Welfare Capitalism

(submitted by Joe Detelj)

By all accounts we are bearing witness to a financial collapse of epic proportions. It is serious enough that our political appointees have offered a trillion dollar prescription to the Bush administration, no questions asked. The properly credentialed experts residing in our economic institutions warn that we have yet to suffer the effects of this in the “real” economy. The job losses announced to date will continue unabated well into the future. A double digit spike in home foreclosures clearly portends hard times and an economy whose fundamentals are far from sound.

In my opinion this situation needs to be viewed from a set of assumptions that are not necessarily those of the corporate media, Fox business news, or their sponsors. I assume that wealth is created from manufacturing and agriculture: Energy from the sun, mixed with air, water, soil, and mystery plus raw materials worked into the stuff we use to feed, clothe, house, and amuse ourselves generates the surplus that allows us to live in towns and cities, attend university, go to the opera, movies, or church such  as our inclinations warrant. The service economy is a myth, a Ponzi scheme whose effect we are now experiencing. How can we live by taking in each others laundry while the material substance of our lives is made in places the average person could never find on a map?

It is in this context that I find it difficult to control my passions in light of the Senate’s reaction to an auto industry loan. The opposition is largely centered in the right to work Southern states that are home to the foreign auto plants held up as  industry standards.  We are to suppose that the market share these plants would inherit in the event of a collapse of the domestic auto industry plays no part in the civic virtue exhibited by our kin south of the Mason-Dixon line. We have been issued the talking points that as guardians of the taxpayers money  these good fellows can not in good conscience help a failing industry unless the recipients  restructure. They could not support failure. If a restructuring takes place then limited help would be acceptable, with conditions similar but different from those imposed on Germany after WW1.  At last compassion reigns.

But let us be clear what is meant by restructuring, and that is that the union must be broken. If you listen to the latest rhetoric it does not obscure this  requirement which was originally inferred. Were we to scrutinize our civic guardians of virtue with a modicum of oversight comparable to that which they believe they are practicing, we would find circumstances that should give pause. Every foreign plant located in the US has been the recipient of huge subsidies. These factories have been given the facilities where they are located as an economic development stimulus. They are housed in State provided land , buildings, water, sewer, and a host of municipal services. They pay discounted utility bills not available to the rest of the citizenry. They all require rail service that has been routed and rerouted for their convenience, all at taxpayer expense. Their State and local taxes have been deferred, reduced or eliminated. Of particular relevance, is their absence of “legacy costs”.   

These plants being of more recent origin have a work force who have not reached retirement age, consequently their pensions are not factored into the published wage rates. Of greater significance is the fact that these factories are assembly plants. They assemble components imported from their European and Far Eastern parent companies: Multinationals that are not hindered by “legacy” costs since universal, single payer health care and a social safety net is provided as an entitlement of citizenship. It is not a cost of production incurred by the industry. The mystic market workings of a fair and impartial “invisible hand” guiding economic behavior is rubbish. The nonsense that we need only leave the market sort itself out is a veil of tears meant to obscure the ideological and financial self interests of the very persons who have created this disaster and laid us to rest on a bed of nails.  It has occurred to me that much is made of the wages that auto workers receive. They produce cars and trucks fundamental to our economy. They produce wealth. The industry is in a collapse and the workers, the least culpable cause of this situation are being blamed. The financial industry is  in a collapse of immensely greater proportions and we hear hardly a murmur of the need for reorganization cast at our friendly banker, broker, auditor, SEC/Federal Reserve director, Treasury Secretary, or President. I have not been able to find any call for a reduction of their compensation and benefits. They have destroyed wealth and have avoided scrutiny. The major difference is the color of their collar.    

Leadership at every segment of society has failed. A rearrangement of the deck chairs on the Titanic appears to be the order of the day. A clearer vision of remedial action that does not blame the victim needs  to be the first prerequisite for a proper correction to happen. People are hurting and are experiencing a great deal of uncertainty. In the grand scheme of things, they are not the engineers who brought this upon themselves.

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