Bailout watch: Robert Reich spreads the wet blanket!


Where the cheering ends: If you’ve watched MSNBC the past two nights, you’ve seen a lot of cheerleading about President Obama’s triumphant speech to the UAW on Tuesday. Last night, Chris and Joan were gushing pretty hard:
WALSH (2/29/12): I would say the winner yesterday was whoever scheduled that speech for President Obama on the day of the Michigan primary.

MATTHEWS: It was a good speech.

WALSH: And it was a beautiful speech. It was a wonderful speech. His heart was in it.

MATTHEWS: Well, let’s—

WALSH: He talked about caring about people.
We were sobbing before they were done! But on MSNBC these days, the cheerleading is general. Obama’s speech was lustily praised, despite itsoccasional misstatements. The auto bailout has also been praised over the past week or so.

Regarding the auto bailout, we think a point deserves to be remembered. This is Robert Reich, spreading the wet blanket on last week’s Last Word. He discussed the possibility of bringing manufacturing jobs back to this country:
REICH (2/20/12): There has been a little bit of a boomlet in manufacturing back in the United States. But we’re still way down. I mean, we’re five million jobs short, manufacturing jobs short of where we were in—ten years ago, in the year 2000.

And the nostalgia, I think, Lawrence, comes from the fact that these—manufacturing used to be the place where we had really good, high-wage jobs for Americans who did not have a four-year college degree. And that’s still the case, to the extent that there are manufacturing jobs out there. The problem is that there’s a misconception. And the reason that those good manufacturing jobs existed was not because of manufacturing per se, it was because we had strong unions in manufacturing and in the manufacturing sector.

And those strong unions were able to negotiate from a position of power and get very good wages for workers in manufacturing. Those days, unfortunately, have waned. I mean, look at GM. And GM has huge profits, but the UAW, the United Auto Workers, you know, managed to negotiate a new agreement that provides new workers with only $14 an hour, starting salary. That’s half of what all new workers were getting.

O’DONNELL: Robert Reich, thank you very much for joining me tonight. Everybody should read your piece, "Manufacturing Illusions." Thank you very much.
GM is doing great! Those new workers, not so much.

On MSNBC, the cheerleading is general, pretty much as it is on Fox. On MSNBC, that includes a lot of cheerleading for the auto bailout.

We liberals are cheering because Romney was so wrong in his prediction about the effects of the bailout. For our money, that highlighted statement by Reich is also worth recalling, big picture-wise.

Romney keeps saying the unions made out like bandits. Unfortunately, it seems he's wrong there too.


  1. I agree that the cheerleading is a bit over the top, but when you consider that even mainstream "liberal" economists like Christy Romer (who was right about the needed size of the stimulus-jobs bill) and Larry Summers (who was wrong about it, deregulation and so much else), as well as more conservative economists like Greg Mankiw and Glenn Hubbard, all have pushed for allowing US manufacturing to move overseas, for a "knowledge-based" economy that provides few opportunities for the majority of Americans, and for tax policies that enable the enrichment of those at the top and asset inflation and little for the 99% who aren't professionals or lucky enough to get service jobs, I understand the cheering. It represents a start, a beachhead, an anchor, a bridge back to what made America the world's economic powerhouse.

    If we cannot make anything in this country but jobs, processed foods, overpriced pharmaceuticals, houses that no one can afford to inhabit, and financial products that end up destroying the national and global economy, we very will be turning into Atlantis. I think Obama gets this. He is still a bit too attached to the neoliberal utopia that brought us to the brink, but he also didn't grow up with a platinum spoon in his mouth and knows how difficult it can be out there and that the mass of people need something other than nostrums and wagging fingers. Romney doesn't have a clue, his plans are a disaster-in-the-making, and he's like a weathervane that's already bent at its base. Not only does he twist in the wind, but even when he does he's off. I just hope more people see that, but it won't be through anything approximating journalism by the major US newspapers or TV channels. They're absolutely HOPELESS!

    1. Missing phrase:

      "If we cannot make anything in this country but low-paying service jobs, processed foods, overpriced pharmaceuticals, houses that no one can afford to inhabit, and financial products that end up destroying the national and global economy, we very will be turning into Atlantis."

  2. A recent JPMorgan Chase internal study concluded, with apparent glee, that the extraordinary rise in profits seen among American businesses is coming almost entirely out of American workers' wages. Redistribution for the rich, as it were.

    The "reality-based" world is often of interest to business people, so you frequently see this kind of analysis in material not prepared to general release. even when it doesn't support Chamber of Commerce dogma. It won't be found, however, in the NYT or on cable TV.

  3. You have to start somewhere, and a terrible 40-year trend of jettisoning whole industries we actually invented cannot be turned on a dime. The notion that an entire continent cannot do manufacturing for its own needs or export-- an idea that seems to infect both liberal (or "neo-liberal") and conservative economists -- not even capital-intensive manufacturing that requires workers if not as many, seems absurd. Local transportation still matters, as does local design. Each continent should be able to handle an auto industry, for example. As long as there is an enormous imbalance in industries that ought to be found distributed throughout the world, we should recognize that something is wrong and something should be done about it. Alexander Hamilton got that. Too bad so many have forgotten his insights. The Germans apparently have not.

    There's a lot more to the GM-UAW deal than the wages. GM effectively went through bankruptcy, for cryin' out loud, and since when are we supposed to be outraged that entry-level workers make a lot less than longtime employees?

    1. Somerby didn't express "outrage," I think.

      And I think you have your terms wrong at the end there anyway:

      The problem is NOT that "that entry-level workers make a lot less than longtime employees."

      A real problem, if the quote from Robert Reich is accurate and correct, is that the entry-level workers' wage has BEEN CUT IN HALF.

      If not the subject of "outrage," this is at least worth some notice. And it has been basically ignored on "the left." So we have either the Republicans' very real outrage over Obama's giving everything to the UAW (in their minds). Or our own liberal celebration.

      The real truth should include the sobering "wet blanket" information as well.

    2. --*A real problem, if the quote from Robert Reich is accurate and correct, is that the entry-level workers' wage has BEEN CUT IN HALF.*--

      Yes, but if I recall correctly, prev union contracts stipulated that entry-level workers be paid the same as long time workers, the unions being irrationally against any sort of two tier wage scheme. That's sort of outrageous, but, of course, one has to pretend otherwise when evincing the corrupt union stance.

    3. It's obvious that you know nothing about what the union pay scale was and what it is now. You just wanted to say "corrupt union..." Honestly, at least do some research - find out what the pay policy was, how it changed, what management and the union concessions were, etc.
      After all, that's why Bob started this long ago - so we would ask better questions and not accept things just because they didn't challenge our prejudices and world view.
      As recently as 1939 people were being shot just for demanding their right to form a union.
      After WWII General MacArthur enshrined the rights of the people to form unions in the post war Japanese Constitution. He was not a personal fan - in 1932 he cleared out the Bonus Army from near the White House.
      (Exceeding the force authorized by President Hoover), but he understood that there needs to be a counterweight to the power of corporations.

  4. In a country with anything like class consciousness, it would be astonishing to us that unionized industrial workers today earn as little as $14 an hour. But even that's apparently too much for Romney, et al.

    If only we could bring the wages of ALL GM workers down to that level, and revoke their health insurance and pensions, then the company could really be profitable!

  5. And later, Ronald Reagan praised the God-given right of workers to join together in solidarity and bargain Poland.
    "By outlawing Solidarity, a free trade organization to which an overwhelming majority of Polish workers and farmers belong, they have made it clear that they never had any intention of restoring one of the most elemental human rights—the right to belong to a free trade union." Oct, 1982

    Though many conservatives complain that bailing out GM was anti-capitalism (socialism), and the auto industry and the nation would have been better off if Obama had "let the system work", it is pretty clear what the real objections were.

    The anti bailout crowd can't abide by the idea that the UAW and auto workers got rescued, too.

    The unbreakable rule is that bondholders have a God-given entitlement to the lion's share of the leavings, since they agreed to accept the lowest rate of return.
    Next in line are the stockholders.
    The employees and customers holding warranties are out of luck.

    Conservatives claim this is fair in the case of GM because it was the rapacious autoworkers and the UAW that saddled the corporation with ruinous obligations.

    GM made many stupid choices from the late 1950's on. The biggest was deciding that the true mission of the company was to provide big dividends to shareholders at the expense of everyone else.
    If politicians want to blame someone, they should blame the Duponts of Wilmington, Delaware, not the autoworkers.

    If you want to know what the Duponts had to do with it, feel free to look it up.

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