Right to Work at The Times

The New York Times invited comments on Gary Chaison’s letter about the new push for right-to-work laws. It published comments today, January 22, 2012. 

My comment is that the revival is both different and similar from past anti-union campaigns.  First, the political meaning of the campaign today is different.  Compared to a generation ago when there was widespread union membership in the industrial belt and southern politicians sought to protect a competitive edge by keeping labor cheap – all of the former Confederate states and only these states adopted right-to-work laws – today the labor market is national and the rate of union membership in the private sector is back to where it was before the New Deal. The anti-union campaign today is clearly an attempt to change the subject from the financial industry that pushed our economy into crisis and from the “job creators” who are not creating jobs to a union scapegoat.   

            Second, Chaison comments about the history of right-to-work that “it is not clear whether” right-to-work laws undermined unionism or whether lack of unionism led to right-to-work laws. This is a question that can be answered. At the time of the New Deal, each southern state was dominated by an oligarchy of businessmen and Democratic politicians who operated an economy of labor exploitation. The question is How did workers react to the New Deal’s federal protection for their right to form unions expressed in the National Labor Relations Act?  In Texas, for example, about 350,000 workers had joined unions by 1953, posing a dramatic challenge to the old ways of doing business in the state.  But the oligarchs fought back, using their control of state government and the Democratic Party to sponsor a half-dozen anti-union laws (of which right-to-work was simply one) and to enforce discriminatory hiring.  Everyone in this debate understands that right-to-work undermines existing unions because it protects free riders, but what about organizing in the first place?  Historically, in the context of an anti-union political campaign, the Texas union movement was defeated because the anti-union laws substantially raised the cost of organizing – largely through expensive litigation – and because state Democratic leaders, such as Governor Allan Shivers, launched a counter-movement of massive resistance to school integration, which undermined labor unity.

         Today’s anti-union campaign has been met effectively in Ohio and prospectively in Wisconsin, if the million signatures on recall petitions is a guide, by broad-based organization. In Indiana, the first push was blocked, but a new push looks likely to prevail because the Republicans have the votes in the legislature.  But there and in other states like Michigan where the Republican Party is scape-goating unions, both public and private, an effective response is for unions to ally with the broader discontent over the economy and keep the focus on the financial and other corporate groups that are responsible for our economic plight. The resurrection of race-baiting in the South Carolina Republican Party primary is the bitter aftertaste of the old southern anti-union campaign tactics, which today's economic justice campaigners must meet head-on. 

Was Market Fundamentalism Bailed Out?

             James B. Stewart complains (The New York Times Business Day, January 14, 2012) that the Obama administration’s actions toward G.M. demonstrate why the government should not own shares in public companies.  It has a conflict of interest as an owner and regulator.  The U.S. government still owns about 30% of the shares. 

             Stewart’s analysis is tone deaf and ideologically tendentious.  His first example of alleged conflict of interest is that the National Highway Traffic Administration pressed G.M. to fix its potentially flammable batteries in its star product, the Volt.  Stewart comments “Rest assured that if Bain Capital owned G. M. it would not be subjecting the Volt to severe safety tests”!  He does agree that the government did the right thing to hold G.M. accountable just as it would any other car company that it did not own, but he believes that this conflicts with the government’s obligation as an investor to maximize shareholder value regardless of costs to others.  This is a massive assumption – though one that the U.S. Treasury has always maintained in its public testimony about the bailout – that the government is just like a private investor when it owns shares and should not care about the public interest.  What, pray tell, was the purpose of the bailout by Bush and the restructuring orchestrated by Obama if not overriding normal capitalist principles in order to serve the public interest?  President Obama specifically overrode the advice he received to save Chrysler (and sell it to Fiat). 

  May not the bailouts actually achieve both public and private interests?  No, Stewart argues.  His next example of a government conflict of interest was that the Obama administration should have sold out all of the taxpayers’ G.M. stock when the company went public in the fall of 2010 when the price was about $33 a share because it’s about $24 today, a 25% drop.  He dismisses the argument made at the time that dropping hundreds of millions of government shares on the market would undermine the public offering.  Instead, he claims that the decline in the share price since then is a result of the continued taint of public ownership, a.k.a. the Wall Street Journal’s talking point about “government motors”.  Investors undervalue the stock because they can’t count of the government investor to act like a real investor, Treasury be damned.  Yet Ford, which was the only one of the Detroit Three not to participate in the bailout, has seen its share price drop from $16 a share in late 2010 to $12 today, a 25% drop.  Could there be something else going on in the world economy?   

            Stewart also claims that the terms of the bailout that limit the pay of the top executives have inhibited G.M.’s ability to attract top corporate talent.  He notes that the Obama administration approved CEO Akerson’s pay of $9 million, but quotes Akerson’s comment that he would like higher pay for top management.  What a surprise!  Wouldn’t we all like to be in a position to make decisions about our own pay?  Stewart may have forgotten the years of bloated management compensation that was unrelated to performance, but the rest of us have not.  We might imagine that the talent pool is a bit deeper and that there are many auto designers (for example) who would work for mere millions.  In any case, G.M. says that these shackles have not stopped it from assembling a top flight team.   
          G.M.'s renewed taste for luxury products may be a perfect match for the market fundamentalism that also survived the government's rescue.