Monday, November 17, 2008

Hope for Robin Hood Needs A Rapid GM Collapse

Republicans are supposedly the ones who promote "Reverse Robin Hood" policies -- help the rich at the expense of the poor. Robin Hood is supposedly a prototypical member of the Democratic Party. So far neither party has done a whole lot to earn their reputations.

For example, it was Democrats in Congress who pushed against Republican resistance to pass a massive Wall Street bailout. The Democrats' argument was essentially that helping Wall Street would eventually trickle down to regular people. Their only attempt to earn their reputation was to expertly avoid using the phrase "trickle down." How can they sustain their reputation when they make such arguments? How can Republican sustain theirs when they miss such opportunities?


Senator Obama's victory gives hope that the Democratic party will be prevented from promoting any other Reverse Robin Hood policies. Can we sustain that hope through current events in the auto industry?

Workers at GM, Ford, and Chrysler are not among the poor by any definition: those workers' salary and benefits total more than $70 per hour!! Yes, I typed that correctly. Very few American workers earn that much per hour.

GM, Ford, and Chrysler shareholders are not among the poor either: the poor own little if any stocks. So a GM bailout would benefit rich workers and rich shareholders. I guess the argument is that a GM bailout would trickle down to people who really are poor, or at least middle class.

Many of us hope that President-elect Obama will not tolerate trickle down nonsense. The problem in this situation is that the United Autoworkers Union was a strong and visible supporter of Obama, and the auto industry is in deep trouble NOW. Will our hopes be dashed within days of the inauguration?


I see three reasons to continue hope.

  1. First, President Obama may stand up to the UAW. Maybe he would even insist that we cannot tax the average American to bail out those who are already more fortunate than most Americans!
  2. Second, GM is failing so fast that it might not last until inauguration day. Thus it might be Bush who stands up to the UAW -- he has done well on that lately. I admit that Bush's actions on this matter are not consistent with the Republicans' Reverse Robin Hood reputation, but I take solace in the fact that Secretary Paulson initiated the Wall Street bailout, even if many fellow Republicans did oppose it for a few days.
  3. Third, a fast failure may result in Bush's living up to the Republican reputation by bailing out automakers before inauguration day -- not exactly Robin Hood's outcome, but at least Obama's record would be untarnished.

A rapid and decisive GM collapse would allow us to continue to hope that President-elect Obama represents genuine change: leading politicians of the Democratic party will no longer tax the average American to bail out the rich, regardless of whether those rich do business in Detroit or in New York City.

[added Nov 18: The $70 per hour includes wages and benefits, but you might say some of the benefits "belong" to the retired workers, and that current workers cannot expect such a generous retirment (Mark Perry reports that in 2006, each retiree received an average of $48,793 of pension and benefits from their former employer; this does not include social security). An alternative indicator of how much auto workers make (wages and benefits) is to look at U.S. workers in Toyota plants (where the retiree legacy is not such a problem): almost $50 per hour. Whether you call it $50/hr, $60/hr, or $70/hr, these people earn much more than the average American worker.]


toad said...

Workers at GM, Ford, and Chrysler are not among the poor by any definition: those workers' salary and benefits total more than $70 per hour!! Yes, I typed that correctly. Very few American workers earn that much per hour.

Doesn't the $70+/hr include the retiree costs? I am under the impression it is calculated by dividing labor costs, including retiree costs, by hours worked.

If so, it is plainly false to claim that the workers are earning more than $70/hr.

toad said...


Thanks for the addendum, but I'm not clear on what you mean when you say some of the benefits "belong" (your quotes) to retired workers. Are these payments to retirees, or contributions to health and pension plans for current workers?

I looked at Mark Perry's data and the breakdown was not clear to me.

Can you point me to a good data source? I looked at GM's 10-K and it was unhelpful.

I'm not arguing that GM's labor costs are not higher than Toyota's, just that the widely publicized gap overstates the difference, does not actually reflect that big a difference in the cost of production labor today, and is being promoted, inaccurately, to advance the idea that "UAW workers are making $150K a year and that's outrageous."

Thank you.

toad said...

I am disappointed by your apparent unwillingness to clearly state that the $70/hr figure does not represent compensation that current workers receive.

As you surely know, the figure has been widely cited to demonstrate how grosly overpaid UAW members are, and in some cases your post is cited.

I think you have an obligation to set the record straight in an unambiguous, non-waffling, statement.

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