Scribes, Profs Fear Government Control Of Auto

[by Bill Onasch]

David E Sanger, one time Tokyo bureau chief before becoming the current White House correspondent for the New York Times, is well educated and well traveled. A graduate of Harvard, he is a member of the Council on Foreign Relations and the Aspen Strategy Group and has a reputation as an expert on globalization. The very concept of the auto bailout makes him nervous and he tells us why in a December 8 article, Washington Takes Risks With Its Auto Bailout Plans.

Sanger begins by quoting remarks by President-designate Obama on Meet the Press,

“We don’t want government to run companies. Generally, government historically hasn’t done that very well.”

Obama is also a Harvard grad so maybe this is what is taught by the history and economics departments at that great Ivy League institution–whose endowment has lost eight billion dollars in investments over the past few months.

But the one experience of government controlling the auto industry–from 1942-46–was not so bad at all. It was, in fact, the greatest industrial mobilization the world has yet seen. Without its success there’s a good chance our first language today would not be English.

Of course, government control of that period was not limited to auto–who stopped producing cars to make planes, tanks, and jeeps. Virtually every sector of the economy was subject to government direction, supplemented by wage and price controls and rationing.

This omnipotent government intervention not only was indispensable for the U.S. military victory in World War II. It was also what finally put an end to the Great Depression that plagued the USA for more than a decade–including all through the mythical New Deal.

The next President, along with a top writer for America’s “paper of record,” do us a disservice by suppressing a significant part of our history clearly relevant to today’s economic crisis.

Of course, the productive success of the war time mobilization carried its own drawbacks–demand was created by the killing of seventy million persons and the destruction of most of the world’s industry outside North America. Taxpayers rewarded the owners of American industry with obscene profits while worker wages remained essentially frozen throughout the war. In those respects, not an experience we want to repeat. We’ll come back to that.

Despite Obama’s bad mouthing government control, Sanger still worries about bipartisan demands for “oversight” of the Big Three automakers,

“It all sounds perilously close to a word that no one in Mr. Obama’s camp wants to be caught uttering: nationalization. “

To Sanger this is like sounding the alarm about termites found on the front porch.

“The fact that there is so little protest in the air now … reflects the desperation of the moment. But it is a strategy fraught with risks.”

The first is a reiteration of Obama’s quoted message,

“Government’ s record as a corporate manager is miserable, which is why the world has been on a three-decade- long privatization kick, turning national railroads, national airlines and national defense industries into private companies.”

These examples are curious choices for advertising the superiority of private capital. Britain’s denationalized railroads stagger from one scandal to another concerning both safety and performance. And you would think the well traveled Sanger would have noticed by now that the world’s deregulated airlines have become dysfunctional.

“The second risk,” he continues, ” is that if the effort fails, and the American car companies collapse or are auctioned off in pieces to foreign competitors, taxpayers may lose the billions about to be spent.”

Sanger joins those in congress who swallowed an eight trillion dollar camel to salvage finance capital but now strain on a 15 billion dollar gnat for a loan to the Big Three.

Now he could raise some serious arguments against the Detroit bailout. For example, he could point out that General Motors has more operations abroad than in the USA and that they are making hefty profits in these other markets. They could easily save themselves from collapse at “home” with some of their earnings from other lands. But such an argument would cut across the grain of globalization that Sanger champions.

There’s more,

“And the third risk — one barely discussed so far — is that in trying to save the nation’s carmakers, the United States is violating at least the spirit of what it has preached around the world for two decades. The United States has demanded that nations treat American companies on their soil the same way they treat their home-grown industries, a concept called `national treatment.'”

He quotes Jeffrey Garten, a professor at the Yale School of Management, who as under secretary of commerce under Clinton was one of many government officials who “tried in vain to get Detroit prepared for a world of international competition, “

“If Japan was doing this, we’d be threatening billions of dollars in retaliation. In fact, when they did something a lot more subtle, we threatened exactly that.”

The fact that Sanger and Garten find this hypocritical double standard as shocking as discovering gambling at Rick’s, and express surprise at muted condemnation of it, demonstrates their understanding of globalization is ideological, not analytical.

Globalization, if it means anything, is a description of the way the leading powers–the old G-7–have screwed the workers of the whole world. It means breaking down social safety nets; abrogating labor, antitrust, and environmental laws; and privatizing every public treasure that might become a profit center; in order for capital to move freely across borders and exploit with few restrictions. It has profoundly, often disastrously, changed the industrial, financial, mercantile, and agricultural economies of the so called “developing countries” while at the same time putting workers in the imperial countries in what another NYT writer, Steven Greenhouse, so accurately described as a Big Squeeze.

But globalization has not eliminated national ruling classes, or the state power they control. Nor has it ended competitive tensions. In the nuclear age it is not practical to resolve disputes in the time honored way of war between major powers. Through passive consensus, all the major players defer to the super-power–the USA–as the ultimate arbiter. That’s why few will complain out loud if Washington decides to protect the Big Three. Welcome to the NFL.

Turning once more to his roots for another nervous Nellie, Sanger quotes Malcolm S. Salter, a professor emeritus at Harvard Business School who has studied the auto industry for two decades and, until a few years ago, was an adviser to General Motors and Ford,

“…we’re in uncharted water. Think about this: Who in the federal government would have the tremendous insight needed to fix this industry?”

When the Feds took control of industry in World War II they turned to some bright young lads barely out of college to plan the economy. They were initially resented at the time by many corporate managers and some professors as snotty nosed kids. But some of them later became prominent, such as Tex Thornton, who founded Litton Industries, and Robert McNamara, who went on to become president of Ford and, of course, Secretary of Defense under Kennedy and Johnson. And all in all they did a pretty good job of “fixing” industry.

Sanger returns to Professor Garten for his grand finale,

“We’re at this moment in history, in which the Chinese are touting that their system is better than ours with their mix of capitalism and state control. And our response, it looks like, is to begin replicating what they’ve been doing.”

Now I would agree with the learned professor that the Chinese mix is not what we should seek. The workers and peasants of China still live under an oppressive one party regime but have lost the old guarantees of even a basic diet, much less the free healthcare and education, and full employment that once brought a measure of security. The rapid growth of Chinese manufacturing– much of it offshored for the U.S. market–has created a new layer of rich but even bigger layers of poor. And, of course, it has been accompanied by a deplorable workplace fatality rate, not to mention enormous environmental destruction. But the downside for Chinese workers–and our biosphere–can be primarily attributed to the global capital component of the “mixed” economy–precisely what Sanger and his academic buddies promote in opposition to government control.

The greatest economic crisis since the Great Depression has not shaken the faith of Sanger & Co. that only the unfettered capitalist market will ultimately resolve all problems. The sole alternative they see is a slippery slope to the world of the Chinese Communists.

Let’s return, as promised, to the historical example they try to ignore–the World War II experience. In my opinion, the war time economic mobilization was a great success for primarily two reasons:

-The inherent superiority of intelligent planning over the irrational chaos of the markets.

-The overwhelming majority of society supported the objectives of the government effort and pitched in enthusiastically to make it work.

Today, in addition to our economic challenges, we face a crisis even more serious than the threat of being conquered by other countries–global warming. It surely rates the same kind of emergency response as this country saw after the bombing of Pearl Harbor.

Building more cars would not help this crisis–the proliferation of cars is in fact a major part of the problem. But the industrial capacity and productive workforce of the auto industry can play an essential role in converting our economy to things we really urgently need: new energy sources, new transportation alternatives, reclaiming forests and wetlands, retrofitting buildings to green standards, etc. There’s plenty of work to save the planet, to keep us all busy.

Like in WWII, workers should be retained, and if necessary retrained, in this conversion without loss of pay or benefits. Union contracts should be maintained– and even extended to those not presently covered.

Unlike the Second World War, we should not reward the corporate polluters with cost-plus contracts but instead embrace the long verboten “N” word and launch a bold new public sector, beginning with the finance, energy, and transportation sectors–including auto.

With the question of job security resolved rebuilding a green economy could quickly win the same level of popular support as the earlier war effort.

Who could the government possibly turn to to fix these industries? How about scientists, environmentalists, elected worker representatives, working with the Tex Thorntons and Robert McNamaras of today’s young generation?

Such ideas will send cold shivers to Sanger and the Establishment he seeks to serve.

Me? I’m in a sweat about what our kid’s world will look like if we can find a way to move in this direction–and soon.

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