dreamed up on Wall Street. The collapse of the nation’s auto companies, meanwhile, was caused by auto workers with the nerve to get paid middle-class wages and benefits. And by the way, local zoning ordinances created the housing bubble.
Despite the spectacular failure of the ideology that sells deregulation, privatization, balanced budgets, tax cuts, “free” trade, tight monetary policy – and, oh yes, union-busting – as the solutions to all economic ills, this right-wing world view still holds sway over our public policy at crucial moments. Witness the filibuster that killed the auto industry bailout.
The failure of American auto companies could cost the U.S. economy 3.3 million jobs – many of them stable, middle-class positions – at a time when unemployment is already at crisis levels. But Senators clinging to failed right-wing ideology insisted, in effect, that unless middle-class autoworkers agreed to pay for the poor decision-making of their bosses, the bill would die. Now we’re relying on George W. Bush to save the auto industry.
As TheMiddleClass.org explains:
There is no doubt that change is needed in the American auto industry. This change should not be borne, however, on the backs of middle-class workers. Nor can the necessity of such change be blamed on them. Disingenuous conservatives would have unions and high labor costs be the cause of Detroit’s misfortune. But while American autoworkers are paid more than their counterparts employed by foreign manufacturers, the difference is not as large as often cited and costs associated with labor are in fact dwarfed by other production costs. Poor management decisions, not autoworkers’ ability to earn a middle-class standard of living, are to blame for the predicament of the auto industry…Support for this bill does not mean support for a culture – and an economy – overly reliant on dirty automobiles. The nation’s future economic success depends on efforts to build more fuel efficient cars, but also to use cars less. Support for alternative transportation – high speed rail, light rail, subways – will be critical to a clean and economically viable future.
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Posted at 8:23 AM, Dec 16, 2008 in Economy | Employment | Labor | TheMiddleClass.org
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The auto workers aren't middle class; they're encroaching on the upper class. The definitive New York Times article about the subject shows that the Big Three's employees get $55 an hour including benefits; this translates to $114,000 a year. People who make six-figure incomes are in the top quintile, nationally. They may feel middle class, but they aren't.
DMI's position on the issue makes sense politically, but not economically. The policy the statement you quote supports is bailing out the automakers now, and then destroying the auto industry by switching from cars to mass transit. Politically, I agree: I see an auto bailout as insurance against authoritarian populism à la Huey Long, and as the way to disarm the many opponents of rail, by showing how autos need subsidies too. But economically, this makes no sense.
Posted by: Alon Levy | December 16, 2008 05:17 PM
The Times article in fact cites a figure of $40 an hour (about $83,000 a year) plus health and retirement benefits. This is a good income, but not outside the realm of the middle class.
There is no economic contradiction in arguing that while the auto industry is currently critical to the American economy the role of cars in American life should be reduced over time. Nor will a shift towards transit inherently mean destroying the auto industry -- good policy can help to create a future in which Americans drive less, and own fewer (and more fuel-efficient) cars more of which are nevertheless made by American workers earning good wages and benefits. Ultimately, the auto industry would shrink, but this is not the same as allowing it to collapse in a chaotic fashion in the depths of an economic downturn.
Posted by: Amy Traub | December 17, 2008 05:07 PM
good policy can help to create a future in which Americans drive less, and own fewer (and more fuel-efficient) cars more of which are nevertheless made by American workers earning good wages and benefits.
That's consistent with letting the undead Detroit-based industry crumble, and having the remaining cars made in Japanese and German transplants, which are paying decent wages, just not UAW wages.
Nor will a shift towards transit inherently mean destroying the auto industry
No, but it'll radically reduce the number of cars made in the US. Let's say the US becomes like France or Switzerland, whose car ownership is two thirds that of the US. It will reduce the number of vehicles made for the American market by far more than a third: the ratio of new cars purchased every year to cars retired every year will need to drop by more than a third to achieve an overall reduction of the number of cars by a third within a few years.
And let's say the US realizes that even Europe is only a transit haven in the large cities, and instead chooses to make every metro area like New York City proper, where car ownership is less than one third the national average. This will more than halve the number of cars per capita, which will mean that new car purchases should dwindle to almost zero.
Posted by: Alon Levy | December 19, 2008 11:06 PM