Some Good News, But Mostly Bad

I am not happy about Tuesday's election results, with a few major exceptions, but I am going to hold off on diving into the mess, especially since so many others will do so in the next few days. I'll let the dust settle a bit, and see where we can go from here. 

However, I do want to share with you some commentary from Robert Parry. I have a similar take: I am reminded of, and strangely comforted by, the studies that show that so many American voters do not know what they are talking about and voting on. There is a swath of ignorance in this country that is both astonishing and depressing.  And more on that later as well.  

As Robert Parry has put it:

"This Republican strategy that Reagan popularized in the early 1980s has – over the past three decades – returned the United States to a second Gilded Age of extreme wealth at the top, a shrinking middle class, growing desperation among the working classes, rampant stock speculation, and a bubble-and-bust economy.

Yet amazingly, millions of Americans went to the polls on Tuesday and voted for this approach. In Rust Belt states – such as Ohio and Pennsylvania – which have substantial interest in manufacturing jobs related to the auto industry, voters punished Democrats who saved General Motors and Chrysler, and favored Republicans who would have blocked the bailout.

Voters also sent the conflicting message that they wanted the federal government to focus on 'jobs, jobs, jobs' but also cut the deficit. They then empowered Republicans whose major idea for job creation is to slash taxes for the richest top two percent of Americans, an approach that has been ineffective in job creation but is expected to add about $700 billion in red ink over the next decade."

We political scientists have a technical term to describe this behavior: "fucking idiots."

On the other hand, I was extremely pleased that Colleen Hanabusa emerged victorious in her effort to take back Hawaii's first congressional district. In a race that the media frequently called "hotly contested," or somesuch, Colleen won 53% of the vote (to Djou's 47%). Still, only 55.7% of registered voters went to the trouble to vote.

Another plus was that Democrat Neil Abercrombie easily defeated Republican Duke Aiona in the race for Governor. And when you include the clear victories by Senator Dan Inouye and Representative Mazie Hirono, it was a Democratic sweep for Hawaii's congressional delegation.

Colleen's victory celebration was packed and festive. I am honored to have been able to contribute in some small way.

Why Don't Corporations Demand a Public Option?

I have often wondered why corporations have not supported a public option for health care or preferably a single payer plan. Our auto makers have longed complained about costly health care as a major reason for their relatively high overhead compared to foreign competitors.  And one of the reasons GM and Chysler were willing to build factories in Canada was government run health care.

One would think corporations would love to get out from under any costly program; after all, they have a long history of privatizing benefits and socializing costs. Why would health insurance be any different?

The Institute for Southern Studies (ISS) has offered some tentative possibilities.  One of these is that executives are reluctant to ruffle business relations for fear of encouraging expropriators. As David Himmelstein, one of the founders of Physicians for a National Health Program, says, "If you can take away someone else's business--the insurance companies' business--you can take away mine."

Moreover, says the ISS, corporations prefer some level of insecurity for their workers. The knowledge that coverage can be lost leads to a more compliant work force.

The problem with these hypotheses is that they don't explain why there is not a more heated public debate, not on the merits of health care reform, but on how non-insurance corporations would benefit from a government role and why they don't make the case. Certain executives may not want single payer for whatever reason, but why are they not at least compelled to defend their decision? Why have Democrats who support health care reform not made a better case to corporate America? Never mind the humanitarian or fairness arguments; most corporations don't give a shit about that. They do care about saving money. 

Some Credit is Due, Part II

On August 2nd I posted an article called “A Little Credit, Please.” I made the case that the Obama Administration's decision to support US automakers was proving to be a good idea, not only because the automakers were turning profits, but also because thousands of jobs were saved at the auto plants and at numerous suppliers as well.

Now Jared Bernstein, chief economic advisor to Vice President Biden, has further made the case that the administration did the right thing. In a recent article, Bernstein also emphasizes that thousands of jobs still exist at Chrysler and at its lengthy supply chain. He notes that there are three jobs in the supply chain, at companies producing a huge array of components, for every job at a Chrysler assembly plant. And these companies, and their workers, are in business because Chrysler, along with GM, are in business.

As Bernstein writes, “In the year before we took office, the auto industry shed 431,300 jobs. But in the 13 months since GM and Chrysler emerged from bankruptcy, auto industry employment has increased by 76,300, a huge reversal -- one we'd never have seen had we listened to those urging us to walk away. Of those 76,300 new jobs, close to 40,000 come from the suppliers. That's the fastest year over year growth that they've seen in a decade."

Good job, especially in a recession. One of the biggest obstacles to job creation in this country is the emasculated manufacturing sector. That sector was about to get a whole lot weaker since many, especially the President's Republican opponents, were ready to let the automakers fail --on Obama's watch, of course.

If GM and/or Chrysler, and much of their supply chain, had gone under, with their thousands of employees out of a job, on unemployment, the whole works, do you think Republicans would have made a campaign issue out of it?

They would have loved to, but it ain't gonna happen.

A Little Credit, Please

I see that Jed Lewison over at DailyKos has raised a point shared by quite a few of us. The mainstream media does not have much to say about American automakers' return to profitability and shows reluctance to give much credit to the crucial role played by the Obama administration. As Lewison posted on Friday:

“President Obama is in Motor City today to focus attention on what he feels is an untold success story: the improving fortunes of American automakers thanks to the administration's decision to use TARP funds to bailout General Motors and Chrysler. Since the administration took action, the auto industry has added 55,000 jobs -- the best growth since 1999.”

Detroit's rescue plan cost $60 billion, an amount that is dwarfed by any number of other spending priorities. That amount would not last long in Afghanistan. And it is a tiny fraction of the amount the feds threw at the big banks.

The critics are silent on the number of people employed by the automakers. This means not just the new jobs, but more importantly, the far greater number of jobs that were not lost because Detroit is still in business. Those workers are collecting paychecks, not unemployment. They are paying taxes on that income, a far higher share than most on Wall Street pay.

A relatively high portion of those paychecks goes to main street America. This is an economic reality that Washington's village people ignore. The guy or gal working assembly at one of the myriad Chevy or Chrysler plants receives a paycheck which is then usually deposited in a local bank or credit union, which then loans overwhelmingly to others in that same community. Much of the multiplier effect takes place within the community.

The auto industry also employs many other companies indirectly; e.g., the huge number of component suppliers. These manufacturers are filling orders and maintaining their own employment precisely because Detroit is still in business. Their workers also are paying taxes on their earned income, and they also have multiplier effects that benefit their own communities. It should be obvious that if the automakers went under, many of their component suppliers would have gone under as well.

Those who criticize the White House plan are missing the primary lesson. This is not, and should not be, the subject of an ideological purity test. It was more about doing what you can with what you've got. The benefits to the economy as a whole are direct and profound, for the government's role has returned both GM and Chrysler to profitability, and it has kept many thousands of employees working and not on unemployment.

$60 billion was a bargain.