Blog

By Robert Reich
Former U.S. Secretary of Labor, Professor at Berkeley

It’s one thing to criticize Mitt Romney for being a businessman with the wrong values. It’s quite another to accuse him and his former company, Bain Capital, of doing bad things. If what Bain Capital did under Romney was bad for society, the burden shifts to Romney’s critics to propose laws that would prevent Bain and other companies from doing such bad things in the future.

Don’t hold your breath.

Newt Gingrich says Bain under Romney carried out “clever legal ways to loot a company.” Gingrich calls it the “Wall Street model” where “you can basically take out all the money, leaving behind the workers,” and charges that “if someone comes in, takes all the money out of your company and then leaves you bankrupt while they go off with millions, that’s not traditional capitalism.”

Where has Newt been for the last 30 years? Leveraged buyouts became part of traditional capitalism in the 1980s when enterprising financiers began borrowing piles of money, often at high interest rates, to buy up the stock of ongoing companies they believe undervalued. They’d back the loans with the company assets, then typically sell off divisions and slim payrolls, and resell the company to the public at a higher share price — pocketing the gains.

It’s a good deal for the financiers (the $25 billion buyout of RJR-Nabisco in 1988 netted the partners of Kohlberg, Kravis, and Roberts around $70 million each — and most of Mitt Romney’s estimated $200 million fortune comes from the same maneuvers), but not always for the company or its workers.

Some workers lose their jobs when the company downsizes. Others, when the company, now laden with debt, can’t meet its payments to creditors and has to go into bankruptcy. According to the Wall Street Journal, of 77 companies Bain invested in during Romney’s tenure there, 22 percent either filed for bankruptcy or closed their doors by end of eighth year after Bain’s investment.

But, hey, this is American capitalism — at least as it’s been practiced for the past three decades. Is Newt proposing to ban leveraged buyouts? Or limit the amount of debt a company can take on? Or prevent financiers — or even CEOs and management teams — from taking a public company private and then reselling it to the public at a higher price?

None of the above. (more…)

By Jamie West
USW Local 6500

Words are used all the time to influence our everyday decisions and opinions. Take the word “socialism” for example; right-wing politicians and their supporters have been using this word with disdain for decades.

It’s clever actually. Socialism is one of those words that most everyone has heard, but not everyone can properly define. Even better, it sounds like “socialist” – as in the “Union of Soviet Socialist Republics” (USSR), which makes most Americans think of communists and Marxists.

The majority of voting-aged Americans have been exposed to cold-war propaganda, whether it was McCarthyism, “duck and cover” during the Cuban missile crisis, or the fictional Rocky defeating the more powerful Russian boxer in the movie “Rocky IV.” Those experiences created a belief that the United States was the good guy and that Russia (USSR) was the bad guy, and, similarly, that capitalism was good and communism bad.

The problem is that communism is not the same as socialism. In addition, the United States has never been a strictly capitalistic society. Social democracy is the cornerstone of many things Americans enjoy, such as public highways, public parks and public libraries.

The next time a conservative attempts to demonize socialism, think of your public fire department. I’m not arguing the pros and cons of socialism.  I’m just trying to clarify the term and to urge Americans not to have a knee-jerk negative reaction every time a conservative Republican tries to denigrate a program or a Democrat by throwing out the word socialist.

***

To submit a blog to Free Speech Zone, e-mail it to bstack@usw.org. Keep it to 250 words or fewer. You MUST include your full name, hometown, and state. You may attach a photograph of yourself. Please include a phone number. This WILL NOT be published. Posting any given blog is within the discretion of the USW.  No blog using foul language (this is a family site), false information (we don’t want to get sued), or unnecessary personal attacks (again, we don’t want to get sued) will be used. Wait a reasonable period of time, then blog again! This is a Free Speech Zone. 

For more than a quarter century after WWII the fruits of America’s productivity were shared with average working people, year in and year out. Not anymore.

Les Leopold

By Les Leopold
Author, “The Looting of America”

Do public sector workers earn more than private sector workers? Who cares? This boneheaded question has us fighting over the crumbs. (And the answer is no — all credible studies show that when you account for educational levels, the total compensation packages are about the same.)

The real question is: Why have most workers seen their standard of living stall over the last generation?

The answer is both obvious and appalling. More and more of our nation’s wealth is going to the few, while the many have seen their real wages actually decline. It’s a disgrace.

It wasn’t always so. For more than a quarter century after WWII the fruits of America’s productivity were shared with average working people, year in and year out. But what exactly was being shared?

What’s productivity and who gets its benefits?

Productivity is a crucial economic measure of the total output of goods and services in our economy per hours worked. It’s not based on pay levels, only on hours worked in the economy as a whole. In effect, it measures how much human labor power it takes to produce everything we have. It makes a real difference to our standard of living if it takes 10,000 hours rather than 1,000 to build a house.

Output per working hour, although imprecise, is the best way we have to measure our level of technique, organization, skill, effort and intellectual firepower. Sure, this measure has significant flaws because it doesn’t really measure our health or environmental quality. But it does indeed measure the material side of our standard of living. When productivity grows, a society has the means to solve many problems and the means to enhance working and living conditions…but only if the fruits of productivity are shared somewhat fairly. (more…)

Leo W. Gerard

By Leo W. Gerard
USW International President

Not the wars. Not greenhouse gasses. Not even the deficit. The issue most important to Americans is jobs.

Despite that, jobs failed to make an appearance in the State of the Union address.

The talk was all about business. Business was doing better. Business needed taxpayers to help pay for research and innovation. Business will get government help to eliminate pesky regulations. Business must have lower taxes.

The most telling statement was this:

“We have to make America the best place on Earth to do business.”

Especially because it wasn’t matched by a companion:

“We have to make America the best place on Earth to work.”

The speech expressed a policy in which business is the focus of government, taking precedence over workers.  The American colonists created a government for their own benefit; they did not constitute an agent to serve business. A policy giving corporations primacy is risky for American workers.

The state of the union noted that happy days are here again for corporations and banks:

“Two years after the worst recession most of us have ever known, the stock market has come roaring back. Corporate profits are up. The economy is growing again.”

Never mentioned, however, were the 14.5 million unemployed Americans, the sustained record rate of foreclosure, and the increasing poverty and food bank reliance among citizens of the richest nation in the world.

The state of the union outlined a plan under which the government will coddle corporations, essentially proving companies government welfare using American workers’ tax dollars. If businesses create jobs for workers as a result, fine. If they don’t, there’s no plan to exact a penalty.

For example, under the policy described in the speech, American workers will fork over tax dollars to pay for research and development for businesses that are sitting on a record $1.8 trillion in cash reserves — hoarding it rather than creating jobs.

The president said:

“Two years ago, I said that we needed to reach a level of research and development we haven’t seen since the height of the Space Race. And in a few weeks, I will be sending a budget to Congress that helps us meet that goal. We’ll invest in biomedical research, information technology, and especially clean energy technology — an investment that will strengthen our security, protect our planet, and create countless new jobs for our people.”

Maybe it will create new jobs. Hopefully. But no guarantees were offered. Mentioned as a business success story in the speech was a Michigan company, Luma Resources, which began manufacturing solar shingles with the help of a $500,000 government grant. It created 20 jobs, $25,000 a job.  American taxpayers might think that’s a little pricey, but what’s worse is the potential for Luma Resources to go the way of Evergreen Solar, squandering the corporate welfare.

Evergreen, the third largest maker of solar panels in the U.S. and recipient of at least $43 million in corporate welfare, announced earlier this month it would close its main American factory in Massachusetts and move manufacturing to China. Eight hundred Americans will lose their Evergreen jobs by April.

Evergreen officials said China will give the company even higher amounts of corporate welfare, which, of course, makes sense since China is not a capitalist country. Its economy is government controlled. And that government routinely violates international trade regulations – by providing banned subsidies to industries and by deliberately devaluing its currency.

No matter how better educated American workers get. No matter how much more innovative. No matter how much more productive. No matter how many tax dollars the government spends on research and development, if the corporations that benefit move manufacturing overseas, the American workers who paid for it will suffer.

In fact, it’s more than suffering; it’s betrayal by their government that provided tax benefits to companies for off-shoring jobs. It is betrayal by their government that fails to stop violations of trade laws by countries like China that lure away firms like Evergreen.

At the end of the State of the Union speech, the president said:

“From the earliest days of our founding, America has been the story of ordinary people who dare to dream.”

An ordinary American dreams of a family-supporting job, owning a home, saving enough to pay for a child’s college education, helping to build a safe community. Corporations aren’t Americans, no matter how often the U.S. Supreme Court grants them rights that the U.S. Constitution guarantees to human beings. Businesses aren’t citizens. Their allegiance isn’t to America. It’s to profits. They dream only of dollars. They concede no responsibility to family, community or country.

They were not included when the president said:

“Tucson reminded us that no matter who we are or where we come from, each of us is a part of something greater — something more consequential than party or political preference.  We are part of the American family.”

The top priority of the American government must be making America the best place on Earth for Americans.  If that’s good for corporations, great. The government must never place American citizens second.

***

Leo W. Gerard also is a member of the AFL-CIO Executive Committee and chairs the labor federation’s Public Policy Committee. President Barack Obama recently appointed him to the President’s Advisory Committee on Trade Policy and Negotiations. He serves as co-chairman of the BlueGreen Alliance and on the boards of the Apollo Alliance, Campaign for America’s Future and the Economic Policy Institute.  He is a member of the IMF and ICEM global labor federations and was instrumental in creating Workers Uniting, the first global union.

Bob Cesca

 By Bob Cesca
Author, “One Nation Under Fear”

I’m sitting here at my desk watching the oil droids hack away at the blowout preventer in preparation for the “cap” portion of the “cut and cap” procedure, which, contrary to what I’m hearing on cable news, is intended to do something other than stopping the flow of oil into the Gulf of Mexico. In fact, this latest solution isn’t a solution for stopping the flow of oil at all. The oil will continue to gush from the well, only now BP will be able to more effectively harvest some of the oil — a more reliable version of what they were doing with the riser insertion tube for the better part of last month.

Good for them. So they can resume drinking their milkshake between now and August when, we hope, the relief well will be completed. At which time, corporate milkshake drinking will carry on via more conventional methods.

And why not? It’s the free market after all. As I watch these robots slice the riser from the blowout preventer and read the news about lakes of oil moving towards the coasts of Florida, I’m wondering who to blame for this. The list is long, but, in part, I blame anyone who bought into the lines: “government is the problem” and “the era of big government is over.” It’s been systematic deregulation and the elevation of free market libertarian laissez-faire capitalism that have wrought this damage and allowed potentially destructive corporations to write their own rules and do as they please.

Does anyone seriously believe that BP has suddenly become a philanthropic venture interested in doing whatever it takes — sparing no expense — to make the Gulf region whole again? It will do the absolute minimum necessary to weasel its way through this crisis. Not a red cent more.

Last week, while the “top kill” procedure was failing, BP continued its effort to fight regulations in Canada mandating relief wells for every offshore rig. Simultaneously, Rayola Dougher, a lobbyist with the American Petroleum Institute laughed off the notion of requiring relief wells here in America.

Dougher said on MSNBC, “That would be — that would really make it unviable [sic]. I couldn’t even imagine such a suggestion.” A relief well costs around $100 million. That would cut into revenues and so — nope.

This is one of many reasons why Robert Reich’s plan makes sense at this point. Temporary receivership. Despite the political peril involved in such an endeavor, the government should take over BP, its manpower and assets, and eliminate the corporate revenue motive from the capping and cleanup process. BP has proved itself incapable of tackling this job with the best interests of Gulf coast livelihoods and the marine environment in mind, and so they ought to lose their privileges to operate in the Gulf of Mexico for a while.

After all, the nature of any corporation is to mitigate losses and increase revenues. Keep the shareholders as happy as possible, spend the least amount of money necessary, hire the best lawyers to avoid paying punitive fines and get back to drilling and selling oil for profit. This is what corporations do.

So it comes as no surprise that the only achievements since the rig explosion have involved releasing a syllabus of weasely remarks designed to ameliorate any damage to the BP brand, and literally harvesting oil from the riser.

At the peak of the riser insertion tube’s efficacy, BP was successfully harvesting around 200,000 gallons of oil per day with a total capacity to process around 15,000 barrels per day. That’s a lot of milkshake drinking in the middle of an unprecedented oil spill. And so BP will probably do what they always do. Refine and sell those barrels for a profit. And once the relief wells are completed, they’ll do the same.

Regardless of Justice Department investigations or lawsuits or cleanup costs, BP will emerge from this disaster and continue to profit from the drilling and selling of petroleum, including the oil from Macondo prospect.

Exxon, as precedent, is now Exxon-Mobil and is doing just fine. It endlessly appealed the fines imposed as the result of Valdez oil spill and whittled the down the cost of the disaster to corporate pocket change, and whatever money they paid out was covered by insurance policies.

Read that again. Exxon almost entirely escaped financial damages from the Valdez. In fact, it spent most of the last 21 years appealing its financial liability related to the Prince William Sound disaster. Why? Mitigating losses, and increasing revenues. There’s no reason or evidence to believe that BP will be any different, lest anyone think they’re in this to take full responsibility and do whatever it takes to repair the Gulf waters and its coastline.

Predictably, BP has lied or misrepresented the truth all along the way.

Before a drop of oil was spilled, they deliberately refused to invest in crucial failsafe mechanisms to prevent this sort of tragedy in the first place.

Following the rig explosion, they detained workers who witnessed the Deepwater Horizon explosion.

They attempted to distribute ridiculously small settlement offers.

They consistently low-balled the estimated volume of oil leaking from the riser and blowout preventer, arguably to avoid harsher liability.

They brazenly refused to stop using Corexit despite evidence that it was more toxic than other chemical dispersants.

BP’s CEO, Tony Hayward, tried to tell us that the environmental damage will be “very, very modest.”

They ordered federal Coast Guard officers to shoo the press away from tar-balled beaches.

They’re preventing other reporters from photographing dead animals.

This week, they not only denied the existence of massive underwater plumes of dispersed oil, but, on top of it all, they’ve hired Dick Cheney’s former press secretary to run their PR efforts. Any minute now, I’m half expecting to hear that the oil spill is in its “last throes.”

Are we to believe that this is a corporation acting responsibly and with the best interests of the Gulf in mind? Not a chance in hell. This is a spoiled, petulant and entitled corporation operating in a largely deregulated free market atmosphere, and BP is so arrogant that it expects this atmosphere to carry it through this thing.

Simultaneously, most of the small businesses along the Gulf coast, which have nothing to do with the oil industry, have been crushed. Someone explain to those people how they shouldn’t sweat it — their businesses are just small sacrifices in the grander scheme of unregulated capitalism on the march. Clear the way, Mr. Gump with your shrimp boat, the free market has to drill, baby, drill. Didn’t you hear? The “era of big government” ended back in the 1990s. You obviously didn’t get the message, so, you know, buh-bye.

Forty years of corporate deregulation by conservative Republican Ayn Rand fetishists (and their Democratic enablers) have successfully poisoned the Gulf of Mexico. Ironically, the most liberal pro-regulation president in this same span of time — the president who has announced on several occasions a significant break from Reagan’s “government is the problem” mantra — appears to be the only politician being blamed for this so far. One of many reasons why I fear it’ll be another 40 years before we roll back this free market monster.

And, as I watch this video, the solution occurs to me: they should just plug the oil leak with every single existing copy of Atlas Shrugged.

UPDATE: I can’t believe I have to do this, but for the record, I’m not opposed to capitalism. I’m opposed to deregulated, laissez-faire, irresponsible capitalism. The mini-McCarthys in the comments are clearly incapable of, you know, reading.

UPDATE 2: Robert Reich reports:

A petroleum engineer who’s worked in the oil industry tells me BP is doing the minimum to clean up the oil and everything it can to protect its bottom line. According to the engineer, here’s what BP should be doing right now to mitigate the damage.

I rest my case.

***

One Nation Under Fear, with a foreword by Arianna Huffington of Huffington Post is available on Amazon. For more by Bob Cesca, see BobCesca.com! Go!

You should have been with me on Saturday at my little Methodist Church in Pound Ridge, NY, where I used to live. I just rejoined it after several years attending a big church in nearby Stamford, CT, where I live now.

Here’s what happened. There’s an informal men’s breakfast meeting on the first Saturday of every month. This time some of the women also came to hear an outside speaker with close ties to the Discovery Institute and American Enterprise Institute (two very conservative think tanks). It was arranged by one of the members.

The speaker was there mainly to talk about his book,  “Money, Greed, and God.” You can imagine what he had to say – the “free market” should rule supreme. Capitalism isn’t the problem, it’s the solution.There’s no more greed in America than usual today. We’ll be okay, he said,  if we just “limit the government’s jurisdiction over the economy and civil society.”

One of our members said:

“I have a different title for your book, how about “Capitalism, a Love Story!”

I asked him what role government should have in setting new regulations for Wall Street or taking over management of the BP oil spill. His answers were:

1.)It wasn’t Wall Street’s fault that people took out mortgages they couldn’t afford, and
2.) BP is liable by law to pay for any damage the oil spill causes.They could be punished severely – it’s no problem!

I asked: 

“What about the millions of dead sea birds and the ruined fishing grounds? How can they ever repair and pay for that damage?”

He changed the subject.

Now I’m wondering how those in my new church liked what they heard – from him and from me.  Am I going to find “Tea Parties” there next? I’ve suggested to our fine Pastor that she and the Elders may want to decide whether to let this one matter die out or face it openly now. The next few days should be interesting, including church services today.

Kenneth N. Davis, Jr.
President, Economic Strategy Associates, Inc
Stamford, CT
Former U.S. Assistant Secretary of Commerce/International, IBM vice president and chief financial officer, and investment banker 

***

To submit a blog to Free Speech Zone, e-mail it to bstack@usw.org. Keep it to 250 words or fewer. You MUST include your full name, hometown, and state. You may attach a photograph of yourself. Please include a phone number. This WILL NOT be published. Posting any given blog is within the discretion of the USW.  No blog using foul language (this is a family site), false information (we don’t want to get sued), or unnecessary personal attacks (again, we don’t want to get sued) will be used. Wait a reasonable period of time, then blog again! This is a Free Speech Zone. 

Richard Trumka

 By Richard Trumka
President, AFL-CIO

Unions are popularly known as “the folks who brought you the weekend.” In contrast, the U.S. Chamber of Commerce has the distinction of trying to take away the weekend–along with overtime pay, the minimum wage, Buy America rules, workers’ freedom to form unions, child labor standards….The list is long and ugly.

So it’s farcical that today the Chamber launched a campaign estimated to run in the tens of millions of dollars to promote job creation.

The Chamber’s campaign originally started out as an attack against financial regulation–until the Chamber found out how strongly U.S. taxpayers support reigning in Big Banks and the financial industry’s widespread shady practices. So the Chamber conveniently changed the packaging to purportedly focus on jobs, which in fact the American people desperately need.

Look at who accompanied the Chamber suits while they were announcing their Orweillian-named “free enterprise campaign.” As Sam Stein reported here:

Many of the individuals featured on Wednesday are long-standing donors to Republican candidates and groups that have fought efforts to enhance regulation. And, in one case, the business leader appearing alongside [Thomas] Donohue to decry the interference of government in the market place received business through the benefit of government contracts.

Yet, while millions of America’s workers struggle to find jobs in an economy where there are more than six workers searching for every one job, the Chamber repeatedly opposed extending unemployment insurance. Can’t have government interference in the marketplace, after all. Or aid to jobless workers. The same workers the Chamber’s smoke-and-mirrors campaign is supposed to be all about.

The Chamber also is joining with Big Banks and financial giants to try and kill a proposed agency that would protect U.S. consumers from being preyed upon by unscrupulous banks, mortgage lenders and many of the same financial institutions that helped create our nation’s economic disaster. The Obama administration’s proposed Consumer Financial Protection Agency, which this week is being considered in the House Financial Services Committee, would regulate products such as credit cards and home loans, while ensuring the U.S. Securities and Exchange Commission oversaw the $450 trillion “derivatives” market that sunk the world economy.

The Chamber is spending $2 million in attack ads, claiming that the new agency would hamstring even your local butcher from extending you credit for a week. It’s the same sorry effort at deception and outright lies that the health insurance industry now is trying to pull in the debate over health care reform. Tell enough lies and hope someone believes you.

As President Obama said in response to the Chamber’s distortion:

“We’ve made clear that only businesses that offer financial services would be affected by this agency. I don’t know how many of your butchers are offering financial services,” Obama said to laughter.

The Chamber is so twisted up in deception it seems unable to even provide accurate membership numbers. Writing in Mother Jones this week, David Corn points to a big discrepancy between the Chamber’s public membership numbers and reality.

In testimony before Congress, statements to the press, and on its website, the Chamber claims to represent “3 million businesses of all sizes, sectors, and regions.” In reality, the number is probably closer to 200,000.

Not sure if the 200,000 includes Apple Inc., Pacific Gas & Electric and the other giant corporations that recently have pulled their membership from the Chamber because of its draconian stand on climate change.

The Chamber’s so-called “free enterprise” campaign has been tried before. After World War II, the National Association of Manufacturers led a similar such effort. That campaign to sell capitalism to U.S. consumers incurred the derision of no less than the editors of Fortune magazine, who found similar sentiments among business executives represented on the boards of the business associations that supposedly represented them.

In dismissing the campaign as ludicrous, one such executive described it this way:

The best way we can demonstrate the importance of Free Enterprise is to make it work.

It’s clearly not working now. And although the Chamber may try to wrap itself in the shiny trappings of a feel-good campaign, its repeated attacks on consumers and workers demonstrate who the Chamber stands for: Wall Street not Main Street.