Tuesday, March 31, 2009

Institutional Memory

guest-posted by Armadillo Joe

The proprietor -- Mr. The Broadway Carl -- and I had the following exchange in the comments to my previous post:

Broadway Carl said...

Hey Joe,

I'm not exactly sure why you're riled up about this considering that bailout based on a feasable restructuring plan was always on the table.

"...the UAW needs to swap equity in the companies for 50 percent of the companies' cash contributions into a union-run trust fund for retiree health care. GM owes roughly $20 billion to its trust, while Chrysler owes $10.6 billion."

I get the fact that this sounds like a raw deal, but if I'm reading this corectly, 50% of something is better than 100% of nothing.

March 30, 2009 7:09:00 PM EDT

Armadillo Hussein Joe said...

I understand that all of these things have been on the table from the beginning, and frankly, apart from seeing my union brothers and sisters taken care of in a way that strengthens the labor movement -- not vice versa -- my love for trains and a rail transportation network over cars makes me hope Obama forces them to invest their vast resources into a new passenger and freight rail system.

I guess it has more to do with the perceived double standard. I file this one under the "Punch a DFH in the Face" strategy for street cred with The Villagers. He should be going for the "Pitchforks & Torches" strategy, but The Villagers don't trust anyone who wants to punch a banker in the face.

I think Obama may be going for his "Sister Souljah" moment, which was ugly and despicable when Clinton did it and its ugly and despicable now.

March 30, 2009 9:46:00 PM EDT

Broadway Carl said...

Well, I'm wondering what the response would have been had the government handed yet another truck full of money to GM or Chrysler without adhering to the stipulations set forth a few months ago, or just let them go bankrupt.

I'm guessing it's more a damned-if-you-do, damned-if-you-don't moment.

March 30, 2009 11:13:00 PM EDT

I bring this exchange out into the open to highlight the fact that I wasn't terribly clear in writing the "Protected Class" post in what I meant in raising objections to the different treatment of the automakers versus Wall Street.

So let me be clear now.

Whole regions of our vast nation, and not insignificant chunks of our overall economy besides, all depend on automobile manufacturing. Some of it is unionized, U.S.-based and predominantly located in the so-called Rust Belt (the great-great-grandparents of whom remained collectively loyal to the United States) and some of it is non-union, Germany & Japan-based and located mostly in Dixie (the great-great-grandparents of whom committed treason against the United States in defense of human chattel slavery). We fought a couple of wars in the 1940's and the 1860's and the good guys supposedly won on both occasions, though it is curious to me that the losers of both conflicts collude now to undermine one of the pillars of strength that girded the American Experiment in the 20th Century: a healthy, unionized Middle Class.

Now, when we talk about manufacturing in the United States, we don't really do much of it anymore. In fact, as a nation, we don't make much of anything anymore except movies and otherwise just dream up new technology for people in other countries to go and build and sell back to us. But our large, complicated world requires technology to run and we have been steadily losing the ability to stay ahead of the curve not at the leading edge, where all the coffee-house-dwelling super-creative types dream up iPods and printable solar cells, but down in the boring, gut-level nuts-and-bolts where engineers with horn-rimmed glasses and pocket-protectors along with a skilled workforce with calloused hands really do the scut work of making things. It's boring and brain-deadening and at the end of the day not nearly as fun as sitting around in a Starbucks with your laptop riffing with friends about what kind of rendering to use in generating the texture-mapping for the skin on the monsters in the next level of your video game you hope to sell. Unfortunately, we can't become a nation of aspiring video-game programmers serving each other coffee and hamburgers in the meantime. This is the unsustainable tail end of the magical thinking embedded in the silly service economy we heard so much about in the 1990's: a strong economy must have some underlying manufacturing base, period.

Because, over time, the accumulating value of institutional memory is the most vaulable asset any collection of people have, whether a small company, a whole industry or an entire nation. Indeed, it is the thing that makes us human, the passing on of knowledge, and -- relatively speaking -- we have been getting stupider as a country for quite a long time. I point to the continued existence of the GOP as my Exhibit A. The reasons for this turn of events are complicated and not entirely the result of the natural evolution of people and institutions; I'd argue that it has been somewhat by design, though that is another blog post for another time. For now, I point to another industry where we've been getting collectively stupider and it will come back to bite us on the ass in next few decades: farming.

One of the many disastrous consequences of our petroleum-intensive energy regimen these last sixty years has been the rise of industrial farming. Write all the glowing paens to the alleviation of hunger you want about the vast yields of industrialized farming, the net result has been that fewer and fewer people in this country actually know how to farm anything. This is not necessarily a problem when you have fleets of fossil fuel-burning trucks whizzing back and forth across the continent delivering food into our sprawling metropolitan areas, but as petroleum gets more expensive and our food-delivery network grinds to a halt, eating locally will become less a boutique lifestyle choice and will instead be forced upon us by outside events. Who will grow our food? Who, apart from a few farmers in the Upper Midwest and perhaps in Pennsylvania, actually know how to grow food on the small and sustainable scale that will be demanded by a world struggling with more expensive fossil fuels?

Which brings me back around to Obama's treatment of the auto manufacturers. In a world where more expensive fossil fuels discourage a Happy Motoring lifestyle, cars will be less in demand. However, the mechanical and engineering know-how to manipulate metal and rubber and glass into functioning machines, and the bureaucratic integration required to keep it all together and running smoothly, takes years to pull together and make whole and it doesn't take very long for it all to dissipate once pulled apart, for the institutional know-how to simply evaporate. It is much easier to make an existing enterprise change course (GM-built tanks & Ford-built airplanes in World War 2 come to mind) than to try to resurrect them or start from scratch.

What I am advocating here is not the survival of General Motors and Chrysler as car makers, but as machine-making entities that can become the kernel of a new industrial concern in the United States -- trains: light & heavy, passenger & freight, street-level omnibus & inter-regional bullet train. Thus far, Obama's rhetoric and the proposed policies of his administration seem to treat them and their Wall Street counterparts as co-equal intitutions, simply as widget-making financial entities that employ some people who do things, which is fine for an economic theory-class in business school but is disastrous as a basis for erecting public policy. Because the folks employed by one are collectively less politically connected, they get all the tough-love rhetoric and the other, more-connected group gets the kid-glove wrist-slap. It is a double-standard, but worse than that it signals to everyone from the highest-flying investor in lower Manhattan to the lowliest bolt-sorter on an assembly line in Michigan where the government's priorties lie.

My problem with all of it is that the rhetoric coming from the Obama Administration signals that the money of the already wealthy is more important and more worthy of protection than the livelihood of a whole sector of the nation's economy, one that I believe is indespenible in the coming years as we try to fix what is fundmentally broken in our economy.

I hope that makes it clearer. Thoughts?


Bhuvan Chand said...

nice article. I'm regular reader of you blog. I also started by blog on fossil fuels.

Broadway Carl said...

Sorry, Joe, but I'm still feeling a little disconnected with your thoughts. I know that you're big on having an amazing railway system and I'm with you on that. But I can't get from point A to point B without auto manufacturing in the picture. And frankly, neither can Europe. Just because they have an awesome railway system doesn't mean they stopped manufactuing cars.

Saving the auto industry is about saving 3 million jobs. Concessions being made by the UAW realizing that to help save their industry and their jobs, they'd have to change their ways to conform to a 21st century way of doing business doesn't feel to me like Obama's sticking it to the litle guy. I think the union realizes that besides wages, 100% coverage for life after retirement is not a sustainable business model. Good for the negotiators who got that in and shame on the auto industry for agreeing to it in the first place (and I'm speaking as a union man). If however, we're looking at health care reform, then the retirees of the UAW wouldn't be left out in the cold, which I think is part of the big picture.

Ultimately being part of my last contract negotiation in my union taught me something. The union is obligated to negotiate, not just be the "Union of No." The officers of the union have a duty to negotiate the fairest terms for their membership. Stonewalling only gets you so far, and if the end result is a dissolution of the union and massive job loss because you're making a stand on principles, then you're not negotiating in good faith and doing your members a disservice.

I think you're also dismissing the fact that the new Obama budget is proposing 21st Century rail transportation as part of the stimulus package. Still, new rail isn't going to happen overnight, and in my estimation, even if we got everything we wanted, I still can't see a world without autos in it. There will never be door to door service by rail across the US. It's feasibly impossible.

So why can't we have both? The only way a sustainable auto industry will survive is by making cleaner, fuel efficient cars (that's the retooling that needs to happen). Along with that, more job creation can happen on the rail front by making a concerted effort to upgrade and install a new rail system that can alleviate traffic, make daily travelling faster and more affordable and give people a choice of transportation. This can happen in major cities and travelling from city to city, but it'll only get you so far.

Here's an example. Yesterday I drove from Gettysburg, PA to Cincinnati, OH. It took me 8 hours including a stop for dinner. Gettysburg will never have an upgraded fast rail service. Never. But maybe Harrisburg will. Will that connect me to Pittsburgh and then to Columbus, OH and then to Cincy? Can it do it in 8 hours? There will always be a need for automobiles and hopefully in the future less dependence on them, but they will never become obsolete even with the best railway system.

On the UAW front, what we need is a lowering of the salaries to compete with the non-union factories (which they've already agreed to) and then put the Free Choice Act back on the table so the non-union foreign car companies working in the south can organize. Then we'd be talking turkey. Tabling the EFCA did more to hurt unions and unionization than the restructuring of GM. Don't forget that if we let GM go into bankruptcy, it's tantamount to tearing up the union contracts anyway and getting nothing in return.