Don’t Bail Them Out, Take Them Over
By Stanley Heller
There’s an old story about a man who comes home and finds his wife in
bed with his best friend. He pulls out a gun and points it to his own
head. His wife starts laughing and he says, “Don’t laugh. You’re next”
The point is when we’re upset we sometimes take actions that we don’t
think out properly.
Casino Capitalism has crashed and when the Lords of Detroit come to
Uncle Sam (by private jet) asking for another $25 billion people are
understandably outraged. The gut reaction is, “Not another bailout.
Let the S.O.B.’s go under.”
The problem is if the Big 3 auto go under there will be millions
unemployed, quickly. The Center for Automotive Research estimates that
if the three companies shut down 3,000,000 jobs will be lost in the
first year. Three million!
Now forget for a moment about the devastating impact to the people
thrown out of work. If this was 1998 and auto went down, it would be a
nasty shock but the economy would recover. But now we’ve been
staggered by a terrific slump in housing, a worldwide credit freeze,
and a worldwide recession. To add to that mix a US Midwest collapsed
into an industrial black hole is a recipe for turning recession into a
Some say if the Big Three goes bankrupt those terrible 8
contracts can be redone to make the companies competitive.
Let’s take a look at the contracts.
In 2008 General Motors, paid its production workers an average of $28
an hour. That would be a base of about $56,000 a year, based on a
2,000-hour work year. That’s scarcely a princely sum. Add to that
$12,000 a year in health care premiums (because the backward USA
doesn’t have national health care). That brings the cost to GM up to
$34 dollars an hour. Add money set aside for pension and GM’s cost
goes up to a final total of $41 an hour. (A recent retiree made
$30,000 a year in pension. Nothing fantastic there, probably what
GM’s biggest burden is “legacy” costs, pension and health-care payment
for retirees. GM has 2.5 retirees for one active worker. On this the
United Auto Workers can be criticized, not for getting these benefits,
but for thinking the auto workers could enjoy these benefits in
isolation. Instead of turning into “realistic” Democrats they should
have stayed union militants and spearheaded a real fight for
single-payer national health care and better Social Security.
This year GM forced a lousy contract down the throats of the UAW. New
hires pay the price. They’re going to get $14 an hour in base pay and
get reduced benefits. Second class workers, indefinitely. P
care for retirees is being done in a new way. Instead of GM paying for
you health insurance, GM will fork over a one time payment of money and
thereafter the union would pay for health care from this fund (from
which they have to depend on the stock market to keep healthy!) With
this drastic cost cutting at the end of the new contract worker costs
could be no more and perhaps less than the Asian car companies in the
It’s easy and traditional to blame pampered workers if you’ve never
actually worked in an auto factory (Back a few years ago a jury
acquitted an auto worker who killed his boss on grounds that the man’s
working conditions had driven him crazy). Not many are talking about
the Big Three blunders in buying up the Saab, Fiat, Suzuki, Daewoo,
Jaguar, Volvo, and Land Rover brands and or their adventures in the
happy world of High Finance or their SUV mania
Working people would have to be mad to sit by while auto workers are
reduced to menial wages. It would reduce everyone’s pay. This country
is immensely rich with (apparently) unending credit from other
countries. The money is there for another way.
That way wasn’t in view at the Congressional bail-out hearing. The
hearings were a PR disaster for auto. People saw through the claims
that prosperity for the car companies was just around the corner. Th
saw a bailout as only delaying the inevitable.
As far as I can see there are two paths. One is to be “realistic” and
support the auto execs as they come up with a new plan, one with even
more devastating cuts in worker pay and benefits. The other is to
reorganize the industry from top to bottom as public enterprise. I’ve
never worked in auto, but I offer these suggestions as a way to get
auto workers and other interested people into thinking how a successful
“Uncle Sam Motors” might be run.
1. The US would takeover the Big Three and turn it into one company to
be run as a car/bus/transportation money-making business.
2. It would make US cars competitive by increasing new car bumper to
bumper warranties from three years to 10 years.
3. The government would provide high quality health care for all auto
workers and auto worker retirees. It would be a model program, the
prototype for single payer for everyone.
4. For at least a year there would be no layoffs of auto workers.
Spread the work around. Let workers who are not producing cars use work
time to figure out how to turn things around, how to make better cars
5. Current Boards of directors would be dumped and a new one would be
created , 40% elected by production and white color workers, the rest
chosen by the government. The company books would be open to the =0
6. Product lines would be reduced especially the macho gas guzzlers.
The Hummer would be allowed to sink into the mud. The wasteful
practice of making a new model each year would be ended.
7. The company would figure out ways to make buses of various sizes
that people would be happy to take, comfortable and with plenty space
for packages and/or Segways or any number of other transport options.
A bailout of financial and social failure would prolong the agony and
discredit future government action. We need to think out of the box,
out of the factory, out of the corporation.
Only the very radical is possible.
Stanley Heller is a school teacher, a union member for 39 years and
creator of the website www.EconomicUprising.8k.com He can be reached