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The Economy is in Good Hands:

N.Y. Times:

It is not every 31-year-old who, in a first government job, finds himself dismantling General Motors and rewriting the rules of American capitalism.

But that, in short, is the job description for Brian Deese, a not-quite graduate of Yale Law School who had never set foot in an automotive assembly plant until he took on his nearly unseen role in remaking the American automotive industry.

Nor, for that matter, had he given much thought to what ailed an industry that had been in decline ever since he was born....

Mr. Deese's role is unusual for someone who is neither a formally trained economist nor a business school graduate, and who never spent much time flipping through the endless studies about the future of the American and Japanese auto industries.

It's funny, but just the other day I was telling my wife that I hope the automobile industry's future [and, more broadly, the economy's] is in the hands of early 30-something political operatives with working on law degrees from Yale who have no formal background in business, economics, engineering, or marketing.

sbron:
Elections have consequences. This is the fault of "moderates" who deluded themselves into thinking Obama is a centrist, and of the McCain/Graham Republicans whose sole obsession was alienating the Republican base.
6.1.2009 10:41am
Abdul Abulbul Amir (mail):

Mr. Deese's role is unusual for someone who is neither a formally trained economist nor a ...


But he has the one key attribute. He is politically reliable. Good news for the UAW, bad news for bondholders.
6.1.2009 10:41am
Soronel Haetir (mail):
This sounds great. Given a desire for these companies to die, putting them under the control of someone who has no clue about what they are doing sounds just about right.
6.1.2009 10:42am
CDU (mail) (www):
Link to the Times article?
6.1.2009 10:44am
Snaphappy:
Heck of a job, Deesie.

Wait, what?
6.1.2009 10:45am
BT:
I wonder if Daddy made a large contribution to BO?
6.1.2009 10:47am
frankcross (mail):
Well, he is working for Larry Summers, a fifty-something with an economics PhD from Harvard with considerable formal experience in finance and recipient of the John Bates Clark medal
6.1.2009 10:47am
U.Va. Grad:
Here is a link to the article.

It seems Deese has really impressed Larry Summers, for what that's worth:
"Brian grasps both the economics and the politics about as quickly as I've seen anyone do this," said Lawrence H. Summers, the head of the National Economic Council who is not known for being patient whenever he believes an analysis is sub-par — or disagrees with his own. "And there he was in the Roosevelt Room, speaking up vigorously to make the point that the costs we were going to incur giving Fiat a chance were no greater than some of the hidden costs of liquidation."
6.1.2009 10:49am
Hannibal Lector:
a not-quite [emphasis added] graduate of Yale Law School
So he's not even a Yale graduate and certainly not even a lawyer.
6.1.2009 10:51am
Patrick from OZ (mail):
I'm just glad that I am not paying this particular bill.

And although I love big American SUVs (and drive one), this is mainly because no-one else makes them so big (and with three small kids and lots of visiting family and friends, I love big). In every sector where there is a choice, however, I prefer by a large margin non-US cars.

In particular, as for the ugly execrable ugly-boat-on-wheels junk that passes for mid- and full-size cars here, surely no-one besides scrap metal dealers will miss them (oh yea, and the UAW).
6.1.2009 10:56am
Connecticut Lawyer (mail):
Why is any of this surprising? The whole - the only - point of the GM bailout is to funnel tens of billions of dollars of taxpayer money to the UAW (which will funnel part of that back to the Democratic Party). So it really doesn't matter who is "running" the bailout; it doesn't really matter whether the restructuring is successful or not; and it certainly doesn't matter whether GM ever returns to profitability. All that matters is the UAW jobs are preserved and UAW members don't have to take a pay cut. Mission accomplished!
6.1.2009 10:59am
PaulTX (mail) (www):
God, if there be a God, help us.
6.1.2009 11:00am
salacious (mail):
God, I sure am glad that people round these parts were bitching just as hard when the Bush Administration hired kids far less qualified than Mr. Deese to disburse hundreds of millions of dollars of reconstruction money in post-war Iraq. We would never want the government to engage in vast, centrally planned adventures with minimal accountability. Nosiree.

This is fun, the tu quoque is almost writing itself.
6.1.2009 11:01am
Johnny Ryall:
At least he can't do a worse job than the "experts" who were running the company before.
6.1.2009 11:02am
keypusher64 (mail):
He's acting as an economic advisor, not a lawyer. Would any of the posters in this thread be happier if he had actually gotten his law degree? Would that make him qualified?

Also, judging from the article, he's a number cruncher, not a policymaker. Basically, he's been a strong proponent of what has now come to pass: restructuring via bankruptcy, rather than liquidation on the one hand and or muddling along on the other. I think liquidation was never in the cards for this administration (or McCain's administration, had there been one) and bankruptcy was a mathematical inevitability.
6.1.2009 11:04am
Connie:
I second the post of salacious.
6.1.2009 11:06am
gravytop (mail) (www):
Tu Quoque is a fallacy.
6.1.2009 11:06am
Bob from Ohio (mail):
No chance of either Chrysler or Government Motors surviving so I agree, it does not matter what flunky is given a large NYT profile so he can take some blame for the failure.

I do find it amusing that the spin is that there was a "debate" regarding liquidation. Like there was ever a chance that 50,000+ union voters would lose their jobs before 2012.

Not to mention that without autoworkers, there are no highly paid Autoworkers union officials.
6.1.2009 11:07am
salacious (mail):
"Tu Quoque is a fallacy."

Really? Thanks for enlightening me!
6.1.2009 11:14am
PeteP (mail):
Our PRESIDENT has similar 'qualifications'. He has NEVER IN HIS LIFE RUN ANYTHING other then his own campaigns for office.

What did you THINK he would appoint to run our new government-owned car companies, banks, hospitals, etc ?

The INCOMPETENT, just like himself.

America - GOODNIGHT ! It's been nice knowing you .....
6.1.2009 11:14am
ShelbyC:

No chance of either Chrysler or Government Motors surviving...


Why not? They have a near-infinite supply of govt money. They can continue to run a loosing operation for years and years.
6.1.2009 11:15am
erp:
I second Bob's contention that this poor shlub is being set up to take the blame for what will be perceived as a worldwide disaster, but what will in fact be exactly what Obama et al. has orchestrated, the demise of the U.S. economy.

Where, I wonder, will all the neo-commies live and where will all the toys they like to play with come from when the U.S. is no more? Dubai? Bali? Palaces in the northern wastes like Superman?

American voters tossed themselves out of the garden of Eden.
6.1.2009 11:18am
AlanW (mail):
I really don't get this reflexive anti-unionism. The UAW is taking a beating in the restructuring. Yeah, sure, the stockholders are doing even worse, but where does the idea the unions are making out like bandits come from? Tens of thousands of jobs are being lost, benefits are being slashed - the unions are making concessions left and right.

As for the wisdom of propping up these walking dead companies, the economic argument is simple enough: There are millions of jobs that depend on these things stumbling along and bailing them out is cheaper than dealing with that fallout in the depths of a recession. I'm not an economist, so I can't say that that argument is true, but it seems at least plausible, doesn't it?
6.1.2009 11:20am
EcoLawyer:
Given the track record of GM and its leadership, I'm not sure why any of you think he could do worse. Let's face it. GM killed the electric car in favor of the hummer and was essentially encouraged to do so by favorable tax policy. It's no wonder they've failed, and it doesn't take a PhD in economics to see that.
6.1.2009 11:20am
Javert:
Anyone here clever enough to predict how the inevitable disaster will be blamed on the free market?
6.1.2009 11:22am
byomtov (mail):
What salacious said.

Where were Bernstein's complaints over unqualified and inexperienced political types managing the reconstruction of Iraq - arguing that the key was a flat tax or something. Not to mention his objections to people like Goodling making hiring decisions at DOJ.
6.1.2009 11:22am
krs:

just the other day I was telling my wife that I hope the automobile industry's future [and, more broadly, the economy's] is in the hands of early 30-something political operatives with working on law degrees from Yale who have no formal background in business, economics, engineering, or marketing.
I'm about 55% certain that this is sarcasm, but I really don't know.
6.1.2009 11:23am
Seamus (mail):
GM killed the electric car in favor of the hummer and was essentially encouraged to do so by favorable tax policy.

And by the fact that Hummers were actually profitable (with the brief exception of the period when gas was in the $4-$5 range). But by all means, lets get GM to work making the electric equivalent of the Trabant.
6.1.2009 11:25am
Joe T. Guest:
He's utterly unqualified for this position because he doesn't have a blog.

If he had a blog, he'd know *exactly* how to rescue the auto industry. Don't believe me? Just ask anybody with a blog. They'll tell you how.
6.1.2009 11:28am
sk (mail):
Wow-
Obama is actually making me pine for the likes of Dee Dee Myers and George Stephanopolous.

Sk
6.1.2009 11:33am
Careless:
byomtov: "What salacious said." was worthless to the discussion of the present situation. While you're free to keep bashing him for things he may (I've got no idea what he did 2+ years ago) have done in the past, it will continue to be irrelevant to discussions of the present.
6.1.2009 11:33am
Nunzio:
Are people going to buy government-owned Chryslers and GMs?
6.1.2009 11:34am
rosetta's stones:

"...the automobile industry's future [and, more broadly, the economy's] is in the hands of early 30-something political operatives with working on law degrees from Yale who have no formal background in business, economics, engineering, or marketing."



He's going to get plenty of on the job training, because GM and Chrysler are only the start to this.

You think that dozens and dozens of Tier I and Tier II suppliers are in any different shape than those 2? Who do you think is engineering and manufacturing those quarter panels and drive shafts, on thin margin, in a market volume dipped 40%?

And the only reason Ford isn't in the dock right now is that they were the first to run out of money 2.5 years ago, and were lucky enough to have been forced to go out, hock the furniture, and seek credit in a far looser market than today's. They're still in sad shape, and will now be forced to comply with the labor agreements Obama Motors has decreed operative, which basically leave the current UAW agreement intact.

Looming bankruptcy, loss of shareholder value and the Ford family's control of the company... these are the only leverages to force significant debtholder concessions, and free up cash flow. The Ford family hocked the furniture, remember? And they are not really much leverage, for that matter, certainly not on the UAW, which will kick back and wait. Heck, they'll call a strike on Ford if they give them any lip... watch for it.

The young kid will have all that to deal with... as well as Dana, Lear, American Axle, Roush, Delphi, Visteon... et al.

But that's ok, those new Fed printing presses are high-capacity models, so we're cool.
6.1.2009 11:38am
Tom952 (mail):
I can't imagine what Fiat CEO Marchionne is thinking as he let's his company get drawn into an deal that includes the black hole for capital UAW.
6.1.2009 11:39am
RHJ:
Goes to show how valuable connections are on both sides of the aisle. You may not be the most qualified but if you are in the right place at the right time and know the right people you just may get the chance of a lifetime.

I'm not necessarily surprised by this appointment but by how someone with at most 7 or 8 years policy work in DC became one of the chief economic advisors on the HRC campaign. After that, he had his foot in the door...
6.1.2009 11:39am
cboldt (mail):
-- Are people going to buy government-owned Chryslers and GMs? --
.
You betcha. The government bought MANY Chrysler products after the 500 million dollar load guarantee of the 1970's. From here on out, it will be practice for the government to buy ONLY from GM/Chrysler, etc., and never award a contract to a company that is not under government operation.
.
As for private buyers, who knows how that market will develop. If the government can undercut the private companies, price wise, it will be able to drive them out of business. AFAIK, the government is immune from antitrust actions.
6.1.2009 11:41am
George Smith:
Now watch this little twit kill the 'Vette.
6.1.2009 11:43am
salacious (mail):
Careless:

Yes, clearly my tone was out of line, compared to Bernstein's one sentence of snark or the inane comment thread, including at least comment that reads like it was written by a John Bircher who just dropped acid.

There's a serious conversation to be had here. Jim Manzi over at The American Scene is doing a decent job selling the conservative position on the bailouts. But the hypocrisy here is laughable.
6.1.2009 11:45am
Federal Dog:
"God, I sure am glad that people round these parts were bitching just as hard when the Bush Administration hired kids far less qualified than Mr. Deese to disburse hundreds of millions of dollars of reconstruction money in post-war Iraq."

Who are you referring to?
6.1.2009 11:45am
c.gray (mail):

Where were Bernstein's complaints over unqualified and inexperienced political types managing the reconstruction of Iraq



Bush put a thirty-something with no relevant experience in overall charge of the Iraq effort?

That would explain a lot, if it was true.
6.1.2009 11:46am
Blue:
"Heck of a job there, Deesey!"
6.1.2009 11:47am
Joseph Slater (mail):
What AlanW said.
6.1.2009 11:47am
rosetta's stones:

"Tens of thousands of jobs are being lost, benefits are being slashed - the unions are making concessions left and right."


No, AlanW, this isn't so. We had this discussion earlier, and I posted the exact markup copy of the agreement negotiated with the UAW back in April... with the principals scratched up markings and initials, and I saw little in it changed. Some vision and dental costs for retirees removed, but that's it. All employees retained. No wage cuts. Minor reductions in job classifications, which like all of this, is at least 2 decades too late.

For current employees, that UAW contract survived essentially intact. My next door neighbor is available for consultation, if you need to discuss with one who voted on that contract and confirms all this. Or any of the shop committemen around these parts.
6.1.2009 11:48am
rosetta's stones:
Heck, I'm still waiting to see if the UAW Jobs Bank really disappears. Much talk in that regard, we'll see if there's any real action, at the end of the day.
6.1.2009 11:52am
ShelbyC:
salacious:

There's a serious conversation to be had here. Jim Manzi over at The American Scene is doing a decent job selling the conservative position on the bailouts. But the hypocrisy here is laughable.


Yeah, well where were you when [insert lefty here] posted a post criticizing a righty about something but didn't criticize a lefty for doing something similar?
6.1.2009 11:53am
Lior:
@AlanW:
where does the idea the unions are making out like bandits come from?


It comes from the federal government threatening secured creditors (certain bondholders) to "voluntarily" forgive part of the debt they own so that the unsecured debtholders such as the UAW (and now the Government itself) won't lose as much as they would otherwise. The government's argument why these secured debtors should receive unsecured debt (equity) instead of actual dollars is that "the company is worth more to them alive than dead". This is true for unsecured creditors like the union and the government, but a serious gamble for the secured creditors.

The UAW are making out like bandits because, had the company been left to its own devices, it would have been liquidated and the UAW would have come out with nothing.
6.1.2009 11:59am
rosetta's stones:

I can't imagine what Fiat CEO Marchionne is thinking as he let's his company get drawn into an deal that includes the black hole for capital UAW.


Oh, he's plenty smart. He gains access to the recently thinned herd of Chrysler dealers, which gives him ready access to the NA market, and facilitates a rebirth of Fiat here. Sweet, eh?

And he may be able to finangle control of the trucks and Jeep, which are the profitable plums, and leave Obama Motors with the remaining junkpile, after the shell game dust settles.

And whatever he is or isn't getting from this, it ain't costing him one thin dime. Obama Motors is a silent partner, and is putting up all the money. I think I'd take that deal, wouldn't you?
6.1.2009 12:00pm
Redman:

Connecticut Lawyer (mail):
Why is any of this surprising? The whole - the only - point of the GM bailout is to funnel tens of billions of dollars of taxpayer money to the UAW (which will funnel part of that back to the Democratic Party). So it really doesn't matter who is "running" the bailout; it doesn't really matter whether the restructuring is successful or not; and it certainly doesn't matter whether GM ever returns to profitability. All that matters is the UAW jobs are preserved and UAW members don't have to take a pay cut. Mission accomplished!


Completely correct! Government Motors was created for only one purpose; to serve as a huge money laundering scheme for the dem party. The worse the company performs, the more its cars suck, the more money the government will throw into it. When that doesnt work, the government will impose targeted taxes on Hondas, etc., to jack up their prices so that GM cars will become a bargain in comparison. The only people who will be able to afford a decent, safe car will be ... the rich! Hope and change!
6.1.2009 12:02pm
byomtov (mail):
It seems that Deese is an analyst, working under the supervision of more senior members of the Administration. His current influence appars to stem from the qulaity of his work. Reading the article makes this clear. For example,

Every time Mr. Deese ran the numbers on G.M. and Chrysler, he came back with the now-obvious conclusion that neither was a viable business, and that their plans to revive themselves did not address the erosion of their revenues. But it took the support of Mr. Rattner and Ron Bloom, senior advisers to the task force charged with restructuring the automobile industry, to help turn Mr. Deese's positions into policy.

As for the Iraq reconstruction, here's some information.

It's not altogether uncomplimentary, but does suggest the lack of experience in the group.
6.1.2009 12:13pm
AlanW (mail):
From the NY Times story: "The company will also have to shed 21,000 union workers and close 12 to 20 factories, steps that most analysts thought could never be pushed through by a Democratic president allied with organized labor.

"Forty percent of the company's 6,000 dealers will close, the workers' union will be forced to finance half of its $20 billion health care fund with stock of uncertain value in the restructured G.M. and bondholders, including many retirees, will be forced to take stock worth 10 cents for every dollar they lent the company."

I mean, yeah, sure, the UAW would be worse off if the companies were liquidated. So would the bondholders, in all likelihood, and certainly the suppliers and dealers and so on. The government handout is meant to prevent all of that from happening.

If you want to argue that propping up the companies will result in more problems down the road, that's fair. If you think it's a terrible precedent, I can understand that. But just whining about the unions is dumb.

A republican president would have done something pretty similar, not because of UAW political power, but because cutting millions of jobs in the middle of a recession is political suicide - whatever the daily opinion polls say about the bailout.
6.1.2009 12:15pm
CFG in IL (mail):
This sort of thing has happened before; I think it's still too early to say just how that turned out.
6.1.2009 12:17pm
George Smith:
I think it is a lead pipe cinch that GMTrak will never stand on its own, and that the government subsidies will never, ever cease. All that has happened and that will happen is that the public is being fleeced to support the UAW, which will pay off the Democrat party with campaign contrubutions. As the UAW President has bragged, the absurd work rule restrictions remain in place and the labor cost differential per car with, say, the Nissan plant is still there. The engineers, who can design cars as well as any other automaker, will still have to back out design and quallity features to make the GMTrak cars cost competitive. Makes me want to buy a Ford.
6.1.2009 12:19pm
levisbaby:
Do you think he can do any worse than drive the company into bankruptcy?
6.1.2009 12:20pm
Gaius Obvious:
-- No chance of either Chrysler or Government Motors surviving...

- Why not? They have a near-infinite supply of govt money. They can continue to run a loosing operation for years and years.


Similar to Trabant.
6.1.2009 12:21pm
ShelbyC:

But just whining about the unions is dumb.


Well, that's a downside of the political process controlling such a large section of the economy; it creates both the possibility of the govt inproperly diverting money to political supporters, and the possibility of creating the false perception of diverting money to its political supporters. I personally think we should assume that the govt will act to benefit its supporters, simply because that's what politicians do.

And does someone wanna school me on how companies with unionized labor forces are supposed to compete directly with companies that don't have them? Does anyone have any examples of this being done?
6.1.2009 12:30pm
shertaugh:

But he has the one key attribute. He is politically reliable. Good news for the UAW, bad news for bondholders.


I was a GM bondholder.

I have to say, GM's Harvard-trained MBA's and all the PhD economists were awesome. The ran the company into the dirt.

Yet DBernstein complains about someone without the same pedigree running GM?

David . . . you were being ironic, right?
6.1.2009 12:37pm
Cato The Elder (mail):
Obama "knew" the dissenting secured creditors in the Chrysler case were better off taking his deal for a paltry $2 billion dollars, rather than allowing each individual creditor to make the best fiduciary decision. Obama "knows" that the problem with the Big 3 is their insistence on the sales of overpriced gas-guzzlers, which is why he is granting large portions of new equity to the high-cost UAW who ate very well indeed when those very same corporations were subsisting on sales of SUVs. Obama "knows" that Fiat is the best available partner for Chrysler, even though they are not exactly reputed for quality in Europe, even though they put up no money at all in the partnership, even though hundreds of other auto manufacturers have resisted the advances of Chrysler for many years previous.

The WSJ has estimated the total costs of the auto bailouts that have been committed thus far, at about a total of $100 billion dollars. Obama "knows" the best use for this immense amount of money, because, well...elections have consequences.
6.1.2009 12:41pm
rosetta's stones:

I personally think we should assume that the govt will act to benefit its supporters, simply because that's what politicians do.



Of course. Union leaders are politicians, too, remember. A few years ago, I believe they caught the Teamster's guy exchanging campaign cash with the SEIU guy, or maybe it was the Laborer's Union guy. Union members' hard earned cash being laundered and exchanged for distribution to current leaders' campaign funds in another union. Despicable, but there you go.

Politicans are politicians. They seek advantage, and cash, and power. Obama Motors is expanding that playing field, significantly.
6.1.2009 12:41pm
Cato The Elder (mail):
Shertaugh sez: YLS JD = Harvard MBA.
6.1.2009 12:43pm
ShelbyC:

I was a GM bondholder.

I have to say, GM's Harvard-trained MBA's and all the PhD economists were awesome. The ran the company into the dirt.


Well, if they were so bad maybe you shouldn't have bought the bonds?

But I don't care about how those guys did, because I wasn't a GM stock/bondholder at the time. Now I've involuntarily become a GM stockholder, and I don't have the option of divesting if I don't believe a 31yo law student can't do a better job than the previous guys.
6.1.2009 12:46pm
Gabriel McCall (mail):
When people say "the government should fix this", they all too often forget that the government, like Soylent Green, is made of people.
6.1.2009 12:48pm
Cato The Elder (mail):
He is the son of a political science professor at Boston College (his father) and an engineer who works in renewable energy (his mother). He grew up in the Boston suburb of Belmont and attended Middlebury College in Vermont. He went to Washington to work on aid issues and was quickly hired by Nancy Birdsall, a widely respected authority on the effectiveness of international aid and the founder of the Center for Global Development.


I feel like crying, actually.
6.1.2009 12:51pm
George Smith:
GM should have filed BK on its own over a year ago. They could have restructured their union contracts to compete on a level field with the Japanese 3, and had some hope of survivial other than on the dole.
6.1.2009 12:55pm
Commenterlein (mail):
The article makes it sound like a smart and hard working young guy is gaining influence because he is doing a good job and earning the confidence of his superiors. Once you cut out the journalistic hyperbole and focus on the facts in the article, you notice that he isn't actually making any decisions, he is crunching numbers and giving information to the decision makers.
6.1.2009 1:01pm
Connecticut Lawyer (mail):
The defenders of the UAW role in this might want to explain exactly how the New, Improved GM is going to make competitive small cars when UAW workers are going to be paid exactly the same base wages after the chapter 11 filing as before.

In a real chapter 11 filing, everything is up for grabs. All creditors and workers get hammered. Lessors have their leases rejected, contracts are repudiated, and workers' wages and benefits and work rules are cut to competitive levels. Somehow the last part of that equation has been largely omitted here. GM's unionized work force is being protected far more than it would be in a real chapter 11 filing (that is, one controlled by management and not by the Government). Certainly, the UAW is making out far, far better than GM's white collar work force.

I think what's going on here is that Obama and his political advisors heard the cries from his base that the bank bailout was helping a bunch of rich capitalists, and so they decided to direct $100 billion into blue collar pockets. That's all this is. It has nothing to do with saving GM.

If the Government really wanted to save GM, it would start by repealing the "two fleets" rule, which effectively prohibits GM from importing the inexpensive, small, fuel-efficient cars that it makes outside the US. That would be an easy step that would cost the Government (i.e, the taxpayer) nothing and would have probably favorable environmental consequences. Answer me this: why doesn't Obama call for repeal of the two-fleet rule?
6.1.2009 1:04pm
Cato The Elder (mail):

At least he can't do a worse job than the "experts" who were running the company before.


Johnny Ryall,

This is completely wrong. The potential loss in social welfare is almost uncapped, because we as taxpayers and inadvertent investors cannot very easily pull our money if he does perform terribly. By the way, would you be willing to bet on some measure of how good an outcome all this will end up being?
6.1.2009 1:05pm
NaG (mail):
Maybe I'm reading this wrong, but it seems to me that the real story here is that Deese originally argued strongly AGAINST having GM go bankrupt, and is now busy putting together GM's quickie bankruptcy. So, in other words, he has already staked a position and then realized that it was wrong.

There may be some nuances I am missing here. Perhaps Deese argued against bankruptcy initially because the idea was for there to be a GM/Fiat partnership created that would make bankruptcy unnecessary. When that fell through, then bankruptcy was the back-up option. Now Fiat will simply buy up GM's assets at a fire sale instead. Can I get some confirmation from someone with more knowledge of the nuts and bolts?
6.1.2009 1:10pm
Bruce Hayden (mail):
Oh, I get it. Ivy league lawyers are so much smarter than the rest of us, that MBAs, PhDs in economics, etc. are now irrelevant in running our economy.

Sorry, I don't buy it. I will suggest that much of our current economic problems, and how they seem to be worsening, or at least not getting better, despite spending trillions of dollars addressing them, was that a bunch of lawyers thought that they could understand the economy better and faster than those PhDs and MBAs, who had spent their lives doing so. All within a couple of months of the Obama team of lawyers taking charge.
6.1.2009 1:13pm
Joe T. Guest:
God, I sure am glad that people round these parts were bitching just as hard when the Bush Administration hired kids far less qualified than Mr. Deese to disburse hundreds of millions of dollars of reconstruction money in post-war Iraq."


Shorter version of premise of this argument: "My guys are just as stupid as your guys... and daaaaaaaaamn, are your guys ever stupid."

Good point maybe, but a little strange if you're trying to defend your own side. Seems to me that "we're just as bad as you" can only result in a stalemate, at best.
6.1.2009 1:29pm
Bruce Hayden (mail):
My last post was mostly a snark, sorry. I am serious about lawyers, or almost lawyers, thinking that they are smarter than anyone else in running the other guy's business, whether that be banking, auto, or soon, medicine.

But my big complaint here is that they have blown the chance to really restructure these two companies in a way that will make them competitive in the future. A lot of things were needed, but some of the biggest involved the unionized employees, current and former. This includes pay, staffing levels, work rules, benefits, and pensions.

You may ask, why should those who have worked all their working lives be the ones to pay here? My response first is that through their union, they were able to garner pay and benefits that far outweigh their contribution to the bottom line of the companies.

So, I find myself paying for health and retirement benefits for those younger than myself who managed to get themselves already on early retirement. I fail to see how that is the least be fair, or economically efficient.
6.1.2009 1:32pm
AndyinNC:
This kid is a technocrat writing policy papers as a staff member of the auto task force. Good for him.

The headline is obvious hyperbole. If you don't realize this, you might be a sucka.
6.1.2009 1:39pm
rosetta's stones:

"If the Government really wanted to save GM, it would start by repealing the "two fleets" rule, which effectively prohibits GM from importing the inexpensive, small, fuel-efficient cars that it makes outside the US. That would be an easy step that would cost the Government (i.e, the taxpayer) nothing and would have probably favorable environmental consequences. Answer me this: why doesn't Obama call for repeal of the two-fleet rule?"


Because that would result in imported vehicles rolling across the docks on the waterfronts of this country, and Obama Motors doesn't want that imported competition.

Additionally, there are inevitable safety, environmental and other regulatory considerations involved. Either you blackout those regs on these imports, screwing the domestic producers who are playing by those rules, or you force GM to comply on all imports, and they have little spare cash available for the required product development cost of that.

It's a cruel world in the automotive business, and now it's a cruel publicly owned world in the automotive business.
6.1.2009 1:39pm
Joseph Slater (mail):
It's pretty much impossible to have a sane discussion about unions on this blog, but two quick points.

First, as to union vs. non-union productivity, there is a vast literature on it, and little of it makes unionization look like a net minus. Begin with Freeman and Medoff's _What Do Unions Do?_

Second, the competitive disadvantage the unionized car companies face in the U.S. isn't in current wages, it's in legacy health care costs for retirees, laregly a function of the fact that foreign companies in the U.S. don't have nearly the number of retirees that, say, G.M. has. This is a complicated problem, but it's a problem of current union wages being all that much higher than current non-union wages.
6.1.2009 1:53pm
Bruce Hayden (mail):
Second, the competitive disadvantage the unionized car companies face in the U.S. isn't in current wages, it's in legacy health care costs for retirees, laregly a function of the fact that foreign companies in the U.S. don't have nearly the number of retirees that, say, G.M. has. This is a complicated problem, but it's a problem of current union wages being all that much higher than current non-union wages.
You may be right there, but my understanding is that they are still at a notable disadvantage when it comes to how many hours it takes to build a given vehicle, and what those hours cost (ignoring legacy costs).

However, that still doesn't change the fact that I am effectively funding the retirements of guys younger than myself, through this short circuiting of the bankruptcy system.
6.1.2009 2:08pm
ShelbyC:

First, as to union vs. non-union productivity, there is a vast literature on it, and little of it makes unionization look like a net minus


Huh. If that's true, why do companies fight so hard to keep unions out?
6.1.2009 2:10pm
Kazinski:
So what if the unions are taking a haircut? They should be losing their scalps.
6.1.2009 2:25pm
Abdul Abulbul Amir (mail):

Second, the competitive disadvantage the unionized car companies face in the U.S. isn't in current wages, it's in legacy health care costs for retirees, laregly a function of the fact that foreign companies in the U.S. don't have nearly the number of retirees that, say, G.M. has.


That is due in large part because a UAW can retire at 30 years of service, regardless of age, as young as 48!
6.1.2009 2:28pm
RKV (mail):
"First, as to union vs. non-union productivity, there is a vast literature on it, and little of it makes unionization look like a net minus." My anecdotal personal experience aside (specifically with UAW in the 1980s, and highly negative at that), productivity itself is not enough. As has been noted elsewhere, non-union automakers in the US produce at a profit. The big 3 do not, and have not for years, if a true accounting is made including the pension and other liabilities . Profit matters, not just hours per unit produced. So, when we answer the question as to why management works so hard to keep unions out, it's quite simple - unions use political clout to gain economic and other advantages to the detriment of those who own the enterprise. It cannot be otherwise given the differences in the interests of the parties, nor can some socialist kumbaya resolve the conflict. Watch what happens over the next several years with the union ownership at Chrysler and Gummit Motors. It won't be pretty and they will come back to the treasury for more money as long as we let them. Take a peek at this article on British Leyland for a preview. NYT
6.1.2009 2:39pm
MikeS (mail):
Compared to the GOP contributors and Bush cronies that ran the "reconstruction" in Iraq, this kid is Warren Buffet. Funny how the non-partisan libertarians here had nothing to say about that.
6.1.2009 2:39pm
Thorley Winston (mail) (www):
Do you think he can do any worse than drive the company into bankruptcy?


Absolutely, he can waste tens of billions of taxpayer dollars trying to prop up a failing organization, have the government put political pressure on the organization's creditors making other investors and lenders even more apprehensive about lending or investing knowing that the rules might be changed after the fact, and still have the company go bankrupt.
6.1.2009 2:40pm
rosetta's stones:
Slater is correct, that per hour union costs are comparable to non-union costs, and I'd estimate the disparity to be less than 10% certainly, and much less in some cases. He's also correct, that it is the legacy costs that are killing the Big 3, which are essentially health care and pension providers, who happen to build cars as a sidelight. Various auto analysts here in Detroit make that analogy regularly, fyi.

However, Slater is incorrect that the productivity of union and nonunion labor is comparable, particularly when you include absenteeism rates, as you must, and these have always been at astronomical levels in UAW plants. It is a perpetual sticking point, and disciplining absentees is a problem for the UAW, still. They fight this tooth and nail, and historically have grieved and fought any serious attempts to discipline in this regard.

You can't make production schedules with 10-30% absentee levels on many days, forcing makers to pay premium time to make up. Many are convinced this is the UAW's point all along, to get paid straight time for sick days, then get paid premium time to come in and make up the required production. Nice little scam. Either way, it's more costly than merely having a low absentee rate, like the transplants have, because they discipline offenders. They pay straight time for 40 hours, with a little OT juice thrown in when necessary.

Then you have the problem of employees on medical leave. I worked in Flint back 30 years ago, when Buicktown was still rocking (now it's a brown field... well done, UAW, that Pyhrric strike up there 10 years ago did wonders). Guys would go on medical and stay out, and there were doctors handing out "slips". You went on medical just because you wanted to, no real review of it. Those guys were passengers, sucking up cash from hardworking Americans. Does this still abound? Not as much I bet, but it took bulldozing Buicktown to get there, it seems.

The UAW struck last contract round, Slater. In the midst of all reality, they struck. Daimler bailed the moment this occurred, as they saw the sinking ship. This is largely a UAW and government created problem, and these bailouts only compound past stupidity in that regard.
6.1.2009 2:41pm
Jmaie (mail):
Re: Union vs. non-union productivity, I can speak from personal experience concerning the west coast Longshoremen's union.

Depending on the port and type of operation productivity will vary. One company I am very familiar with set their production goal at 30 containers moved per crane gang per hour. They sometimes met this goal, often not.

When the longshoremen are motivated they are easily capable of moving 40 containers per hour. I have seen numerous examples where this level of productivity was reached - when it was to the Longshoremen's benefit. On finishing shifts, vessels often depart midway through the day due to tide or timing issues. The men are paid for the full shift regardless, and can go home when the work is complete. This is called a "shorty."

They refuse to work at this pace during normal times for one reason only - working slow increases the number of longshoremen needed to work vessels.

Unlike the auto industry, there are no non-union container stevedoring companies to compare with.
6.1.2009 2:43pm
Joseph Slater (mail):
Thanks in part to Rosetta's Stone for understanding the compensation issue.

In response to his claim about where I am incorrect, however, I will just again note that there is indeed a vast literature on this -- I pointed out a starting point. His, or anybody else's anecdotal experiences about absenteeism and/or ideologically-driven feelings about unions don't amount to data. For example, turnover is usually much higher in non-union companies, and there are a lot of other things going on.

And, R.S., I could just as easily say this is a lack-of-sanely-funded-health-care problem as it is a "UAW" problem.

One reason companies don't like unions is that although union workers are typically productive, they tend to redistribute profits of the company back into the hands of the folks on the assembly line, as opposed to shareholder profits. There's a lot more to it than that, but I generally despair of having a sane conversation about unions on this blog. But if anybody wants to, read the literature on union worker productivity.

Final note: most of the foreign competitors of U.S. car makers have unionized work forces in their home countries.
6.1.2009 3:02pm
dmv (www):
This was a fun comment thread to read, in view of the fact that people are decrying the ills of government intervention, and the prospect of Chrysler living on the government dole for the next eternity and...

Oh, wait, I see that the BK judge has cleared the sale of Chrysler...

Bwomp, bwomp.
6.1.2009 3:09pm
byomtov (mail):
Good point maybe, but a little strange if you're trying to defend your own side. Seems to me that "we're just as bad as you" can only result in a stalemate, at best.

You would be right if Deese were actually running GM. But as the article makes clear, he's a staffer who has gained influence through the quality of his work. He is not the actual policy-maker.
6.1.2009 3:12pm
Steve H (mail):

One reason companies don't like unions is that although union workers are typically productive, they tend to redistribute profits of the company back into the hands of the folks on the assembly line, as opposed to shareholder profits.


This is pretty much it. Management's incentive is to put as much money as possible into their own pockets while doing what it takes to keep share price and/or dividends high enough to avoid shareholder revolt. The employees' incentive, on the other hand, is to put as money as possible in their own pockets while doing what it takes to keep the company afloat.

The difference around here is that when management lines their pockets, it's hailed as capitalism and the free market. When the employees line their own pockets, it's scorned as greed or extortion.
6.1.2009 3:13pm
Jmaie (mail):
...while doing what it takes to keep the company afloat.


Or not.
6.1.2009 3:29pm
rosetta's stones:
Hmmmm, so my data that supports you is fine, but that which doesn't is "anecdotal and ideologically driven"? That it, Slater? Both came right off the top of my head, based upon long personal experience, so how is it you're discriminating between the 2 data sets?

Don't be disingenuous, my man. If you're not familiar with the hugely problematic UAW absentee issue, and its nearly 1000% absentee rate disparity with that of the Japanese, as well as the nearly 55% disparity in productivity that this absenteeism rate causes, and are willing and able to discuss these issues honestly, then you're not familiar with the American labor movement in any fashion detailed enough to contribute to this discussion.

You are aware, I suspect, so please step out of the defensive crouch and be honest about what you know. All of us know this, and the data confirms our knowledge.

Yes, the UAW is gonna get smacked around in that discussion, deservedly so. I do it out of love, as I'm a union man, born and bred. I've belonged to unions, and my friends and family still do, some committeemen, and my livelihood depends on unionized industries. But, right now, they need some extremely tough love, and are getting another crack rock instead, courteousy of unborn taxpayers. This is wrong. It's time to break the crack addiction, and it's time to stop pounding the costs of that crack addiction onto unborn children.

Let's be honest and fair, Slater. No chance you're gonna run any nonsense through here, and you shouldn't try.
6.1.2009 3:34pm
Joseph Slater (mail):
No, the data support you when you said that the vast bulk of the difference in costs is legacy costs. And the data don't support you when you talk about productivity rates.

Again, there is a huge literature on this, which you again choose to ignore. Don't try to mau-mau me: I've studied and written about this subject. If you want an overview of the literature on union worker productivity, see my article "Homeland Security vs. Workers Rights? What the Fedral Government Should Learn From History and Experience, and Why?" in volume 6 of the University of PA Journal of Labor and Employment Law, beginning on page 295, and especially pages 338-45.

I don't romanticize unions, but I don't fall for the tired stereotypes I see here. And finally, the workers in the UAW, by and large, do not deserve to be "smacked around."
6.1.2009 4:05pm
Joseph Slater (mail):
"Federal Government," obviously, not "Fedral Government."
6.1.2009 4:05pm
J.R.L.:

Second, the competitive disadvantage the unionized car companies face in the U.S. isn't in current wages, it's in legacy health care costs for retirees, laregly a function of the fact that foreign companies in the U.S. don't have nearly the number of retirees that, say, G.M. has. This is a complicated problem, but it's a problem of current union wages being all that much higher than current non-union wages.



Well, that and all the shitty American cars.
6.1.2009 4:06pm
Perseus (mail):
he is working for Larry Summers, a fifty-something with an economics PhD from Harvard with considerable formal experience in finance and recipient of the John Bates Clark medal

Wasn't this the same Larry Summers who was booted from his management position (president) at Harvard? We'll see how long his deputy lasts before the unions manage to neuter him too.
6.1.2009 4:09pm
Connecticut Lawyer (mail):
Rosetta,

You're not quite right on the "two fleet" rule. That rule says that GM must count domestically made and foreign made cars separately when computing CAFE mileages. It says nothing about safety features. If GM could average the fuel mileage of the inexpensive, small, fuel efficient cars it makes overseas with the fuel mileage of the large cars it makes here, it could satisfy the CAFE rules and actually make money. But it can't do that. It can't import its inexpensive, small fuel efficient cars because that would steal sales away from the small cars it makes in UAW factories in the US - thus, it is forced to make small cars in UAW factories and sell them at a LOSS in order to bring their fleet averages down enough so that they sell some big cars at a profit.

The only reason for the "two fleet" rule is to protect UAW jobs and wages. That is also the only reason for US taxpayers to pour $100 billion and counting into the GM bailout.

So, President Obama, I congratulate you - mission accomplished.
6.1.2009 4:09pm
ShelbyC:

The difference around here is that when management lines their pockets, it's hailed as capitalism and the free market. When the employees line their own pockets, it's scorned as greed or extortion.


Aren't unions basically cartels? If anything, aren't monopolistic tactics more accepted from labor than from management?
6.1.2009 4:10pm
Joseph Slater (mail):
Aren't unions basically cartels?

No. Unions are a group of employees typically at one employer who have chosen to come together in a legally recognized entity to bargain about wages, hours, and working conditions. Much like the folks on the other side of the table, a group of people who came together in some legally recognized form of business association, who also get to bargain with one voice about wages, hours, and working conditions.
6.1.2009 4:17pm
ShelbyC:

One reason companies don't like unions is that although union workers are typically productive, they tend to redistribute profits of the company back into the hands of the folks on the assembly line, as opposed to shareholder profits.


Still not following. Are we measuring productivity in output per hour or per dollar? If it's per hour, that would be irrelevant to the ability of unionized companies to compete with non-unionized companies, right?
6.1.2009 4:18pm
SeaDrive:

It is not every 31-year-old who, in a first government job, finds himself dismantling General Motors and rewriting the rules of American capitalism.


I think the more accurate tack for liberal bashers would be to attack the NYT for bad journalism than the Obama administration for bad government. As noted, this guy is not making many un-reviewed decisions. That said, the bulk of the hard work in the economy is done by workers in their thirties. They have experience, they have the energy, they put in the time. When you get higher up the ladder, you don't do the grunt work, you apply their work product.

How old was John Yoo when he wrote his infamous memos? 36.
6.1.2009 4:22pm
ShelbyC:

No. Unions are a group of employees typically at one employer who have chosen to come together in a legally recognized entity to bargain about wages, hours, and working conditions. Much like the folks on the other side of the table, a group of people who came together in some legally recognized form of business association, who also get to bargain with one voice about wages, hours, and working conditions.


How do the folks on the management side of the table get to bargain with one voice? I usually look for employement with many companies, and accept the one that makes me the best offer.

And please explain how your description of a union is different from a cartel? I thought the whole point of preventing anti-competitive practices is to ensure that there are many voices offering goods or services, so we can be sure we're getting the best and cheapest.
6.1.2009 4:25pm
keypusher64 (mail):
NaG (mail):
Maybe I'm reading this wrong, but it seems to me that the real story here is that Deese originally argued strongly AGAINST having GM go bankrupt, and is now busy putting together GM's quickie bankruptcy. So, in other words, he has already staked a position and then realized that it was wrong.

I think you're reading it wrong. As I understand it, pretty much from whenever he got involved (which was only last November) he concluded that bankruptcy for Chrysler and GM was inevitable. He contended for restructuring Chrysler and letting it be acquired by Fiat rather than having it be liquidated because, he concluded, the costs of liquidation were higher than the costs of restructuring.

I suspect he's wrong about Chrysler, but obviously he's done a hell of a lot of work on the question and isn't talking off the top of his head, like I am.
6.1.2009 4:28pm
Joseph Slater (mail):
ShelbyC:

There is a lot of literature on this, and the methodology is not always the same. If you are genuinely interested, check out the cites in the my article that I posted above.

But if you point is "even if they are more productive, that doesn't help the bottom line if they cost more," then sure, that's true. So for particular companies in particular industries -- and for the unions of their workers -- the question is, how does the union compensation advantage fit with any possible productivity advantages. And again, that varies from company to company and industry to industry.

In the case of the auto industry, the compensation question is especially tricky, because there are both the current wages of workers (now roughly equal between union and non-union U.S. manufacturers) and other aspects of compensation, specifically the "legacy costs" for retirees.

Domestic car compaines have more than 775,000 retiriees and surviving spouses, while all foreign automakers in the U.S. support about 5,000 pensioners.

It's not easy to imagine a solution to this problem that doesn't require some taxpayer money supporting the retirees.
6.1.2009 4:29pm
J.R.L.:

Unions are a group of employees typically at one employer who have chosen to come together in a legally recognized entity to bargain about wages, hours, and working conditions. Much like the folks on the other side of the table, a group of people who came together in some legally recognized form of business association, who also get to bargain with one voice about wages, hours, and working conditions.



I think everything in your list is great and fully support it. The problems come from forcing employers to recognize and deal with the unions. In many cases it makes sense for the employer, and in many it doesn't. Personally, I am pro-choice. If the company wants to deal with the union, more power to it. If it doesn't want to, it should have that choice as well.
6.1.2009 4:31pm
Joseph Slater (mail):
How do the folks on the management side of the table get to bargain with one voice?

When a worker takes a job at an auto company, union or non-union, he doesn't go from supervisor to supervisor at that company trying to strike a better deal (unless the company wants to structure things that way, which in my experience auto companies don't). Management at that particular company speaks with one voice. Union workers speak with one voice as well.
6.1.2009 4:31pm
Joseph Slater (mail):
J.R.L.:

OK, if the company doesn't want to recognize the union, what should the union be able to do? Have a sit-down strike? Picket the company indefinitely? Picket the suppliers and customer companies of the the employer? Because unions currently can't do any of those things, but if they could, maybe I would let the private play of economic forces work themselves out.

Instead, a long time ago we decided to let unions represent workers if a majority of the workers wanted them, but not let unions employ a lot of economic weapons they might otherwise have wanted to.
6.1.2009 4:36pm
Joseph Slater (mail):
Finally, while this has been fun, as discussing unions always is here, I'm outta here for the day (got to get some real-world stuff done). You may resume your normal programming.
6.1.2009 4:38pm
Javert:

The problems come from forcing employers to recognize and deal with the unions.
And from forcing employees to be members of that union. It is no accident that the new factories are being built in right-to-work states.
6.1.2009 4:39pm
J.R.L.:

OK, if the company doesn't want to recognize the union, what should the union be able to do? Have a sit-down strike? Picket the company indefinitely? Picket the suppliers and customer companies of the the employer?


If sit-down strike means on the job, that's fine until the employer decides they are trespassing. The others I'd be OK with.
6.1.2009 4:41pm
ShelbyC:

There is a lot of literature on this, and the methodology is not always the same. If you are genuinely interested, check out the cites in the my article that I posted above.

Thanks, I will this evening.


When a worker takes a job at an auto company, union or non-union, he doesn't go from supervisor to supervisor at that company trying to strike a better deal


No, they go from company to company. But the company has exactly 0 alternate sources for labor. They have to accept the demands of the unions, or not use labor, correct? But the consumer doesn't have any restrictions. He can purchase products made with cheap labor, or products made with expensive labor. So long-term in a competitive market, unionization seems like a sure-fire route to bankruptcy.
6.1.2009 4:49pm
rosetta's stones:
Slater, it doesn't matter what you've studied and written about, because if you don't recognize the historical and massive absentee issues associated with the UAW, and their influence on the horrid productivity rate of the Big 3, then you're just another ineffectual academic, completely insulated from and unaware of the world going on around you. Sorry my man, but it is so.

Did you check that link I provided you? Sure, it's much dated information, but that dated information is damning:


US auto industry 1,000% worse than Japanese on absenteeism rate.

US auto industry 55% worse than the Japanese on productivity rate.


My experience is that these disparities are still far too high, and that the UAW is still protecting their historical absenteeism offenders. I can research the industry further, and you should as well, as apparently you haven't been doing so. Start with Wards.

Further, I'm not even remotely interested in your academic research into public union employees, which bear not a whit on the discussion here about the Big 3 and UAW (although thanks to Obama Motors, these auto workers do seem to be becoming public union employees, so maybe you're on to something afterall).

And these aren't "stereotypes", Slater, my experiences are real. I've worked on vehicle product development programs, and tabbed up the program costs associated with vehicle part and assembly. I've spent time on the plant floor. I cost out projects. I work in the industry. Do you? Do you do anything besides sit in some public employee job and write about the Department of Homeland Security? Sorry if this offends, but it gets a little tiresome when some lawyer academic runs off on something about which he's completely unequipped to discuss.

Please, man, you're being disingenuous here. Real disingenuous. Fine to be loyal to the cause, and so am I, but the data don't lie.

You apparently want 50 year old men to keep all they have, full UAW contract with no changes to their income whatsoever, including full pension and wall to wall health care, and all the absenteeism they can muster, and pound the cost of all that down on children yet unborn, and you call that "smacking down the workers"?

You're wrong. That's "smacking down" the braindead UAW organization that's wrought all this, and whose members openly acknowlege to me the suicidal path it's been on... for years.

A strike last contract round? A STRIKE? At long last sirs, have you no shame?!
6.1.2009 4:49pm
ShelbyC:

Instead, a long time ago we decided to let unions represent workers if a majority of the workers wanted them, but not let unions employ a lot of economic weapons they might otherwise have wanted to.


Can't they collectivly stop working (strike), but retain a right to their jobs when they come back? Thats a pretty powerful weapon.
6.1.2009 4:58pm
rosetta's stones:
Connecticut Lawyer,

I take your point about CAFE, and it's still too early to dissect what this latest CAFE round has wrought, but experience says it'll be full of enough loopholes to drive my pickup, your SUV, and Slater's Hummer through it, side by side. That's what the tequila talk around here seems to indicate anyways, and that's how it basically worked out last time through.

I still detest CAFE, even if its effects turn out to be zero on fuel economy, as it will invariably cause makers, er Obama Motors, to jack around with product line mixes and prices, in a distorted way, which will still allow them to sell all the large vehicles that the greenies are screeching against, except the jackaround process will cost them time, effort and inertia. It's bad policy, and basically worthless. I'd wait for one of the Volokh Conspirator regulation types to blog on this eventually, after the dust clears.

But as the upshot of CAFE, I wouldn't worry about importing anything as a requirement to meet CAFE, because it certainly won't be worth any additional cost to engineer any vehicle platforms. If it's the thing to do, fine, but I'm not sure it is. Makers don't want to import, really. They want to manufacture in their sales market, that's end game for all the transplants as well. That's also why theyr'e all investing in China so heavily. They want to tap into that 1.3B customer base, and they want to do it there, not here, in case some Chicom warlord starts jacking around with exchange rates illegitimately, or Bernanke/Geithner decide to do it here.
6.1.2009 5:01pm
Glen Alexander (mail):
Yet another reason why I'm putting all my money into Universa's new hyperinflation hedge fund...
6.1.2009 5:10pm
Connecticut Lawyer (mail):
Rosetta,

I hope my cars (2 SUVs, one convertible, and one 350 HP sedan) last a long time. I will never buy one of the Obama econo-death boxes.
6.1.2009 5:29pm
Leo Marvin (mail):
As usual, Frank Cross throws a wet blanket of facts over the pitch-fork parade. Thank God, some people know a good time when they see one and won't be deterred.
6.1.2009 7:07pm
rosetta's stones:
Slater, I asked one of my line buddies to send me anything he had of recent publication, concerning Big 3 absenteeism rates, and here's what I got back:



Absenteeism trends

Absenteeism among hourly workers in the automotive industry runs about 10 percent annually, about three times higher than in other industries, according to a 2004 study by the Supplier Action Committee, a trade group.

At some Big Three plants, the study found, absenteeism runs as high as 20 percent. The figures include vacations, paid time off and medical leave. Industry analysts have long pinpointed absentee rates as an area in which Detroit automakers lag behind their foreign rivals who operate U.S. plants.

"The foreign-owned plants were a lot tougher in this area," said manufacturing consultant Ron Harbour of Harbour Consulting Inc., which tracks productivity in auto plants. "If it was 'five unexcused absences and you're fired,' you were really fired."

In plants with the worst attendance rates, Harbour said, missed work can add a couple of hundred dollars to the average cost of building a vehicle. -- Source: The Detroit News, November 12, 2007


You dig for current data, and I'll do likewise.

Remember, the NA market has been about 15M vehicles per year or so, something more than half of them Big 3, which means upwards of $1B per year of Big 3 revenue is wasted because of this horrid absenteeism issue. A billion this year and a billion next year, and pretty soon you're talking real money... and Bernanke's printing presses might start wearing out.
6.1.2009 7:58pm
AndyinNc:

I hope my cars (2 SUVs, one convertible, and one 350 HP sedan) last a long time. I will never buy one of the Obama econo-death boxes.

If you actually think this, I feel sorry for your clients. You clearly don't know anything about CAFE standards.
6.1.2009 8:09pm
Leo Marvin (mail):
AndyinNc:

If you actually think this, I feel sorry for your clients. You clearly don't know anything about CAFE standards.

I'm not sure how much CAFE has to do with it. I'm already hearing talk radio callers urging a boycott of any American company the government has acquired a controlling interest in by bailing it out.

That'll show 'em.
6.1.2009 8:40pm
DeezRightWingNutz:
Accounting rules for publicly traded companies require them to record "legacy costs" as expenses as they're incurred, don't they?

So the "legacy costs" should have already been recognized. If my employer promises to pay me a hamburger Tuesday for a day of work today, my day of work didn't cost them $0, it cost them a hamburger.

So how can legacy costs be killing the big three. The "legacy costs" aren't the costs of building today's cars, they're the cost of building cars in the 1980s.

I submit that blaming legacy costs for current uncompetitiveness is BS. Even if accounting rules don't reflect this, common sense does.
6.1.2009 8:55pm
/:
That'll show 'em.


Yeah, because it has nothing to do with the probable incidence of warranty contracts being declared null (just like the company's own contracts with investors) or manufacturing of replacement parts drying up.
6.1.2009 9:27pm
ShelbyC:

Accounting rules for publicly traded companies require them to record "legacy costs" as expenses as they're incurred, don't they?

So the "legacy costs" should have already been recognized. If my employer promises to pay me a hamburger Tuesday for a day of work today, my day of work didn't cost them $0, it cost them a hamburger.


I think you're confusing accounting and finance. On paper it cost them a hamburgur, and the book value of the company is -1 hamburger, but the hamburger doesn't have to go out the door until Tuesday. So the company doesn't have to file for bankruptcy untill Tuesday when it can't pay the hamburger. But Accounting was a bad subject for me, I could be wrong.
6.1.2009 10:11pm
Randy R. (mail):
Since everyone likes to beat up on unions, I offer balancing anecdote. It's only an anecdote, might, and told to me by a friend, but I will relay it here for what it's worth.

My friend works for Porche in Germany. Several years ago, he transferred to one of the Big 3 in Detroit and was put in charge of an entire division. One of the first jobs he was given was to fire 3/4 of the workforce. This was very hard for him to do, as in Germany, very few people are ever fired or laid off. Even when the economy takes a downturn, the company does what it can to keep everyone on the payroll.

So they laid off the workforce. In the meantime, the company bid on a contract to do a large job, and surprisingly, they got it. So about 9 months later, they told my friend to rehire the people he laid off. He said this is nuts, because by now, many of the employees had found jobs or otherwise moved on. (They company dishonestly bid on the contract by saying that they still had all these experienced employees). So now he had to try to rehire the experienced ones, but ended up hiring mostly inexperienced employees. They started on the contract, and it was a disaster.

After one year on the job, my friend quit, saying this is no way to run a company. Had they kept the old guys on the payroll, they would have been in a great position to obtain AND execute the contract. This way, however, they did a lousy job.

So, dear friends, please remember that the fault lies not solely with the unions, but that management- the MBAs, the Ivy Leaguers -- deserves at least half the blame.
6.1.2009 10:22pm
Barrister's Handshake (mail) (www):
Next time I walk into my law classroom and look out at those fresh faces, eager to learn...I'll pause for a moment and ask myself "Which one of these students may run GM someday... and by someday I mean, before they graduate."

Heckuva job
6.1.2009 10:28pm
http://volokh.com/?exclude=davidb :

This was very hard for him to do, as in Germany, very few people are ever fired or laid off. Even when the economy takes a downturn, the company does what it can to keep everyone on the payroll.

Unless those employees of a stressed German parent company work in America, you mean. Then they'll get an hour to collect their belongings, and nothing else.
6.1.2009 10:42pm
jukeboxgrad (mail):
rosetta:

the nearly 55% disparity in productivity that this absenteeism rate causes


Your source does not say what you claim it says. You are claiming that absenteeism causes a "nearly 55% disparity in productivity." That's not what your source says. Your source says that absenteeism causes an 11% disparity in productivity.

There is a "nearly 55% disparity in productivity" (according to your source), but that's from all causes. Absenteeism is just one of those causes. Your source says this:

… unplanned absence accounts for 5.5 hours per vehicle. This amounts to almost 20 percent of the estimated Ford-Toyo Kogyo productivity gap.


What is "the estimated Ford-Toyo Kogyo productivity gap?" It's expressed in labor hours per vehicle. The table on that same page indicates that the US labor hours per vehicle are 82, and the Japanese labor hours per vehicle are 53. You compared those two numbers to come up with your correct claim that there is a "nearly 55% disparity in productivity." But what you're missing is that absenteeism is only one cause of that disparity. And your source indicates (in several ways, in several places) that absenteeism accounts for "almost 20 percent of the estimated Ford-Toyo Kogyo productivity gap." 20 percent times 55 percent is 11 percent. So absenteeism causes an 11% disparity in productivity, not 55%.

It's also helpful to notice what your source says on the next page:

from $100 to $150 in cost per vehicle could be eliminated with reductions in absenteeism to the Japanese level.


That number would be much higher if absenteeism alone was the cause of a "55% disparity in productivity." Above we saw that the 55% disparity in productivity (from all causes) amounts to 82-53=29 hours per vehicle. If absenteeism alone was responsible for that entire 55% disparity in productivity (which is what you claimed), then the cost that "could be eliminated with reductions in absenteeism to the Japanese level" would be much greater than "$100 to $150 in cost per vehicle." Unless we're paying people only $3-5/hr. If we could actually save 29 hours per vehicle, that would be worth $700 or more.

Absenteeism doesn't cost us 29 hours per vehicle. Rather, it "accounts for 5.5 hours per vehicle."

So the overall productivity gap is a problem, and absenteeism is a problem, but you've greatly exaggerated the importance of absenteeism.
6.1.2009 11:00pm
Desiderius:
Slater,

Can you explain this?

"UAW Chief Ron Gettelfinger claimed in a message to his members, 'For our active members these tentative changes mean no loss in your base hourly pay, no reduction in your health care, and no reduction in pensions.'"
6.1.2009 11:07pm
jukeboxgrad (mail):
Can you explain this?


Can you explain why Hennessey didn't provide a link for that quote, so it could be seen in context? The original document is here (pdf), and it describes various concessions the workers are making.

It's helpful to be reminded of Hennessey. He's the person who used to hold the job now held by Summers. Even though Hennessey's resume is much closer to Deese's resume than it is to Summers' resume.

Here's what Hennessey did in 1990-92:

he tested the database program Q&A for Symantec Corporation in Cupertino, California.


Here's what Summers did in 1993:

He is the 1993 recipient of the John Bates Clark Medal for his work in several fields of economics


So Hennesy and Deese have roughly comparable backgrounds. The difference is that the former reported to Bush and the latter reports to Summers.

I've been trying to find Bernstein's post where he complains about Bush giving Hennessey such an important job, despite his light resume. I haven't found that post yet. I wonder if I should keep looking.
6.1.2009 11:53pm
Cornellian (mail):
Since he's 31 but still hasn't graduated from law school, he must have done something between college and law school, but the article is quite vague on what that was.

And saying he's in charge of dismantling GM is absurdly overstating it - the guy reads position papers for Larry Summers.
6.1.2009 11:57pm
Leo Marvin (mail):
/:

Yeah, because it has nothing to do with the probable incidence of warranty contracts being declared null (just like the company's own contracts with investors) or manufacturing of replacement parts drying up.

Right. I always boycott businesses in financial distress. Especially the ones I own.
6.2.2009 3:51am
/:
Especially the ones I own.


They said if I voted for McCain, GM would would go under; they were right!

Good thing management of big business is in the Right Hands now.
6.2.2009 4:31am
Desiderius:
LM,

"Especially the ones I own."

We don't so much own GM, as it owns us. Or pwns, as the case may be. Just wondering where our seat was at that vaunted Wagner Act bargaining table. Maybe furren comtishin is adversity enough without sowing dissension in the ranks.

Just a thought.
6.2.2009 7:13am
Joseph Slater (mail):
Rosetta: The personal slams don't help your argument. As Jukebox pointed out, there's more to productivity than absenteeism rates. If you would actually read the studies, you would see that union labor, on average, is also more highly skilled. It's a complicated issue that you are grossly oversimplifying. And although I don't usually respoind to ad homimens, I will say that I worked with and for unions in the "real world" for over a decade before becoming an academic.

ShelbyC: Workers who strike for economic reasons (for better pay, hours, working conditions) do NOT have a right to get there jobs back. They can be "permanently replaced," which in most cases is pretty much the same thing as being fired.

J.L.R.: If you and I could re-do all of labor law, I might take you up on your offer to not require employers to recognize unions, but allow unions to do a lot more picketing and secondary activity than they are currently legally allowed to do. But, for better or for worse, you and I don't have the power to do it. But I can respect your point of view.
6.2.2009 11:28am
rosetta's stones:
That was a reasonable, measured post, box... free of invective, and free of playing engineer. I salute you. Seriously, man.
.
.

Now let's review the statement you quoted from that report (which is 1982 vintage, in case you didn't notice, meaning the dollar figures should be adjusted for inflation, which I won't consider in this analysis even though it would bolster my argument).

Let's see if we can use the statement you quoted from that report to generate some real data as to what the Big 3's historically horrid absentee rate is costing them in the all-important data point... $$$$$ :


"...from $100 to $150 in cost per vehicle could be eliminated with reductions in absenteeism to the Japanese level."


So, if the Big 3 has 50%+/- of the NA market share, and in recent times we've been using a figure of 16M vehicles per year or so for that market, then let's say 8M Big 3 vehicles per year are sold.

That means, using your figure of $100-150 per vehicle potentially saved if the Big 3 could absentee at the Japanese rate, the Big 3 would be saving between $800M and $1.2B per year, right around the $1B figure I quoted in my above post.

Now, $1B isn't much money to Obama Motors, I know, but it is to the Japanese, which is only one of the reasons they're cleaning the Big 3's clock. They rigorously control ALL their costs effectively, and plow that savings back into product. Simple model, but rather than adopting that model, the UAW has committed to a strategy of forcing the Japanese to adopt the UAW model... which is a money loser, as we see in this absenteeism issue, only one of the many case studies citable to document that losing model.

THe UAW may have lost the battle of organizing and spreading their losing model, but not to worry. Next stop... card check... and the UAW will be allowed to spread their losing model... with night riders.

And children yet unborn are even now being assigned the debt required of them, the day they are born into this world, so that that money can be handed to 50 year old men today. Welcome to Government Motors.
6.2.2009 11:44am
George Smith:
What does Juke drive?
6.2.2009 11:54am
rosetta's stones:
Slater, you better toughen up, because when you talk nonsense as you have, "the personal slams" will be forthcoming, and no I don't recognize your reference to Department of Homeland Security studies as anything relevant. Make your case, if you believe your past experience is relevant, but so far... case not made.

No need to explain to me the skill level of any category of labor, I analyze that and include it in my cost estimates for the work... real work... wherein it's necessary for me to be intimately involved with the skillset of the labor force... in any facility construction or production process I involve in. In Mexico, it's dicey. Here in SE Michigan, my UAW friends and relatives got in going on, if the ijyets of the UAW politicians and Big 3 management and Obama Motors can be pushed out of the way.

The costs of the absentee rate are calculated above. Rather than referencing your own irrelevant work, perhaps you should generate some real data to bolster your point... Big 3 specific. I can help you, and we can come to some real understanding that would help everybody, but this academic rambling ain't gettin' it, Slater. People's lives are at stake here , and it's far, far more than a couple hundred thousand UAW cardholders.
6.2.2009 11:54am
rosetta's stones:

Several years ago, he transferred to one of the Big 3 in Detroit and was put in charge of an entire division. One of the first jobs he was given was to fire 3/4 of the workforce.


Randy,

Thanks for the contribution, and my heart goes out to your buddy, having to walk in and axe people is heartwrenching.

Just a few minor tweaks to your description, though. Your buddy didn't get put in charge of a Big 3 division that laid off 3/4 of the workforce, because that's never happened to any division in Big 3 automotive history, to my knowledge (By contract, UAW employees don't get laid off, they go into a Jobs Bank, and get paid, and even now I still don't think that Bank has firmly disappeared, shamefully, despite some tequila talk that it's gonna happen eventually. And white collar employees don't go out by the 3/4's, most get reassigned if a division is wiped out).

Your reference to his company "bidding" on a contract is a clue that he actually went to work for one of the Tier I or Tier II sutomotive suppliers, and yes those guys DO lay off 3/4 of their work force, when a contract doesn't come through, or gets cancelled. And many or most of those guys aren't union, and get nothing but a box for their personals when they're sent off.

Welcome to the real automotive industry, because those guys, and me, are the backbone of that industry. We make the parts. We engineer the parts. We raise the facilities out of the cold ground. We design the hydraulic systems. We instrument the production equipment. We program the control. We are the backbone, and there are millions of us, as opposed to Slater's couple hundred thousand chosen few.

Welcome to the real world of the automotive industry. It's one you and Slater and most of the public are likely unaware of. It works without Obama Motors support. It works, if it's allowed to work. It loves working. It loves cars. It loves the people who make the cars. It takes pride in its work. It works, and shows up for work.

And when the greed of the few overwhelms these many, they suffer, and their unborn children will suffer... and everybody else's. That is the evil of a government takeover of this industry, that would bring that about.
6.2.2009 12:15pm
Joseph Slater (mail):
Rosetta: I'm plenty tough enough to deal with you, because you've got nothing. Case in point: I wasn't talking about "Department of Homeland Security studies"; the references to broad studies about unions in general are contained in my article, which discusses the DHS among other things. Just shows that you don't care about whether you have a clue about what you're talking about.

And I've spent plenty of time in SE Michigan, and I got a lot of buddies on both sides that do business there too. Maybe that type of argument impresses some kid that's wet behind the ears, but again, you need to bring data or give it up.
6.2.2009 1:10pm
bushbasher:
It's funny, but just the other day I was telling my wife that, even with all that formal background in business, economics, engineering, and marketing, the managers of GM drove their company off a cliff.
6.2.2009 1:15pm
rosetta's stones:
Slater, sorry, but you appear to be the one empty handed, regarding data supporting your position.

And as for the relevancy of your past experience to this discussion... case still not proven.
.
.

Ya' know, that's why I sorta like this Sotomayor judge. She gives short shrift to sloppy, unprepared pettifoggers who show up in her courtroom, and that's good. Consider yourself short-shrifted, Slater.
6.2.2009 1:33pm
Joseph Slater (mail):
Rosetta: You seem to think I care about whether you admit that you don't know the data. I don't. I supplied a cite that contains a bunch of articles on the subject of union productivity. You've just responded with personal insults. Again, that might work with some kids you play with, but not here with me.

Let's be clear: If anybody wants to seriously engage with the literature on union productivity, I would be happy to do so. If you don't, fine, but don't expect me or anyone else to care what you say on the subject.
6.2.2009 1:49pm
jukeboxgrad (mail):
rosetta:

if the Big 3 could absentee at the Japanese rate, the Big 3 would be saving between $800M and $1.2B per year, right around the $1B figure I quoted in my above post.


You already said that. Why are you saying it again? I never challenged that claim. I challenged this claim:

the nearly 55% disparity in productivity that this absenteeism rate causes


I challenged that claim because your own source proves that it's false.

What you're doing is called misdirection. Instead of taking responsibility for your false clam, you instead posted a response that presents an elaborate defense of a claim I never challenged, as if to create the impression that you're discussing the claim that I challenged. But you're not. Why are you refusing to take responsibility for your false claim?

Whatever the reason is, it probably explains why you have made other false claims for which you have also refused to take responsibility.

==================
george:

What does Juke drive?


You crazy.
6.2.2009 1:57pm
rosetta's stones:
Slater, you've provided not a shred of data. At least box, in all his/her obsessed rants, attempts to do so, even if also fantasizing to be a structural engineer.

If you wanted to "seriously engage", you'd provide some data.

Case not proven, counselor, better stick to the classroom.
6.2.2009 2:15pm
George Smith:
Only with much laughter. Don't want to say, I guess.
6.2.2009 3:04pm
Joseph Slater (mail):
Rosetta, I supplied a place to find cites. I gave you the cite to the leading book on the subject, Freeman and Medoff's _What Do Unions Do?_. The fact that you can't be bothered with the data isn't my problem.

But here, I'll make it easier for you. See also: Dale Belman &Richard N. Blcok, "The Impact of Collective Bargaining on Competitiveness and Employement: A Review of the Literature," in _Bargaining for Competiveness: Law, Research, and Case Studies (Richard N. Block, ed., 2003); Lawrence Mishel &Mathhew Walters, "How Unions Help All Workers" (2003); Lal Carr Steelman, et al., "Do Teacher Unions Hinder Educational Performance? Lessons Learned from State SAT and ACT Scores," 70 Harv. Educ. Rev. 437, 448-59 (2000). For the minority view that unions can hinder productivity, see Barry Hirsch, "Unionization and Economic Performance: Evidence on Productivity, Profits, Investment and Growth," in _Unions and Right-to-Work Laws: The Global evidence of their Impact on Employment (1997).

Get back to me when you have something to add.
6.2.2009 3:04pm
Joseph Slater (mail):
That first cite should be "&Richard N. Block, . . . ."
6.2.2009 3:04pm
rosetta's stones:
Slater, I ain't looking for textbooks, or lawyer cites. I can get those from any ineffectual academic, or find them myself, and don't need you for that.

I want data, hard data related to the automotive industry... TODAY... RIGHT NOW... concerning the Big 3... and the UAW. That's what we in the real world use, fyi. You might pass that thought around in the coffee room on campus, it'll probably come as a shock to them, too.

In a bit, when I have some more time, I'm gonna crack into that absenteeism data a bit further, and we'll analyze how it relates to overall UAW expenditures on vehicle production in NA, and the ratio to that total, so we can scale the wastage due to absenteeism beyond Japanese levels. I'm interested myself, although you sure don't seem to be.

You could save me the trouble, and work that up for us, if you were interested in contributing to this discussion honestly. That's what true academia was supposed to be about, I thought?
6.2.2009 4:44pm
Joseph Slater (mail):
Rosetta:

OK, I thought you were interested in facts and data about unions and productivity. Because that's what I was talking about. But when you're confronted with that data, you run away like a little boy. And again, I spent plenty of time in the very real world you talk about, so save that crap for somebody else.

As to the auto industry specifically, I addressed that a looooooong time ago upthread -- it's primarily about difference in legacy costs.
6.2.2009 4:53pm
rosetta's stones:
And I agreed with you about legacy costs, even though you failed to support your opinion with any data. I'm well aware of the data, and provided some for you (you're welcome), and you happily accepted that agreement and the supporting data, but then called the data I presented re absenteeism anecdotal and ideologically driven. That's disingenuous.

You have yet to provide any data. Zero. Case not proven, counselor.

What did you do in the real world? Serious question, and no I'm not gonna jump you on it, because if it was specifically relevant you would have already mentioned it. But, do you at least have working knowledge of the grievance process, and labor agreement execution, and have you been directly involved in any of this? Have you been involved in negotiating local plant rules? That would be a nice insight, if you have any of that sorta stuff to share.
6.2.2009 5:03pm
rosetta's stones:
I gotta run though, and I'm gonna miss the Wings game tonight. Dang UAW, they'll probably be getting paid to watch that game!
6.2.2009 5:06pm
Joseph Slater (mail):
Dude, the data is in the cites. One is even a hyperlink. How lazy are you?

Yes, I was involved in grievances and arbitrations, and I did contract negotiations (although the latter not for the auto industry). I was a labor lawyer for over a decade before becoming an academic. But that is just ad hominem.

Let's get to the bottom line: we agree legacy costs are the problem in the auto industry. The other point was about union productivity in general, and as I said, I've given cites including one you can CLICK ON, for god's sake. I don't think I need to prove anything else to you, so that's it from me on this.
6.2.2009 5:09pm
Joseph Slater (mail):
At least I agree with you about the Wings.
6.2.2009 5:09pm
jukeboxgrad (mail):
rosetta:

even if also fantasizing to be a structural engineer


That reminds me. Did your "structural buddy" ever help you understand that the things you claimed were "easily accessible at ground level [and] away from observation" are not "easily accessible at ground level [and] away from observation?"

And did he ever explain to you that we didn't firebomb "millions" of Japanese?

And did he ever explain to you that 11% and 55% are not equal?

And has he explained to you that people who engage in blatant misdirection tend to not be taken seriously?

Just wondering.

===============
george:

Don't want to say, I guess.


I'd prefer not to, for reasons that I'd prefer to not explain. And the reasons are probably very different from any reasons that you are likely to guess.

But I did once have a GTO.
6.2.2009 7:43pm
jukeboxgrad (mail):
george:

Don't want to say, I guess.


That reminds me. Why did you evade the question I asked you back here? Don't want to say, I guess.
6.2.2009 8:06pm
rosetta's stones:
Yeah, we agree legacy costs are the major problem with the Big 3, Slater, now let's agree on who caused that problem, and the solution to that problem.

For generations, the ijyit UAW and ijyit Big 3 owners signed labor agreements that resulted in astronomical and unsustainable health care and pension expenses. They've known about this for nearly 30 years, that the demographic freight train was barreling down the tunnel, and that that wasn't a light they were looking at out there in the tunnel darkness.

Both parties have known this. They fiddled.

The ijyits signed those labor agreements anyways.

One of the parties to those labor agreements is now standing there holding worthless stock certificates. They've paid whatever price is to be paid for their stupidity.

The other party is gangsta muscling their politically bought off buddies to raid the treasury, and pound down their mistake onto generations of children yet unborn, so that they don't have to pay for their mistake.

Others are paying for this mistake, not those who made it. This is what you're advocating. This is immoral. It is wrong. It is despicable. It is Government Motors.
.
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I can appreciate your work at the "appeals court" level of the grievance process, but remember, we at the "trial court" level do the real work, and you don't want to know the dirty machinations we use as part of our procedure. I've seen stacks of absenteeism disciplinary grievances disappear into the shredder, in trade for inocuous bullsh!t in ways that just made me want to go take a shower. Thus, my interest in the absenteeism thing, an issue which is both a tremendoius burden on the auto industry, and a reflection of the corruption of the labor process, and the major reason why automakers avoid new construction here in SE Michigan, despite the wealth of talent available here. Your work is ripping off our right to work.

But, when you have a gangsta holding a gun to your head, you do things in the labor arena. Don't me misled by the quality, character or quantity of what comes in front of your grievance appeal bench, Your Honor, because it don't reflect what's taking place out in the real world. You are hidden from that, and it is hidden from you.

The contract negotiations I was interested in were concerning local plant rules, and as I hope you know, this is where the rubber meets the road in terms of productivity. It's only been in the last 2 years that I've seen movement here. Prevoius to this, only stasis, and the slugs and inefficiencies were coddled and protected, and the lowest common denominator accepted as the baseline. This is wrong. This is where we've needed smart and automotive savvy lawyers to dig in and fight, within the UAW... but for generations, we've had shysters cashing in, and collecting their paychecks even as that freight train barreled ever closer.

The freight train has arrived, and it's landing on my grandchildren. Congratulations.
6.3.2009 10:59am
rosetta's stones:
box, you raving dope, have you found an engineer to confirm your fantasies yet? Let me know if you ever do, pogue.
6.3.2009 11:00am
jukeboxgrad (mail):
have you found an engineer


I found a very, very special engineer, who can engineer facts out of thin air.
6.3.2009 12:05pm
Joseph Slater (mail):
Rosetta's Stones:

(1) Yes, we agree on legacy costs. The problem, I think, is not so much the folks who signed the agreements, but rather the way health care is provided in the U.S. -- dependent on employers. Having decent health care in retirement is part of the middle class life that UAW members aspired to and, IMHO deserved, but it's tough to do.

(2) FWIW I've been at the grievance process at all stages, but your obsession with my biography is odd. I post under my real name, and I've never made a secret of who I am. You can find my resume on line. That, I note, is in stark contrast with you and your anonymous posting handle.

(3) I will assume that I've given you enough to chew on re the union productivity issue, although it would have been nice for you to acknowledge the easy click-link I gave you.

(4) To end on a more conciliatory note, I hope the Wings bounce back from last night's disappointing loss.
6.3.2009 1:14pm
rosetta's stones:
Slater, you're conflating too many issues. The UAW's and Big 3 ownership's bankruptcy isn't a result of a lack of socialized medicine, because plenty of other businesses are avoiding bankruptcy. It's a result of stupidity from both, and now the UAW's wanting somebody else to pay for their stupidity... children yet unborn.

I haven't looked up your bio, and I doubt I will. No offense, you understand, and I hope you understand you're proxy for the arguments I'm making, and it ain't personal. I like you, and remember, I've learned my SOBness from the best in the world, the meanest toughest negotiators there ever was, smarter than any lawyer and twice as clever (schooling's overrated, man, but they got that, too!). They have a 3-letter acronym which I'm sure you can guess. I'll be playing in one of their golf outings with some of my member buddies coming up here at some point, and get some more SOB lessons.

However, I do highly doubt you've been at the grievance levels I'm speaking about, because lawyers ain't invited to those, and they are what sets the operating standards and work rules for the local agreements that dictate productivity rates in the Big 3's facilities. That's why I asked if you ever worked on local agreement negotiation, because that's where the rubber meets the road.

Most of the good stuff takes place out on the plant floor, by the way, away from lawyers, tape recorders, witnesses, eavesdroppers... "the cone of silence", as one of my wise old engineering managers counseled me early on, is where you settle business... including the dirty business of labor grievance resolution. Because believe me, that UAW shop chairman don't want anybody to know what he's doing anymore than I do, in many cases. It's just another dirty little secret, kept from the membership.

The shop chairman at the (now dismantled) Chevrolet plant in Livonia used to yell and blow smoke in my face in the "War Room", the conference room we met up in, to look tough in front of his guys, then I'd get him alone out on the floor and he'd apologize and give me what I wanted, quietly. But there's always a price attached. What a scam, eh? It's a dirty world, and it results in plants closing, like that one.

The link you provided is generic academic stuff, and not Big 3 or UAW specific, and it's dated. Thanks, but it doesn't apply right now.
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.

Yeah, the Wings ran out of luck last night. I did catch some of it. They'll be alright. But don't mention Pittsburgh, or you might get me started on the steel industry. ;-)
6.3.2009 2:14pm
rosetta's stones:
...we'll have to ask box about the steel industry, he/she is a "structural engineer", evidently.
6.3.2009 2:20pm
jukeboxgrad (mail):
he/she is a "structural engineer", evidently


I've never claimed to be a structural engineer. I just claim to be someone who can spot baloney when it's as obvious as yours.
6.3.2009 2:49pm
Joseph Slater (mail):
Rosetta's Stones:

We agree on this:

(1) Some issues are indeed industry specific. Earlier in the thread, I was talking about and was asked about general studies on unions and productivity. I'm not aware of any general productivity studies specifically on the auto industry.

(2) As you say, lawyers are usually not at the first level grievance hearings. I've only been to a couple of those in my career, while I've done dozens of grievances. And believe me, I know that there is stuff that goes on that the lawyers (from both sides) probably don't want to know about.

(3) I also know from experience that many labor negotiators are tougher and meaner than many labor lawyers (again, on both sides).

(4) Of course we agree on the Wings and, at least in this context, Pittsburgh.

I also agree that the problems in the car industry aren't ALL about legacy costs and employer-based health care. Way upthread I was just trying to make the point that legacy costs are the main labor cost differential these days. And apparently we agree on that.

Of course there are many other problems: the types of cars the U.S. automakers make is chief among them, and the reputation of U.S. cars vs. imports (not exactly the same thing as actual quality) hurts too.

And yes, the UAW and various autoworkers are not blameless in all this either. I see warts on both sides; you can't work in labor relations and not see that. But on this here blog, it's pretty much blame the union completely all the time, so I try to give some balance.
6.3.2009 3:25pm
Joseph Slater (mail):
Oops, in (2) above, I meant to say I've only been to a couple of first-level grievances while I've done dozens of arbitrations.
6.3.2009 3:26pm
Leo Marvin (mail):
The only thing I'd add to Joseph Slater's comments is that the auto worker legacy costs predicament is a natural consequence of the legal fiction we call "the corporation." Contracts were made, profits earned and distributed to shareholders, and now when the biggest contingent bill comes due, the cash drawer is empty and there's no recourse to the the real people behind the promises.

I'm not saying it should be another way. The corporation as a vehicle for wealth building has served this country well. I'm just pointing out that when we shield the assets of the side that already got its end in quarterly dividends, we ought to shut up, bite the bullet, and share the burden of doing the right thing to avoid such an inequitable result on so large a scale. The one thing we shouldn't have to endure is listening to complaints about how we're burdening our kids with gold-plated payouts to those selfish union workers. (Imagine the nerve of them thinking they're entitled to the health care they worked their whole lives to earn.)
6.3.2009 8:19pm
rosetta's stones:

The one thing we shouldn't have to endure is listening to complaints about how we're burdening our kids with gold-plated payouts to those selfish union workers.


You'll have to endure it, Leo, because that's exactly what's happening. We had 2 parties to a contract, and only 1 of them is paying a price for their mistake, and this price is being paid by those kids you mention... our kids.

I can go along with arguments against the evils of corporatism, but that's another discussion.
.
.

And Slater, we agree on plenty, I agree with you. I'll probably be stripped of my libertarian magic decoder ring over this, but I remind you that I'm a union man, and I salute you in your fight to stick up for the right to organize within the law. Over the years, I've counseled several groups of young kids working in industry, that they should organize, rather than just bitch about their wages. Usually, they're young technocrats that are really making the job go, on something I'm working on, but they don't know their own value. Haven't struck gold yet, but some day....

That's why I disrespect the UAW's attitude in this, as they've forgotten those roots of organized labor, and are just fighting for their share of a pie... to the exclusion of those young kids, and those yet unborn. Instead, they go down to Honda and Toyota, to shake them down, even though those employees are already making similar money to the UAW (you agreed on this above, remember). Rather than organizing those who REALLY need it, they waste time and money organizing those NOT in need, just to pick up more union dues... a pure shakedown. This is wrong.

Go Wings, baby! Datsyuk's back, and Draper, so the Pens might be in trouble tonight.
6.4.2009 1:13pm
rosetta's stones:
box, you drone, you couldn't spot a 2 x 4 on a shelf, let alone a primary member in a mass structure. Let me know if you ever find an engineer to confirm your kookiness, bud. You've had a month... what's taking you?
6.4.2009 1:16pm
jukeboxgrad (mail):
You've had a month


Funny you should mention that. Something very interesting has happened in the several weeks since I posted these photos. Have you noticed what it is? It's quite peculiar. What I notice is this: the photos originally indicated that the things you claimed were "easily accessible at ground level [and] away from observation" are not "easily accessible at ground level [and] away from observation." And now when I look at the photos, I notice that they still indicate that the things you claimed were "easily accessible at ground level [and] away from observation" are not "easily accessible at ground level [and] away from observation."

Isn't that odd? I wonder if you have any idea why that might be.
6.4.2009 5:02pm
rosetta's stones:
Now it's a month and 4-hours, and still nothing?

Stick with it, box, there's gotta be some engineer out there to confirm your kookiness... any minute now... any minute...
6.4.2009 5:07pm
jukeboxgrad (mail):
any minute now


That reminds me. I realize you know some imaginative engineers, but do you know any imaginative mathematicians who can explain the technique that's used to make 580,000 equivalent to "millions?"
6.4.2009 6:25pm
Dick King:
One fact that should be noted is that there is one union covering all of GM, Ford, Chrysler, and all the retirees.

Most of the people who vote for a GM employee's union representation don't work for any car company at present, and many work for a competitor.

-dk
6.5.2009 2:40am

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