Thursday, December 04, 2008

Unusual Suggestions for an America Undergoing Change (An ongoing series)

It seems that everybody is writing memos to Barack Obama.  Missives about “what I’d do if I were president” pour forth from columnists, political-sages, bloggers and citizens.  The official transition team has even set up an online suggestion box to sample this eager tidal wave of participatory democracy.

Of course, any tsunami is mostly water and air, with only a small amount of material that’s surprising or unique.  Likewise, most of the recommendations for the coming administration are pretty predictable.  Fix health care. Get us out of Iraq. Create jobs. Prosecute some of the klepto-thieves who turned the first decade of the 21st Century into the Naughtie Oughties.  These unsurprising exhortations do help measure public concern - or outrage - but they won’t fire off many new light bulbs the minds of Team Obama

Or take Discover Magazine’s recent feature "Advice for the Next President."  I was asked to opine alongside Edward O. Wilson, Steven Weinberg, Jack Horner, C. Everett Koop, Danny Hillis and others about ways to restore America’s position as world leader in science and technology.  Several of us urged that science education should get top priority, and that Congress restore the independent advisory commissions that Republicans demolished, so that policy deliberations can be based on facts, rather than stories.

Important?  Sure.  But also pretty obvious.

And so, I refrained for a month, browsing what everyone else was saying, winnowing my own list down to only items that are different, unconventional... perhaps even a bit contrary.

Oh, I won’t claim total originality. A few of my suggestions may have appeared elsewhere -- just not to my knowledge.  They range from slightly-skewed perspectives, to some that may seem arcane, or even bizarre. From nonpartisan and pragmatic to a few that are fiercely partisan.  But when it comes to saving the Republic, can the earnest folk in the new government afford to overlook anything?

Let’s start with the economic mess. Then we’ll continue - bit by bit - to defense, foreign affairs, domestic policy, politics and, finally, some ideas that are really out there, on the fringe.


1) Offer a fresh deal to labor and management

It’s a new century and time to chuck some obsolete ways of thinking.  Take this bemusing realization. On paper, the sum of all obligations owed to union workers, company health plans and pension funds would make organized labor by far the biggest net owner of capital in the United States.  

By some ways of reckoning, the workers already own the means of production. This was actually foreseen a long time ago.

Indeed, for decades, both labor and management have sought ways to avoid confronting this fact - for example, by separating off pension funds to be controlled by neutral specialists.  Labor leaders are comfortable with an old-fashioned, adversarial relationship toward management. The idea of sharing some hybrid role terrifies them.  Moreover, a few experiments in worker-ownership - such as United Airlines - seemed to prove it a bad idea. (These were contrived-to-fail.)

But there may be no avoiding this issue, any longer.  With unfunded obligations adding up to hundreds of billions, the pension plans need to start getting imaginative, or taxpayers will be stuck with that bill, in addition to all the others that are piling up.  In striving to preserve an illusion, labor may risk losing everything.  Meanwhile, American car companies with UAW contracts suffer a crippling competitive disadvantage against foreign automakers who pay far less for non-union labor, just a few states away.  A situation exacerbated by the blatant, greedy corporate vampirism of a dullard, parasitical managerial caste.

Is the solution yet another a mammoth federal rescue plan? Not without a stiff price, please!  There has to be a meeting of the minds, to thrash out an entirely new deal.

Everybody may have to give up something.  Stockholders, much of their delusional equity.  Managers, most of their recent crony-voted bonuses, even digging back some years.  Unions, their illusions. And non-union states, their unfair intra-national advantage in cheap labor laws.  Workers in Michigan might have to get NewGM or NewChrysler shares, in lieu of a third of their wages.  Workers at a Honda plant in Kentucky may have to get used to becoming union men and women.

In fact, just after I wrote this in first draft, the United Auto Workers announced (December 3) that it is willing to change its contracts with U.S. automakers and accept delayed payments of billions of dollars to a union-run health care trust to do its part to help the struggling companies secure $34 billion in government loans.

That’s fine.  We’re negotiating at last.  But it still reflects a desperate will to avoid facing the obvious.

The unions and pensions funds should “defer” nothing.  They should instead accept payment in the form of preferred, convertible stock in completely re-shaped and renewed companies.  And if worker-ownership hasn’t worked in the past, then it is high time that due attention is paid to making it work.

What should not be accepted any longer is the illusion that stockholder equity in GM etc is sacrosanct.  This is a bankruptcy reorganization, accept it.  Get past it.

On a broader scale, this notion of holding a grand conference, at which everybody sits and everything is on the table, will be raised again, and again.  After twenty years of partisan intransigence, we can no longer afford ideological impracticality.  All parties, from environmentalists to free-traders, all the way to xenophobes, will have to gather up a new maturity and go back to the old, American genius at negotiating for the best deal -- the best positive sum game -- trading away a little, in order to get a little.  So that we all can move forward.

More about this, soon.

Continue to the next posting in this series...

THIS IS PART OF AN ONGOING SERIES: Suggestions to the new administration

Part 1: Unusual Suggestions for an American Undergoing Change
Part 2: The Horn of Africa
Part 3: Radical Transparency
Part 4: Watch out for a supra-national Aristocracy
Part 5: Avoid a crisis caused by "just-in-time"
Part 6: Repair the U.S. Civil Service
Part 7: Free the Inspectors General!
Part 8: Micro-Suggestions about the Economic Crisis
Part 9: Restore the Army, the Reserves and the National Guard
Part 10: Enhance our nation's (and civilization's) overall resilience
Part 11: Control the borders
Part 12: Investigate Wartime Contracts
Part 13: Restore Independent Advisory Agencies for Science and Technology
Part 14: Insure the kids
Part 15: Truth and Reconciliation 
Part 16: More Truth and Reconciliation: bring crooks to justice
   Part 16b: Truth and Reconciliation Addendum
Part 17: Political Matters
Part 18: Time to do something about Gerrymandering
Part 19: Consider a few Crackpot items
Part 20: Seek Ways to End Culture War

David Brin
Twitter                Facebook


B. Dewhirst said...

There is a subtle but importatn difference between -owning- and -controlling- the means of production, at least in the sense that you've used own here.

Those workers in Germany and Japan don't look so crippled to me...

As for the UAW's leadership-- they're as bad for UAW workers as the formal management. Because they -are- parallel management.

You're blaming the slave for his chains again.

B. Dewhirst said...

My solution: Just nationalize the damn things. Cheaper than a bailout by far... if you could find someone in government who wasn't an incestuous MBA golf buddy.

Anonymous said...

Well, as a stockholder I can report Mission Accomplished on giving up that "delusional equity". And I am as conservative in my investing life as my political life!
Not all of those pension obligations are going to be met. They can't be.
And from the last thread, I entirely agree on the Violin Concerto. The Best.


Enterik said...

I pretty sure the Club for Growth will continue to primary pragmatic moderate centrist Republicans in order to bias a false hegelian dialectic. The irony of recent electoral results is that a more frequently progressive Democrat usually win the general election. The net effect is a hollowing out of the pragmatic biconceptual pool. What can be done to reverse that process? Even abject idealogical failure seems to provide no check...

matthew said...

Let's take GM as an example.

GM has 610.46M shares outstanding. Today's stock price is 4.11 per share. That would be 2.5090 billion to buy back every share.

Buy back all shares of the company, and reorganize as a non-profit. Priority #1 (and stated non-profit goal) is to provide for pension and employee obligations. Remove the obligation toward dividends.

Total debt for the company is 45.16B (also as of today). Set a five-year window to fully-fund all debt.

"whides" - brand name of cheap cotton underwear

Anonymous said...

haha nice

Anonymous said...

Labor actually isn't costing the non-union Honda plant that much less, Dr. Brin.

The actual cost, not including the legacy costs still borne from the days when GM and Chrysler needed far more workers to build a car, is 28 bucks an hour for a UAW worker. That's including paying into the pension, paying for health care, the employer portion of FICA, ect.

Honda is paying 23 bucks an hour on average for workers in the US, all told.

However, the CEO of Honda makes twenty times less than the CEO of GM. The gap is similar for all of their top level executives. Obviously, the maxim that "you get what you pay for" has been proven to be completely false.

Untill the issue of execs calling "profit" what should be "increased capital investment" is resolved, it doesn't much matter what other solutions are tried.

It's not labor costs, but horrificly short-sighted executive decisions that have left Detroit in the fix it's in. Toyota workers in Japan cost roughly 90% as much per hour as their UAW counterparts, and shipping costs have to be factored into the final cost of the product which more than makes up the difference in the final retail price.

Japan isn't cleaning Detroits clock due to lower labor costs.

Unless a "partnership" leads to sound long term business practices, it solves nothing.

Zot said...

I'd like to get past the specifics of the GM bailout and address your larger point about a fundamental renegotiation of the social contract of business.

It has long been apparent that unions organized around specific activities have become economically counterproductive in an environment that rapidly creates and destroys categories. Unfortunately, our labor laws pretty much preclude forming other types of unions (I suspect this to be a holdover from the days when big business was actively trying to destroy the IWW.)

We need unions with members who are plumbers and doctors and salesmen and farmers and anyone else who wants to join. The strength of the union would come from the ability of the union to cross-train members and to support them during a strike. This kind of union could address your issue of worker ownership because managers and even CEOs could be members in good standing (though a board of directors might impose some limitations to avoid conflicts-of-interest).

Another big difference between this type of union and unions as they are now is that the new type could far more easily insist upon continuing education as a condition of membership. Under this system, people changing professions wouldn't hurt the union at all and better educated workers are almost always more productive workers so businesses benefit as well.

I have no illusions that such a restructuring would be without problems of its own, but it certainly isn't a bad place from which to start the restructuring discussion.

Anonymous said...

David said: "American car companies with UAW contracts suffer a crippling competitive disadvantage against foreign automakers who pay far less for non-union labor, just a few states away."

I heard about the Japanese having labor unions, too. About all I could find on the web (that's not too esoteric) is:

Anonymous said...

Zot hits the nail pretty much on the head.

We don't have many Unions in this country, most that go by that name are really Trade Guilds.

Anonymous said...

A replacement for the "strike" is needed. It's a crude and destructive tactic, for all sides: workers lose wages, employers lose sales and profits and market share to competitors, customers are inconvenienced, suppliers may go broke, governments lose tax revenues, etc.

The long term harm a strike causes both sides creates anger that gets in the way of negotiating and considering the other side's point of view.

An alternative would be to keep the factories or services rolling - but workers would not be paid, and 100% of income from sales of products and services would go into an escrow account, out of the control of both sides, and neither side could borrow against its value.

It's easily "tweaked" to balance the incentives on both sides and encourage fast resolution. Perhaps after two weeks, all profits must be donated to charity, along with 10% of escrowed wages.

Both sides might be required to put up a "good faith" bond, that they'd sacrifice under certain conditions. The union might lose it's bond if it decided to shift to a real strike, while the company might lose its bond if negotiations go on longer too long.

EITHER side could declare such a "labor negotiation action". If management feels they need to replace workers with robots, or renegotiate benefits, they'd have the same right to declare an action against the union.

B. Dewhirst said...

Tom, two points:

- not all strikes are equal

- most alternatives to strikes are illegal (even classified as terrorism now.)

An adversarial relationship between labor and management is inherent in our system... "hurt feelings" are not a concern.

Strikes needn't be long to be effective, as the IWW has shown. (You just plan your strike for when it -really- hurts.)

You're examining a system which management has won year after year. A softer touch isn't going to advance labor's position.

gmknobl said...

Unions have had power removed from them since Nixon's time in the White House. Their power has waned and I see this as a major reason for many worker's ills, not just the big car manufacturers. Honestly, unions wouldn't be needed if management didn't abuse them. In small companies it usually isn't needed since everyone is in the same success/failure boat. But to say the current unions are failures now is to at least partially ignore how they got that way. Management won the battle when congress and the president rigged the power all on their side. So most of the failure now should be blamed on management and their lubricated fellows in local, state and federal governments. A small modicum can be blamed on the management of unions who didn't properly use what power they still had or felt forced to agree to unfair and ever diminishing-value contracts for their workers. I suggest much of current labor leadership has been co-opted by the businesses they supposedly face across the negotiating table.

So, a new form of union, mean, leaner and more willing to work with business leadership BUT FIRST, you must get of the corrupt business leaders who are truly use to fat-cat policies and not really being responsible to anyone but themselves and their friends. They're corrupt and won't work with any unions no matter what. THEN work on getting new labor representation in the new mode. Until you do this, you won't accomplish anything.

Anonymous said...

B.Dewhirst -

Even if establishing means to negotiate labor disputes without destroying the business were(somehow) considered "terrorism", I'm not proposing this as something one union and company would do, but as a systemic change.

I'm trying to propose a way to move away from strikes and all the harm they do to both sides, and you're suggesting strike tactics to make them quicker and more effective for the unions. Perhaps you'd also like to advise management on the best way to break strikes quickly?

Your one-sided perspective is part of the problem, not the solution. BOTH sides need to move (or be moved) to a better solution.

gmknobl - I'd agree that union power has waned, and a large part of that might be the system being rigged against them. But it's also because the public got fed up with garbage strikes, threats of police or fireman strikes that sounded a lot like blackmail, airline strikes that left them stranded, hospital staff strikes that threatened their loved ones, etc.

Moving to negotiation system evolved another step away from literal class warfare would help unions regain respect and power - especially if they are the ones to drive the change.

B. Dewhirst said...

The public supports unions a good deal more than you seem to think, Tom.

Pity about that media...

As for negotiations being illegal and classifiable as terrorism-- that isn't what I meant.

I meant that a) striking would be considered terrorism were it invented today and b) other, similar, labor tactics such as occupying factories may be classified as terrorism in the future. Several members of my union are -presently- being charged under Minnesota anti-terror legislation for marching on sidewalks without a permit.

As for what management should do to not have strikes-- I have no interest in helping managers. Through legal precedent and social custom, they are inexorably at odds with their employees.

A black friday strike does not hurt workers -nearly- as much as labor. A strike of gas truckers when gas has just hit $4.00 a barrel needn't be very long either-- especially if they strike in the middle of the highway and halt all traffic.

As I said-- strikes needn't be long to be effective.

Yet more timid unions aren't going to fix anything.

We need more unions like the one in Chicago, or my union, the IWW.

We need unions like that, too, for computer scientists, aerospace engineers, etc. (Preferably, one big union.)

B. Dewhirst said...

gmknobl, management is legally obligated to abuse their workers (google the court case ford versus dodge).

gmknobl said...

and any system which even implies that is correct is immoral and wrong. So, strike against it.

B. Dewhirst said...

General strikes are illegal in the US, thus workers cannot strike to promote legislation without the teargas and men-with-clubs being rolled out.