Over the weekend, Washington Post carmudgeon Warren Brown framed the pro and anti-bailout debate as a form of class warfare, pitting wealthy college-educated selfish bastards (i.e. journalists, Wall Street, Washington) against UAW-protected American-dream-seeking assembly workers (i.e. Detroit). This morning, The Detroit News’ resident poverty and employment policy specialist picks-up Warren’s placard and mans the barricades. In “Washington’s whipping boys,” Amber Arellano bites the hand that’s about to feed. “While Wall Street was welcomed into the front door on a Sunday night and served a bail-out with hot cocoa, Michigan’s auto chiefs have been publicly humiliated before the national press so Congress and the Bush administration can show voters they’re finally holding someone accountable for this disaster of an era.” I said, “While Wall Street’s 1990s orgy of deregulation wrecks the economy and the Manhattan Brooks Brothers set gets a true bail-out of more than $170 billion, the Detroit Three automakers beg for a loan — and get mocked as if they’re janitors at an arrogant New Jersey country club.” You might not agree with Amber’s assertions (here’s hoping), but this girl’s got some spunk!
“The United Auto Workers slash their wages down to $14 an hour — little more than McDonald’s wages — and humbly prostrate themselves [?] in front of the altar of Beltway egos. What did Wall Street sacrifice? A few brokers and Starbuck’s mochacinnos.”
OK, OK, I get it.
“Wall Street isn’t easy to pick on, but Detroit is. We, the folks with ties to old economy industries in the very un-hip Heartland, are perceived by many as the weakest on America’s new socio-economic ladder. You can hear it in the nasty undertone lurking in the debate. It’s hardly just about the automakers’ past mistakes, though there are many.”
Such as? Amber? Hello? Amber…
“Throughout history, the poor and working classes have always had to work harder to prove themselves and their worth. Much of the Bible is about busting that myth. Wall Street didn’t have to deal with this lurking, ignorant bias. Wall Street doesn’t have the United Auto Workers and rough-and-tumble factory workers linked with it.”
Fortress Detroit is a bizarre place these days. The people who destroyed it get a pass while the people who are trying to save it (from itself) are vilified. Passive aggressive? Seriously.
“It’s easy to pick on the desperate and vulnerable — and Michigan is that right now. It’s tougher to do what true leaders do: look out for everyone with equal respect and investment, taking care to leave no one region or group jobless and hungry in a ruthless global world.”
She’s pretty hot.
I mean, the picture.
I caught about five minutes of some CNN talking heads show yesterday while they were going on and on about the auto industry situation. Trust me, the dialog pro and con here on TTAC is much better thought out. I shut it off when one of the commentators opined about how those rotten UAW members were making $28/hour cash money while “the rest of us” have to make due with much lower pay. I couldn’t help but wonder which of the panelists was shooting their mouth off on CNN for compensation less than $28/hour!
Bankruptcy lawyers are billing themselves out at ~$300-$1000/hour, yet working stiffs are greedy when they want $28 plus benefits?
John Thain, CEO of Merrill Lynch, is trying for a $10 million bonus for 2008 even though his firm ended up in a shotgun marriage to Bank of America (http://online.wsj.com/article/SB122870455251587405.html?mod=testMod ).
Yes Margaret, there is class warfare going on in America and the Super Highly Paid class has been having its way with the working class. There is something deeply screwed up about the way money is being thrown at the banking industry while at the same time the auto industry is having its feet held to the fire.
What makes auto workers so virtuous? What makes them better than movie theater ushers, waiters, gas station attendants, secretaries, or dry-wallers?
If you want to bill your time at $300 an hour, then go to law school and become a bankruptcy lawyer. This is the United States of America, and there is absolutely nothing to stop you except the constraints you put on yourself. Otherwise, go to work, be happy you have a job, and show your employer why you are worth more than $28/hour.
This is coming from a college-educated selfish bastard who earns about $21 an hour.
It is quite interesting to see the differences in treatment the two industries (financial and auto) have received. Its not exactly apples to apples, but I would agree that the Big Three are being made an example of. She leaves out some important points like the fact that no current UAW member got his/her wages reduced to $14 dollars per hour. Also, Brooks Brothers is far too cheap for the Wall Street elete.
I would argue that Congress did not have adequate understanding of the financial crisis nor adequate time to put the verbal smackdown on the chiefs of finance prior to passage of the TARP. So, it does appear on its face that Wall Street was essentially handed a printing press from the Treasury with no questions asked while Detroit gets table scraps after being beaten and humiliated in the national spotlite.
WTF with all the ads???
Well those #’s for lawyers are like any other time you pay hourly for labor.
I doubt the guy rotating my tires actually makes $50/hour. Those numbers include the amount necessary to pay the rent, staff, and all the other expenses too. Which isn’t to say they are cheap, but its not like that associate sees a quarter of what he charges per hour.
Over the weekend, Washington Post carmudgeon Warren Brown framed the pro and anti-bailout debate as a form of class warfare, pitting wealthy college-educated selfish bastards (i.e. journalists, Wall Street, Washington) against UAW-protected American-dream-seeking assembly workers (i.e. Detroit).
While Warren is stretching the point–a lot–he is right about the treatment of Finance versus Manufacturing. In the case of the financial industry we’re effectively paying what amounts either a bribe to loosen their own purse strings, or as insurance against their own losses.
Both leave me feeling more than a little ill. I’m pretty left of centre, and I truly dislike the idea of institutionalized redistribution of wealth from the poor to the rich. The problem is–and this is what Warren doesn’t mention–is that unless we nationalize the financial industry completely, failing to bail out the money-men results in their tightening the taps on rest of us as they cling to their hoards.
Trickle-down economics at it’s best. Barf.
(yes, my inner Marxist is showing. Sue me)
Where Warren is right is that failing to bail out the auto industry deals another body-blow to the middle class. We’re rapidly destroying the ability of people with average education and means to earn reasonable living, reducing more and more people to McJob levels of employment. Between the gutting of manufacturing and the Walmartization of retail, there’s not a lot left.
Median income has been on a downswing for the last thirty years, and the spread is getting embarrassing. In another twenty years, expect to see more gated communities for the rich, more credit dependency for the poor and, eventually, a return to indentured servitude.
Two Points….
(1) toxicroach has it right. Comparing billing rates for lawyers to salary for assembly line workers is apples to oranges.
If you want to make the comparison, then you have to compare what the lawyer bills to a metric called “revenue per employee”. That is computed by taking all the revenue the company earns and dividing it by the number of employees. Then you will find that the “pay” for an assembly line worker goes way up.
(2) The “Class Warfare” these writers talk about is real, but they have it bass-ackwards. The rest of the working stiff’s in the US who don’t have golden medical care for life, job banks, and other perks are pissed off that their tax dollars are going to be used to prop up what looks to them like very generous benefits.
In other words: From the trenches in the rest of the US, the UAW workers are spoiled brats, no different than the overpaid executives bozos who ran GM into the ground.
If things are as bad as Detroit claims, then welcome to new American reality that the rest of us have to life with. Welcome to the world of no affordable health care, no hope of retirement, and the prospect of loosing everything as soon as an accident or serious illness strikes. If you want my tax dollars, then you get them same “benefits” that I get, which are none.
“The United Auto Workers slash their wages down to $14 an hour. . .” Correction, that slash was for new worker wages only.
The old workers continue to get paid with a wage and benefit package that is better than what most people who went into huge debt, joined the military or worked days and took night school to go through college get.
The $14 an hour for new workers is the UAW’s fault, and nobody else. If you’re not hired yet you don’t vote in the UAW, so you get screwed.
Basically the current UAW workers completely threw the new workers under the bus, destroying the future of blue collar auto workers, so that the current workers would not have to make any concessions.
And if Amber Arellano wants to say “down to $14 an hour — little more than McDonald’s wages” she better be careful because:
1) She’s flat wrong, McDonald’s workers get ~$7 an hour with no benefits; more than twice as much (when factoring in benefits) is not “little more”, and
2) There are some skilled positions like die making and assembly line fabrication (the people that make the robots), but I don’t even know if those people are UAW, they’re probably machinists. But the stuff that isn’t done by robots, the standing on a fast paced line, snapping on the parts, is really not that different than standing on a fast paced line making Big Macs, etc. Why should the pay be different, Amber?
I’m indifferent toward a union getting as much as it can out of a company, but if the union gets so greedy that it kills the company it is not the taxpayers’ problem.
People doing moronic work that would probably be done by a robot if the Jobs Bank didn’t make replacing line workers with robots so expensive do not deserve to be bailed out with public funds so they can continue to make as much or more than teachers, police, firefighters, skilled tradesmen and >90% of white collar workers.
Above I called the work moronic, not the people, because, although I’m sure the UAW has a fair share of high school drop outs and other failures, it probably also has a lot of people that are intelligent and educated, but can make more (for now) standing on a line snapping on parts than doing what they went to college for.
psharjinian: The problem is–and this is what Warren doesn’t mention–is that unless we nationalize the financial industry completely, failing to bail out the money-men results in their tightening the taps on rest of us as they cling to their hoards.
If we nationalize the financial industry, we will create a highly paid government organization that is most efficient at redistributing money from lower-paid taxpayers to the well-paid bureaucrats who will run it.
Even worse, said government monolith will be even more immune to regulation and more prone to being stuffed with the cronies of powerful politicians than the current financial industry (see the recent history of Freddie Mac and Fannie Mae for how this works).
psharjinian: Where Warren is right is that failing to bail out the auto industry deals another body-blow to the middle class. We’re rapidly destroying the ability of people with average education and means to earn reasonable living, reducing more and more people to McJob levels of employment. Between the gutting of manufacturing and the Walmartization of retail, there’s not a lot left.
We are talking about relatively few jobs, and said jobs make FAR more in wages and benefits than the average middle-class worker. Senior UAW workers make more than most white-collar workers around here – but the workers around here aren’t begging for food or living in a shack.
What Warren Brown and other pro-bailout individuals can’t seem to admit is that any successful turnaround plan for GM and Chrysler will require both companies to reduce capacity to serve their true market share, which means the shuttering of divisions, closure of factories and dealers and a reduction in white-collar jobs and blue-collar jobs.
They want an aid package to stave off the inevitable…but the jobs are going to disappear, one way or another.
Just for a second, let’s get beyond the ‘relative value of work’ piece and look at the (mostly unintended) crux of this article.
The perception that there is no justice for Wall Street.
Fact of the matter is what has been done openly and heralded as cutting edge by the current crop of Streeters makes Milliken eligible for sainthood. Easily.
Massive unregulated ‘reinsurance’ deals that were built with less design thought than a barf bag.
DET is gonna get theirs for years of screwing the customer. I’m afraid all NYC is gonna get is some temporary easing of the used Ferrari market.
We may well have no choice but to pump money back into the well. But when they are not made to pay in any appreciable way (and yes, thousands have lost jobs and the sacrificial lambs have been led to public slaughter) but please.
The mother of all trainwreck-clusterfu**s, and this all we do to the Wall Streeters folks who, in the end, have the greatest culpability? Really?
If we nationalize the financial industry, we will create a highly paid government organization that is most efficient at redistributing money from lower-paid taxpayers to the well-paid bureaucrats who will run it.
And that’s different than what we have now—how?
Answer: it isn’t. We’re just maintaining separation of bank and state to make libertarians feel good. We’re funneling huge volumes of money directly into the pockets of some very wealthy people and organizations, simply because they hold the economy hostage.
Again: how would nationalized banking be worse than what we’ve just done? A lot of people have said we’ve effectively got privatized profit and socialized loss: why not just socialize the profit as well? I mean, it’s not like we seem to have the stomach or ability to privatize the loss.
Note that I’m being facetious and not actually advocating nationalization of the financial industry, because it doesn’t really work well, but I’m not at all adverse to a lot more regulatory pressure, even if it means slower net growth. I’m also not quite sure why everyone is panicky over government oversight in GM/Chrysler or the banking industry, because private oversight has done such a wonderful (sarc.) job in both cases.
If you want to bill your time at $300 an hour, then go to law school and become a bankruptcy lawyer. This is the United States of America, and there is absolutely nothing to stop you except the constraints you put on yourself.
Keep believing that dream, because it’s pushed on you by the people who are already wealthy (and don’t want to own to any kind of social responsibility) and don’t want you asking why the income spread in this country rivals that of many third-world nations.
Yes, the 96% of working Americans (not counting government workers) who have no pension will be forced to pay for those poor downtrodden masses who have a pension.
I wish I could have such a pessimistic view of the world. It would be a lot easier to blame “the man” for my problems. My struggles could all be traced back to the conspirators against my happiness and success.
Luckily, I have my own soul, and I’m not swayed by those conspirators trying to “push dreams” on me.
I spent a little time at the Detroit News website this morning, reading stuff by/about Amber Arellano. It cost me nothing. It was a fair price.
Ms. Arellano is preaching to the choir, so to speak. Detroit didn’t deserve to have this happen! It isn’t fair! Government [deregulation] was the cause, and government is the solution.
A typical lefty whine.
I won’t defend the excesses and stupidity of the financial sector. (Other than to note there has been considerable punishment dealt out. For example, Lehman stock is four cents a share. It’s now cheaper than wallpaper for decorating a room.)
Deregulation wasn’t the problem. The real estate and subprime mortgage bubble was the result of government policy. (Even poor people deserve to buy a nice house.)
And it is important to note that finance and manufacturing are very different. When there’s a liquidity crisis, everything grinds to a halt. A shortage of automobiles is quite unlikely. Think of credit as being like electricity. It takes juice to run factories, mills, mines, etc.
psar,
Your last comment is over the top. There are so many angles to attack its fallacies I won’t even bother. I know you have some lefty beliefs, but do you really believe that one?
Are we to think we are all living in a lottery, and that our own talents and hard work will get us nothing? Come on. Certainly there are people who have earned more than they deserved due to fortune or theft or fate or whatever. However, you want to attack the millionaires for the supposed sins of the decamillionaires in order to keep everyone, especially the working class, enslaved to the state.
The vast majority of millionaires go there by hard work and prudent finances. Also, not everyone making over $100 per hour is, or will ever be, a millionaire. There is no regulation or tax scheme ever designed that effectively benefitted the poor at the cost of the rich. The schemes always miss the mark and hurt everyone, with the poor getting a very temporary boost, and the middle class paying the bill over time.
Landcrusher,
The libertarian in me believes that on one level, you are spot on. As someone who is self-employed, if I didn’t believe that hard work paid off, I’d be eating a gun.
The realist in me looks at the science and facts that show income and wealth distribution. No tin-hat stuff: IRS, Commerce, those kind of facts.
When an ever-increasing amount of income and wealth is being shifted to a relatively small number of people, it would seem prudent to examine if perhaps our model needs some tweaking.
“Bankruptcy lawyers are billing themselves out at ~$300-$1000/hour, yet working stiffs are greedy when they want $28 plus benefits?”
Learn the difference between invoice and net. The lawyer may write an invoice for services rendered at $1000/hr, but that is only the beginning of the process. The invoice is submitted to the court, and all the lawyers involved in the case can jump on it. The judge has to approve the payment, and often cuts the request before it is approved. Only then can it be paid, if and it may be a big if, there is any thing left to pay the bills.
Of course after the invoice is finally paid, the lawyer has to repay the bank he borrowed money from to pay his employees, his landlord, and his outside suppliers. What remains is his profit.
Some lawyers get rich some of the time. A number of them make a good living most of the time. But, a larger number wish they had a $28/hr. union job. And, yes law firms go under all the time. There have been a couple of big ones this year.
And for psahjinian, no matter what the idiots in your sociology class said, the door is open. There are lots of law schools. All you have to do is finish college with good grades (a B+ average would be nice), take the LSAT and get a good score (over 150 or better), complete law school, and pass the bar exam. Of course monetizing your skills is another story, but your success will be due to your hard work and smarts, not the system, the man, or your stars.
Keep believing that dream, because it’s pushed on you by the people who are already wealthy (and don’t want to own to any kind of social responsibility) and don’t want you asking why the income spread in this country rivals that of many third-world nations.
I grew up in Ohio, in a family of six, with my dad earning “blue-collar” wages. Yet my parents managed to send all four of us kids to college (two of us to an Ivy League school). I don’t remember any of our family being members of an “old boys’ club” or anything like that.
Now, I didn’t go to law school nor do I bill myself out at $300/hour, but I’m doing alright so far. But it goes to show that it is certainly possible to economically advance oneself (and/or one’s children) without any particular socioeconomic advantage.
Cheers,
Jeremy
Are we to think we are all living in a lottery, and that our own talents and hard work will get us nothing? Come on.
You’re taking the absolutist view because you’re assuming I have, too. That’s not the case.
You can work hard, you can succeed. But if you’re born into institutionalized poverty, you have far less of a chance of doing so just by virtue of the depth of the pit you need to dig yourself out of, forst. For every, say, Barack Obama, there are hundred (thousands? millions, if you widen your scope outside the US) who strive and work all their lives and never, ever dig themselves out of that hole.
One of the reason the west–and the US in particular–has made the achievements it has over the past hundred or more years is that we’ve had a middle class of people who could rise above their daily needs, who weren’t faced with having to scrabble together enough to eat. And we’re making a horrible economic mistake destroying this class in a wholesale fashion.
The automakers, interestingly, were a large part of what provided for that middle class.
Certainly there are people who have earned more than they deserved due to fortune or theft or fate or whatever. However, you want to attack the millionaires for the supposed sins of the decamillionaires in order to keep everyone, especially the working class, enslaved to the state.
Put it this way, either we do gentle redistribution of wealth now, or do it by force when it becomes untenable. That’s my extreme counterpoint to your extreme example.
Whether we cede power to the state (comprised of a bunch of rich people), or to an oligarchy of rich people, the end game is the same: a few people have all the money and power while the bulk of society does the work.
I think we’re actually arguing for the same thing, but from different points of view. I’m talking about framework, you’re talking about end results.
And for psahjinian, no matter what the idiots in your sociology class said, the door is open. There are lots of law schools. All you have to do is finish college with good grades (a B+ average would be nice), take the LSAT and get a good score (over 150 or better), complete law school, and pass the bar exam.
You’re making the assumption a lot of upper-middle class people make: that there is no barrier save your own will and ability. It’s an easy mistake to make when you haven’t had to deal with, say, fetal alcohol syndrome, growing up in a ghetto, having little or no social structure and so forth.
Ask yourself: why does poverty breed crime?
Now, the other part of this, and it’s not something anyone like Warren Brown will say: the jobs and salaries afforded automaker employees were one of the few ways people with average (or less-than-average) intellect could make a good wage. Not everyone can pass the LSAT, let alone get into post-secondary institution. Yet by having meaningful employment we enabled these people, and their descendants, to achieve more and participate in the economy to a greater degree than would typically be possible.
Much of the wealth currently in the system exists because of the size of middle class. That the rich are working to disenfranchise them is short-term stupid (who will buy your wares or invest in your funds when no one has money?); that fellow members of the middle class are cheering them on out of intellectual snobbery is doubly so.
Mr. Farrago, many of the email lists i subscribe to are set up some people can be put on a blocked senders list. This seems like a good time to ask if your list could ever be set up this way? Not a complaint, just a question.
I “Yahoo’d (Yahooed?)” Amber Arellano. and she is pretty hot. It took me to DetNews.
psar,
The problem I have is that the framework you want, redistribution, has a reverse effect. It INCREASES actual disparity. Until I lived in Canada, I had never met so many people with hidden assets and internationally diverse portfolios. There were millionaires everywhere, but the goverment had NO idea who they were.
The middle class is the weakest everywhere there is an economically liberal climate. The redistrubition isn’t effective at taking from the rich, only the middle class.
Lastly, I believe much of the numbers produced by the government are simply BS. My favorite red herring is average household income. It’s a bogus number that is used WAY beyond its reasonable applications. The other is how we classify people based on their incomes. The minute I retire, I will be middle class, even though I will likely be much wealthier than I am today. Today though, I am one of those filthy rich people that should be giving back. It’s just stupid.
Disparity in wealth is really meaningless. Disparity in political power is not, but we know nothing about it without transparency which the left is always against. The real thing is whether people know they will eat tomorrow, have a warm bed, and decent clothes. Practically the only people in the US that are really in poverty are mentally unstable, or dysfunctional.
Institutionalized poverty was best reduced with welfare reform. Better progress was made by that than anything done since Kennedy.