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Leo W. Gerard

By Leo W. Gerard
International President

The proposition General Motors has presented to the United Auto Workers and American taxpayers in its latest restructuring plan is simple: You must pay for your own execution.

GM, which already took $15.4 billion in bailout money, wants another $11.6 billion and is offering in return this deal: It will close 16 of its American manufacturing plants, terminate 21,000 of its factory workers and double the cars it builds in low-wage Mexico, China and South Korea and ships back to the U.S. to sell.

There it is: GM is demanding that Americans pay to send their own jobs overseas.

In the world where corporate executives live, the one in which boards of directors grant CEOs multi-million dollar bonuses even after companies tank, maybe that’s not a perverse proposition.

But in the world where real Americans live, we’ve had enough of this crap. Decades of foolish tax and other federal policies that encouraged American manufacturing firms to throw Americans out of work and expatriate were bad enough. To expect American taxpayers to bankroll GM’s plans to layoff American workers and move their jobs overseas goes too far.

We’re taking a stand. It’s gotta stop here. The United Steelworkers (USW), the Alliance for American Manufacturing (AAM) and the Mayors and Municipalities Automotive Coalition (MMAC) are conducting an 11-state, 32-city protest bus tour. At each stop so far, hundreds of people have cheered our message: “Keep it Made in America.” And they’ve signed our petition calling for support of a simple idea: Buy it here; build it here.      We will present the petitions at a teach-in conference in Washington, D.C. on May 19 when we will explain to elected officials why GM’s plan fails America and why they must require GM to submit a new plan supporting American jobs.

As much as for the UAW, this is a life and death struggle for the USW, American manufacturing, and for millions of Americans in good-paying jobs. Without manufacturing, America is in danger of attempting to subsist on an economy based on nothing more than amorphous derivatives, credit default swaps and Ponzi schemes. The Steelworkers represent hundreds of thousands of workers whose jobs depend on the auto industry, from steelworkers who make the steel, to the rubber workers who make the tires, to the glass workers who make the windshields, to the paper workers who make the glossy pamphlets.

Altogether, more than 7 million paychecks depend on the U.S. auto industry, including healthcare, education, service, retail and other jobs. This bus tour is about preserving those jobs, all of those jobs.

In just the past eight months of this recession, caused in huge part by recklessness on Wall Street, this country has lost 1.2 million manufacturing jobs, according to the U.S. Department of Labor. GM cannot take tax dollars to slash more. Former U.S. Labor Secretary Robert B. Reich agrees. Here’s what he told the Washington Post, “. . . it raises fundamental questions about the purpose of bailing out these big companies. If GM is going to do more of its production overseas, then why exactly are we saving GM?”

It’s not as if it’s impossible for a U.S. auto company to manufacture here. Ford Motor Co., which is not taking any bailout money, is investing $500 million in retooling its Michigan Truck plant outside Detroit so that it can make small cars that it will sell worldwide, including its next-generation, battery-electric Focus. And Chrysler, which is getting bailout money, has made a deal with Fiat under which the Italian car company will manufacture a small car in one of Chrysler’s U.S. assembly facilities, which, along with other long-term commitments, will eventually create 4,000 U.S. jobs.

On the first day of the bus tour, I was joined by the Rev. Jesse Jackson, actor Danny Glover, the angriest mayor in the U.S., Virg Bernero of Lansing, and U.S. Sen. Debbie Stabenow, among others.

The Rev. Jackson drew cheers as he remarked that somehow we’ve given billions to the “banksters,” yet somehow we’re still hemorrhaging hundreds of thousands of jobs and homes each month. He called for a moratorium on foreclosures and plant closings, and I’m with him.

Bernero is tired of Wall Street describing his father, a retired auto worker, as a legacy cost. His father is a human being, a senior citizen, who worked hard every day of his life and returned home exhausted from an honest day’s work. Now, however, Wall Street thinks it’s fine to reduce him to a sub-human term and cheat him out of the retirement benefits he earned.

Bernero’s father made things, real things that could be touched, held in the hand – not derivatives, not figments of the imagination that turned out to have less than no value at all.

Now Wall Street and GM must be made to understand that Main Street isn’t going to take it anymore. We’re not going to continue allowing corporate America to outsource the American dream. Bernero said it right: “This is America’s fight.”

Join us. Sign the petition. We have no intention of buying our own noose. We intend to win this fight.

Dean Baker

By Dean Baker
Co-Director, Center for Economic and Policy Research

The media coverage of the auto bailouts has focused on the need for union autoworkers to take big pay cuts, causing them to once again miss the real story. The Fiat-Chrysler deal shows that the pay problem is at the top, not the bottom. At the end of the day, the new Chrysler is still likely to be producing most of its cars in the United States. What the new company will be getting from abroad is technology and top management.

This big story was so easily missed because it runs against one of the main myths that our elites have cultivated about the US economy: that the country has a “comparative advantage” in highly skilled labor. In this story, the United States will continue to lose manufacturing and other “less-skilled” jobs as its economy becomes more concentrated in highly skilled sectors.

This story was convenient for our elites because it meant that the decline of manufacturing was a necessary, if sometimes painful, part of a natural economic progression. It also justified the growing inequality in US society that benefited not just Wall Street bankers and CEOs, but also millions of doctors, lawyers, economists, and other highly educated workers. These people took their six-figure salaries as a birthright, even as the pay of less educated workers stagnated or declined.

While this story of the US becoming a high skills center in the world economy may have been comforting to the elites, and was widely promoted by economists and the news media, there was never much truth to it. Highly skilled professionals did well in recent decades not because they succeeded in international competition, but rather because they were largely sheltered from it.

Trade agreements like NAFTA were explicitly designed to remove any barrier that made it difficult to export manufacturing goods to the United States, thereby placing US manufacturing workers directly in competition with their much lower paid counterparts in the developing world. Most of these restrictions had nothing to do with tariffs. Instead the key issues were rules protecting investment in the developing world along with limits on the ability of the US to exclude imports through safety or environmental regulations.

There has never been any similar effort to eliminate the barriers that prevent professionals from the developing world from coming to the United States and competing directly with their US counterparts as doctors or lawyers or in other highly paid professions.

The economists and the media somehow failed to notice that professionals were intentionally sheltered from international competition and instead just trumpeted them as the winners in the global economy. We were just treated to a beautiful example of this double standard when the media and the economists got all huffy about the “buy America” provision in the stimulus bill that might have protected a few manufacturing jobs in steel and other industries.

While this provision was roundly condemned and eventually watered down, the buy America provision in the Treasury’s latest bank bailout bill went completely unnoticed. This provision requires that any investment manager taking part in the program be headquartered in the United States. Even though the argument against protectionism in financial services is identical to the argument against protectionism in steel, no one bothered to make the argument when Wall Street was the beneficiary of protectionism.

The end result of this protectionism for those at the top is a bloated overpaid sector of top managers, which is what we saw at Chrysler. If we compare wages for assembly-line workers in Europe and the United States, there would not be much difference between the pay of UAW members and their counterparts in Europe. However, there would be a very large difference between the multi-million dollar pay packages of the top executives at the US companies and their European counterparts. The pay gaps persist among the more highly paid engineers and management personnel.

Therefore, it was only logical that a bailout of Chrysler would seek to take advantage of the lower cost management and design skills available at a European car company like Fiat. In Chrysler, as in other companies, the high pay packages for these people are like an anchor dragging them down in international competition. If the US is to be competitive in the 21st century, we must either bring the pay of those at the top back down to earth or we should look to follow the lead of Chrysler and contract out for these services.

Dean Baker is the author of the new book, “Plunder and Blunder: The Rise and Fall of the Bubble Economy.”

This piece was first published on Huffington Post.