Conspiracy Alarmism

There have been no easy questions to address in dealing with the current economic crisis, and there is certainly nothing simple about the current state of the domestic automobile industry. It was thus disappointing to read Tim Dickenson's post to his National Affairs blog on the Rolling Stone Web site in reaction to the Senate defeat of a proposed bailout package:

The lame duck Republican senate, a handful of rogue Democrats, and the intractable United Auto Workers have conspired to kill the $14 billion bailout plan for the auto industry.

The thought of a conspiracy uniting Republican Senators with the United Auto Workers (UAW) is enough to boggle any clearheaded mind (even if there is never anything particularly surprising about "rogue Democrats"); and, since Dickenson's hyperlink does not substantiate his claim, he has done little more than make a bad situation worse by stirring up alarmism among his readers. Thus, it would be a good idea to try to straighten out what really happened last night, under the usual logic that the best way to get out of a mess is to first examine how you got into it.

Here is what Julie Hirschfeld Davis and Ken Thomas filed for the Associate Press at 2:18 (Eastern Time) this morning:

A bailout-weary Congress killed a $14 billion package to aid struggling U.S. automakers Thursday night after a partisan dispute over union wage cuts derailed a last-ditch effort to revive the emergency aid before year's end.

Republicans, breaking sharply with President George W. Bush as his term draws to a close, refused to back federal aid for Detroit's beleaguered Big Three without a guarantee that the United Auto Workers would agree by the end of next year to wage cuts to bring their pay into line with U.S. plants of Japanese carmakers. The UAW refused to do so before its current contract with the automakers expires in 2011.

This is no conspiracy. To the contrary it would appear that it was a failure of an agreement between the Republicans and the UAW on a solution path that contributed to the undoing of the bailout proposal. Since the favorite Republican mantra seems to be that UAW workers are overpaid and are thus contributing to the financial distress of General Motors, Ford, and Chrysler, Davis and Thomas also took the trouble to provide some quantitative data points around this belief system:

Hourly wages for UAW workers at GM factories are about equal to those paid by Toyota Motor Corp. at its older U.S. factories, according to the companies. GM says the average UAW laborer makes $29.78 per hour, while Toyota says it pays about $30 per hour. But the unionized factories have far higher benefit costs.

GM says its total hourly labor costs are now $69, including wages, pensions and health care for active workers, plus the pension and health care costs of more than 432,000 retirees and spouses. Toyota says its total costs are around $48. The Japanese automaker has far fewer retirees and its pension and health care benefits are not as rich as those paid to UAW workers.

As I said, this is not a simple story that can be reduced to whether or not a UAW member is getting a fair day's pay for a fair day's work, as the old saying used to go. Beyond these numbers is a far more complicated story about just what constitutes a "living wage," which accounts for not only the needs of the present but also the risks of the future, particularly in matters of health care and retirement. Presumably this is always a major consideration when the UAW negotiates contracts for its members; and, as we saw in the conflict at Republic Windows and Doors, the violation of any contractual agreement puts all labor-management relations on a slippery slope leading to the undermining of all such agreements.

As we discovered with the problems now emerging around the $700 billion bailout check that the Congress agreed to write for Treasury Secretary Henry Paulson, complex problems do not lend themselves to simple solutions. The problem is not one of conspiracy but of dereliction of duty on the part of a Congress that should be deliberating over solutions rather than providing ineffective bandages made out of checks for large amounts of money. In the Republic story deliberation brought the real issues to the surface. Once they were in plain view, they could be addressed (even if their resolution came about through a Governor now under arrest for corruption). Unfortunately, at the Federal level it appears that efforts towards deliberation are consistently foiled by political maneuvering that has less to do with problem solving and more to do with how one stands not only among one's constituents but also in the power structure of one's own party. Since, at least according to Davis and Thomas, Congress is not scheduled to deal with this matter until it resumes its legislative calendar in early January, both the automobile industry and the UAW are left high and dry with little prospect for action beyond the White House using a piece of Paulson's mega-check to prop up the automobile industry (which may or may not benefit the labor side of the balance). Once again, deliberation will be trumped by panic-driven action taken in haste. This seems to be a good time to recall the words of Representative Marcy Kaptur after that mega-check was approved:

Pray for our republic. She's being placed in very uncaring and greedy hands.

Unfortunately, those prayers do not seem to be having much effect.