Globalization & the American Dream

With the Beijing Olympic fireworks show over, are we ready for the next big “dog and pony” show at the Democratic Convention in Denver? I swear, sometimes I think I am back in the days of the big Coliseum shows in Rome with the Roman Empire in all its glory. Of course the difference then was that Nero did not pretend that anything serious was about to take place. It was just entertainment. I wonder, is this what we are going to be treated to in both Denver and St. Paul?

The Sunday Magazine of the Times is devoted to Obamanomics. This was an interesting read. Obama went to the University of Chicago. There he was heavily exposed to the Milton Friedman notion that, left alone, the market will eventually take care of everything. Obama seems to be struggling with how much to trust the market, ala Milton Friedman, or are there times when Government intervention is absolutely necessary, as in the time of the Great Depression?

One of the most dramatic changes that influences this debate is the globalization of the economy. I am reminded of a tense negotiation between G.M. and the U.A.W. back in the fifties. G.M. was not budging on the wage issue and Walter Reuther, then President of the U.A.W. said to the President of G.M. something like, “Look, if you want your employees to be able to buy your cars, you got to pay them a living wage.” That notion suggested that, if the system was going to continue between the balance of wages and profits, profits had to be shared with workers. What has happened with that idea since globalization?

I believe it is precisely because manufacturing has been moved out of the U.S. that the wage and profit ratio has gotten completely out of hand. With manufacturing done in very low wage countries, profit ratios for most major companies have gotten out of hand. If these companies were manufacturing in the U.S., the unions would long ago have been able to keep up with their share of the profits. But because the manufacturing is off-shore, the unions lose their power in trying to maintain a wage/profit ratio. That’s why so many economists keep saying that the middle class has not been able to stay even with inflation, no less move ahead. (Somehow over the years the term “middle class” has gotten to include blue collar workers.)

Further evidence for my argument comes from Robert Reich in the New York Times, Feb. 13, 2008: “The underlying problem has been building for decades. America’s median hourly wage is barely higher than it was 35 years ago, adjusted for inflation. The income of a man in his 30s is now 12 percent below that of a man his age three decades ago. Most of what’s been earned in America since then has gone to the richest 5 percent.”

This is at the heart of why the rich have gotten richer while the rest of us just keep treading water to keep from drowning. That is precisely what is happening right now in this economy. The middle class trying to improve themselves, a very noble American tradition, are being swallowed up by debt. Oh sure, one can argue that it’s their fault that they bought houses they can’t possibly pay for on their income. But how about the responsibility of the hustlers who sold them a bill of goods knowing there was no way in God’s world they could pay those mortgages. Now it’s just fine for the Government to jump in and save Bear Stearns and soon Freddie Mac and his cousin Mae, but many of the middle class folks are stuck holding the bag for mortgages they can’t pay. And we all may be paying for Fanny Mae and Freddie Mac to stay afloat.

It is this new configuration that tells me that Obama is absolutely right when he says we have to rescind the tax breaks for the wealthiest people who have been making a huge killing on the Global economy. If Obama proposes to redistribute wealth someone wants to call wealth redistribution via the tax system, that’s just fine. The point is we are living in a Global Economy and the average middle class American has to have a way to get in on the goodies, otherwise the system is in serious trouble.

Finally I do certainly agree with James Carville when he says it’s time for Obama to get mad. Obama needs to show more intensity about the everyday needs of his constituents.

Enjoy the spectacle and we’ll touch base again when it’s over.

Thanks Kate N.H.W.Y.

P.S. As we consider Friedman’s admonition of letting the market work, it might be good to recall President Reagan’s economic stimulus package. He doubled the defense budget, creating millions of good blue-collar jobs.

Every Action Has a Reaction

It is a basic law of physics that every action has a reaction. It seems strange that our Secretary of State, a Stanford graduate, just doesn’t seem to get it. Now as for our president, well forget about that. Here’s the case.

Over the last couple of years the US has been shopping around Europe for places to install anti-missile based radar stations. The Czechs agree, as did the Poles. Now while it is not directly comparable, this did remind me of the Cuban Missile Crisis in October of ‘62. Remember? The Russians were installing missiles in Cuba 90 miles of our coast. Now did they really think there would not be a very serious reaction? (Every action has a reaction.)

Man did we react! First we setup a naval blockade. Then we told the Russians we would never permit their missiles on our doorstep; or put another way, in our “sphere of influence.” Any superpower worth its weight in salt clearly has a sphere of influence. Then there was the exchange of communications where an agreement was reached for the Russians to eliminate the Cuban missiles and we would do the same with our missiles in Turkey. Each superpower preserved their spheres of influence as well as saving face. More significant was both parties willingness to back off in order to avoid a nuclear confrontation.

If we learned anything from the Cuban Missile crisis, it should have been “every action has a reaction.” It is now 46 years later. What is doubly puzzling is the fact that Condi Rice is supposed to be a Russian specialist. How could she not know that we are just baiting the Russian Bear when we stick it to them with anti missile radar tracking within their sphere of influence.

That brings me to the present US-Russia crisis over Georgia and the region called South Ossetia. I believe the Russians needed a way to show the US that it is not going to stand idly by and watch us put anti-missile radar bases within their spheres of influence. Not much difference than our reaction to Cuban missiles in our sphere of influence.

This is just another example of the Bush Administration’s notion that they can wander around the world deciding what and where they will alight to support or undermine various countries or its parts. This, of course, is policy that begets disasters as it does not take into consideration all the other variables that will arise and slap the “intruders” smack in the face. If we have any sense of reality, we need to recognize our need to find ways to coexist in a world that has lots of nuclear bombs laying around and is not necessarily being run along our lines of governance. That’s what made it possible to keep the peace between the two great nuclear powers in the years of the cold war. I do look forward to an administration that will engage with others in the world and not feel itself anointed as the worlds super-state in charge of deciding who stays and who goes.

Thanks Kate N.H.W.Y.

P.S. As I warned some time ago, the attacks on Obama are going to make the attacks on Kerry look like child play. Well here they come with Mr. Corsi, same slime-bag who did Swift Boat stuff on Kerry, with a book on how Obama will turn the country into an Islamic state. Not pretty, but why should those folks change color now? Lets all be hitting back as hard as we can.

More Thoughts on Blue Collars

In the last blog I wrote about the declining number of blue collars jobs, hence the decline in blue collar workers. I have thought some more about men who think of themselves as “blue collar” and those who are the “Good Old Boys” macho guys. The former were men who worked in industrial plants; union men who derived a sense of who they were from they were work. The latter are principally guys for whom the macho image is critical to their self definition. Their image is domination of the female and their role as the almighty voice of the father. There have been many changes in the last 3-4 decades that have threatened the macho image, hence its emergence as a campaign issue.

I start with the emergence of women in the workforce, together with the feminist movement that appeared as a direct challenge to the lofty position of the family breadwinner and also to the macho male. The emergence of the white collar work-world created a real dilemma for the old boys macho world. As I shifted from blue collar to white collar work places, it became perfectly clear to me that in these new workplaces there was no payoff for being a “big strong macho man.” When I had worked as a plumber’s helper, being big, strong, and tough was part of the job description. Being strong and tough would not have gotten me in the front door of the Ford Foundation unless I was sent to clear a stopped up toilet line.

With this background in mind, I began looking at who the media and Hillary were talking about when it came to the blue collar issue. Who of the candidates can be most macho? That’s what they are talking about, not men actually working at blue collar jobs. This is a whole other world that was best exemplified this week by John McCains journey into the Dakotas for the yearly gathering of the country’s bikers. And there was McCain up at the podium telling a huge crowd of Harley Davidson nuts to Vroom it up to show they are America. And Vroom Vroom they did; using up a lot of gas while contributing to fouling the air.

“Oh Schrank, that’s all smart-ass college graduate talk. We’re the old boys who really count cause we drink beer, fart a lot and don’t give a shit what some dumb-ass college graduates like you think of us.”

This is who the media and the McCain people are talking about; definitely not the old factory blue collar guys. They were the heart and soul of the Democratic Party that elected FDR four times. The Dems. began to lose them in the Reagan years. That was caused by a number of important shifts in how the society gets its work done.

During the 2000 election, when Bush first showed up on the screens, I said to Kate, “What we have here is Forest Gump for President. And he will get elected.” The opposition, together with the full support of the media, is determined to give the macho male his power by electing one of them to the most important job in the world. That’s what we have had for the last 7 years. And if McCain gets elected, that’s what we’ll have some more of. And the Bikers can go Vroom Vroom Vroom because they're man is back in power and so maybe they get to share some of that. It might even bring us back to those good old days when “Daddy, the breadwinner, knew best.” Dream on old boys, dream on. Those days are over and they ain’t coming back no matter who is in the Big House, no I mean the White House. “Vroom Vroom on baby.”

Having said all that I would very much hope that the Obama folks would find a way to communicate with the blue collars who are out there. They often suffer from the sense that they are no longer relevant and so nobody cares about them. Obama better care or it can cost him the election.

Thank you Kate N.H.W.Y.

Where Have the Blue Collars Gone?

I meant to get this blog out much sooner, but some work on my chest pump delayed things a bit. My 90 year old arteries needed some plumbing work to clean them out, and that’s what Dr. Lawson did. Okay, lets get on with it.

Barack Obama goes to Butte, Montana for the 4th of July parade. The headline in the Missoulian, the local paper, reads “Obamas hit the town.” A great front page picture shows the Obama family waving to the crowds. I can not for the life of me understand what on earth he was doing in Butte?

I have very fond memories of Butte back in the fifties when I was a Representative of the MIne Mill & Smelter Workers Union assigned to win back the union from decertification. At that time there were about seven thousand miners in Butte and a couple of thousand smelter men in Anaconda, about 50 mikes away. It was a blue collar place. Now the mines and the smelter have been shut down and the place is slowly but surely being gentrified. So Obama, what are you doing in Butte? Someone on his staff must have thought Butte is a good place to get Obama connected to the blue collar folks that he needs to get elected. Ah, now here’s the question. Where have the blue collars gone?

Look at the declining membership of my old union, the International Association of Machinists (the IAM). It is down to 300,000 from over a million a few decades back. The same is true of the United Auto Workers (the UAW). It has about the same membership loss. Some of that loss is strictly attributable to the failure of many unions to attract blue collar votes. The UAW has not been able to organize the Toyota, Nissan and BMW plants opened in the South. But another part of this story is simply the loss of blue collar jobs to cheap labor outsourcing. So where are the blue collars?

(This is where living in the boonies makes it difficult to get data. None of the local libraries had a copy of the Labor Department's “Handbook of Labor Statistics.” I tried to get the data on line, but just couldn’t find it.)

My hunch is the blue collar vote constitutes a large number of retirees. The UAW’s “30 and out” created whole Florida villages of retired auto workers. Many of the unemployed in places like Ohio are blue collar workers whose jobs have gone to globalization. To me that’s a fancy term for a modern version of imperialism. So what’s Obama to do to appeal to this group of people?

Having spent many years toiling in the vineyard of retraining the unemployed, the answer is there is no simple answer. There are a whole variety of variables that impinge on what the answers might be. One variable is geography--for example, in Butte the primary job market for almost a hundred years was dominated by the mining industry. That’s where the jobs were. What’s there now? Nothing much in terms of employment opportunities. An employment policy has to consider factors like age, relocation, and retraining. Age because people who are over 50 are going to find it very difficult to find jobs, even with retraining. That leaves us with a large number of people who have had to skid down the job market and take much lower paying jobs in the service industries. The really good blue collar union jobs were the path to the middle class. These are the jobs that have been going overseas or been outsourced. You can see Obama’s dilemma.

There is no simple solution to the blue collar policy issues. Politicians try to find fast fixes in their appeals to various groups. Election campaigns have become more about image than substance; witness Hillary Clinton in a saloon drinking whiskey with the boys, John Kerry on his motorcycle, or Obama shooting hoops with the troops in Iraq. That’s nice, but I would hope Obama doesn’t continue down that road because the McCain, Rove, Bush Boys crowd are gonna keep chasing him down a dead end alley. Try as he will, he won’t be able to prove he’s just another blue collar Joe off the assembly line. And why should he be? What’s that got to do with being President? Nothing. Obama, don’t let the Carl Rove crowd create your agenda. If you do, you will get lost in their dark woods from which there is no escape. Stick to your agenda for the future. It’s yours and our only hope.

Thanks Kate N.H.W.Y.