Tuesday, November 19, 2013


A few years ago, in Taiwan, I stood in front of an abandoned factory with a middle-aged woman who had once been a shop steward there.

“Everything seemed fine,” she told me, “then, one day we showed up to work and everything was locked up and the boss was gone.”  It turned out he and his children and their families had all skipped to China.

“As far as I know,” she told me, “we were making a profit. We were happy. That was one reason it was such a shock.”

Then, she added bitterly, “He left owing everyone in the plant their pay for the last month.”

I asked her what she thought motivated her boss.  “It’s all about money,” she said.  “He can pay workers in China less, and they have no unions there, at least not real unions like here.”  A shop steward to the end.  (Be aware, it takes one to know one.)

Before she took us to her new workplace, in front of her house, where she had a small table from which she sold chewing gum, cigarettes and betel nuts, she added this thought.  “The workers there can’t be as good as we were.  We were trained.  We knew how to work together.  We made him profit.”

She stopped short, her lower lip quivered, then she bit down and said, “Come I’ll show you my ‘shop.’”

The 31,000 union machinists who last week rejected, by a 2-1 margin, a contract offer from Boeing are at least 4 years away from the betel nut table, -- the new contract offer was made not because the old one is expiring, far from it, but because this is the moment when a new project is beginning and the threat of moving it elsewhere can be made.  But they know how that lady felt: overpowered, and cast aside, and helpless to do anything about it.

As Steven Greenhouse in the NY Times said, Boeing “is on course to report record earnings this year and its stock hit a record high this month.”

Just the time, you might think, for a generous company offer to reach their goal of “stabilizing” their costs as they embark on a new B-777X airliner, an assembly line likely to work for a decade or more.  But as Jon Talton wrote in Boeing’s hometown newspaper, the Seattle Times, “Boeing is operating as a multinational company in a ‘shareholder value’ environment created since the 1980s, and in a competitive world. Thus, record profits and high executive compensation are not at odds with trying to drive down costs, including — especially — for labor.”

The name for this, almost never used by any major American news organization, is “class war.”

The only time you do hear the phrase, it is when some rightwing Republican Congressman or radio talker uses it to attack anyone who mentions, much less aggressively analyzes the ever-widening income gap, the criminal impunity bankers, brokers, hedgefunders and their shysters seem to enjoy with the Obama Administration’s market overseers, from the Justice Department to the SEC, and the near total dominance of American politics by big money.  Questioning the rich and how they got their gains, that’s “class war.”  Unmistakable evidence of real class war, the runaway rates of executive compensation billed to stockholders with the approval of rich person-crony Boards of Directors, ownership’s campaign to destroy worker’s access to professionally-managed collective bargaining, the geometric rise in conventional rates for private profit and shareholder return, goes unremarked in the daily coverage of television news, or the big papers like the NY Times and Washington Post, LA Times and Chicago Tribune.  Class war?  What class war?

Driving down compensation for unionized labor was what this take-it-or-we-leave offer was all about.  As reported by The Seattle Times’ Dominic Gates, “The deal would have ended contributions to the employees’ traditional pension plan in 2016, freezing the pension for current employees and eliminating it for new hires. This pension was to be replaced by a company-funded, defined-contribution retirement-savings account.

"The proposal also would have increased employee health-care premiums and copays. Wages would have increased just 1 percent every other year, on top of an annual cost-of-living adjustment.”

The new contract would also require 16 years for new recruits to work their way up to top machinists’ pay, compared with 6 years in the present contract.

The men making the offer included Boeing CEO Jim McNerney, whose last year got a 20% increase in his compensation, to $21.1 million a year, and Executive VP and CEO of Boeing’s Commercial Airplane Division Ray Conner, whose annual compensation was $6.2 million. 

Let me ask you, “You get on an airplane.  You want it to be the one built by a trained workforce that’s been together for years, or would you board the Dreamliner put together by Jim McNerney, Ray Conner and their friends?  Neither McNerney or Conner get their millions for knowing how to put together airplanes.  These guys get paid to know numbers, and power.

Numbers, shrinking for the workers, exploding for executives and shareholders, are just half the story.  The other half also follows the pattern of the departed Taiwan manufacturer.  It demonstrates the free-of-any-values-but money and power management style of our fallen age.  Boeing wants out of Seattle and to escape the International Association of Machinists, and seems to have no compunctions about moving, whatever the costs..

They first signaled that back in 2001, when after 91 years in greater Seattle, 85 as an aircraft manufacturer, Boeing suddenly moved its corporate office and the guys who fill the wide-bottom chairs to Chicago.  Then, last year, after accepting a big package of benefits from the State of Washington to keep the Boeing 787 jetliner project there, Boeing moved most of the 787 work to a new assembly plant in South Carolina, where wage scales are lower, and unions are much, much weaker.

Of course, everyone agreed, the experience and quality of the workers in Washington were much better than what the Palmetto State had to offer, but that doesn’t seem to have mattered then, and another switch to a plant full of newbies making 777Xs isn’t off-putting to Boeing's management today.  Conner greeted his contract’s defeat by immediately putting his company’s future jobs up for bid: “We’re left with no choice," he said with his self-declared “disappointment” hardly evident, "but to open the process competitively and pursue all options for the 777X.”

Those options are mostly the bottom fish of labor compensation and labor rights, America’s Chinas, Sri Lankas and Bangla Deshes. Utah, Alabama, and Texas can’t wait to bid ‘em down.  Rick (Ooops) Perry may not be able to remember the Cabinet departments he wants to kill, but the Texas Governor can, apparently, read a calendar.  He’s been tweeting his Lone Star ass off, touting how cheap and cheesy worker’s lives are kept in his state, since a week before the Machinists’ vote was held.

In Washington there is anger, nicely summed up by the Seattle Times’ Talton: “A wide majority of workers saw an ultimatum, not a negotiation,” he wrote.

“Especially in a time of historic inequality, when 40 percent of working Americans make $20,000 a year or less, these union workers resent being asked to give back gains it took decades of collective bargaining to achieve. Especially galling was potential loss of pensions in favor of inferior 401(k)s while executive retirement packages are princely.

“Union members I spoke with said the vote might have gone Boeing’s way if the company had not made what they saw as extreme demands when it is also booking record profits and a healthy stock price.”

But even more, there is a feeling of defeat.  As Talton put it, “It is difficult to see that the Machinists have much leverage.” 

Larry Brown, the union’s political director, told the Times, “Hopefully Boeing will recognize they went too far and will come back.”

Richard Aboulafia, an aerospace analyst with the Teal Group in Fairfax, VA,” told the NY Times, Brown might have good reasons to hope: ‘[the Seattle area’s] clear advantages, including an excellent port, a skilled aerospace work force and longtime experience in building sophisticated aircraft.

“’In terms of economics,’ Mr. Aboulafia said, 'it would make absolutely no sense to walk away from Washington because of this rejection, ‘But in terms of psychology, it’s hard to tell what Boeing will do.’”

What Boeing wants to do is clear; still to be decided is where.  But the NY Times reported, “Scott Hamilton, managing director of the Leeham Company, an aviation consulting firm in Issaquah, Wash., said, ‘I think there is going to be great pressure on Boeing to return to the bargaining table, certainly from Governor Inslee and, I would imagine, the whole Washington congressional delegation.’”

The Times reported, there was immediate pressure from the Governor.  But none of it seemed aimed at Boeing.  If jobs go away, the Governor said, it will be because the union said no.

“’It’s a decision that prevented us from winning this tonight,’ said the Governor,  “Minutes after the union announced the rejection of the deal,” the NY Times reported. 

“Shut up and take what you’re offered. You can’t win.” seems to be the economic media meme of the week.  Paul Krugman’s recent NY Times column cites some truly scary analysis from, of all people, Larry Summers.  The man as responsible as anyone for helping the Wizards of Wall Street and the Hopheads of Hedgefunding put the American economy in a ditch, and made himself a multi-millionaire playing hte games he deregulated, says get used to it, the ditch is where we’re likely to stay.

The case for “secular stagnation” — a persistent state in which a depressed economy is the norm, with episodes of full employment few and far between,” Krugman wrote, “was made forcefully [at] the I.M.F.’s big annual research conference.

Mr. Summers began with a point that should be obvious but is often missed,” Krugman reported.  “The financial crisis that started the Great Recession is now far behind us. Indeed, by most measures it ended more than four years ago. Yet our economy remains depressed.

“He then made a related point: Before the crisis we had a huge housing and debt bubble. Yet even with this huge bubble boosting spending, the overall economy was only so-so — the job market was O.K. but not great, and the boom was never powerful enough to produce significant inflationary pressure.

“Mr. Summers went on to draw a remarkable moral,” Krugman continued, “We have, he suggested, an economy whose normal condition is one of inadequate demand — of at least mild depression — and which only gets anywhere close to full employment when it is being buoyed by bubbles.”

Krugman then chimed in, adding that even the death spiral of surging household debt that began in 1985 and ran till the crash in 2007, also couldn’t push demand enough to keep the economy healthy.

What can be done to save the economy, to break the unending recession, the high unemployment leaving more households with less income to spend? 

Nothing, was Summers' answer, and krugman agreed.  “As Mr. Summers said, the crisis ‘is not over until it is over’ — and economic reality is what it is. And what that reality appears to be right now,” Krugman parroted, “is one in which depression rules will apply for a very long time.”

Even more remarkably lame are Krugman’s answers to the question, “Why might this be happening?

 “One answer could be slowing population growth. A growing population creates a demand for new houses, new office buildings, and so on; Another important factor,” he added, “may be persistent trade deficits, which emerged in the 1980s and since then have fluctuated but never gone away.”

 Slow population growth?  Persistent trade deficit?  And that’s it?  That’s why America is in decline and 99% of the population is feeling the pain?  We got old and we bought too many Sonys, or American brand products whose manufacturing had actually been removed to China?

Earth to Paul: read your own goddam newspaper.  Look west, young man, and you may see two more glaring predicates for depressed consumer demand and a sickly economy: radical income inequality and the unrestrained greed that drives it, respectively the product and their producer of a wildly successful, if apparently unmentionable, class war.

The main reason Americans is not spending "enough," is that they don't have enough.  Since 1985, their share of national income has been dropping, and since 2007 much of their savings have disappeared.  And the spending of hyper-rich people whose incomes are rising like rockets, does not trickle down across the whole economy.  When the 1% spend, they do it in big chunks on a few big things, made by a select few producers, or they buy corporate shares or hedge fund accounts, for which they get big tax discounts, and through all this they separate themselves ever farther from the bulk of people who make up the economy and the nation.  They live in their own world, as far from yours and mine as say, Chicago is from Seattle.

Republican Washington State Sen. Mike Hewitt looked at the wreckage of the contract negotiation and told AP, “The dynamics at Boeing have changed over the years from a corporate structure filled with Washington residents to leaders who no longer have ties to the state.

“’The thought processes are different than 10 or 12 years ago when Boeing was a Washington state company,’ Hewitt said.”

Sounds like Summers and Krugman are onto something.  As the late great Walter Cronkite would have said, “And that’s the way it is.”

He would never have called it “class war,” either.



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