General Motors and the Crisis of Capitalism

Prime Minister Stephen Harper's take on the government-subsidized "restructuring" of General Motors was good for a laugh:

The governments of Canada and Ontario are co-operating to provide financing to General Motors of Canada Limited (GMCL) and General Motors (GM) Corporation to support the companies’ efforts to restructure while maintaining Canada’s production share in the Canada-U.S. market and making a significant investment in research and development.

“The management, unions and financial institutions behind General Motors have each made major sacrifices to help ensure a sustainable, competitive company going forward,” said Prime Minister Stephen Harper, who was joined by Ontario Premier Dalton McGuinty and Federal Minister of Industry Tony Clement in making the announcement.

Since the onset of the global financial crisis, a constant thread has been the assault on the working class by a financial oligarchy intent on making them pay for the financial crisis. The old quote, "As goes General Motors, so goes the nation" has never been more relevant. Contrary to Harper's bullshit, the unions have borne the lion's share of "sacrifice". From SocialistWorker:

The Wall Street Journal editorial page sounded a similar theme. "The new agreement simplifies some work rules and job descriptions but makes no reductions in hourly pay, pensions or health care for active workers," the Journal complained. It was forgetting that the United Auto Workers (UAW) agreed to forgive a $20 billion debt that GM owes the union for a retiree health care fund. Instead, the UAW health care trust fund will get 17.5 percent of company stock--which is highly unlikely to ever be worth enough to pay for retirees' health care.

At Chrysler, the UAW health care trust fund will get 55 percent of company stock under the takeover by Fiat--but that's even more likely to force cuts in retiree health care. And at both Chrysler and GM, the UAW gave up the right to strike until 2015--and contract negations will apparently be replaced by arbitration.

So despite the complaints of right-wing blowhards, it's autoworkers, their families and communities who are getting screwed. With 14 GM plants set to close, the company's UAW workforce will be downsized from 64,000 today to just 40,000--compared to 450,000 in the late 1970s.

And as better-paid autoworkers retire, most will be replaced with new hires earning just about half the current top wage of about $28 per hour, thanks to a contract concession made several years ago.

The sacrifices of the UAW mirror the experiences of millions of working people in Canada and the United States, who are being squeezed mercilessly by governments in the pockets of our respective financial aristocracies. As Linda McQuaig notes, Finance Minister Jim Flaherty has made no secret of his contempt for workers and the unemployed, whom he blames for the crisis. The stinginess of the Conservative government in its treatment of Employment Insurance is truly remarkable, given how many Canadians have paid premiums into the program without receiving any benefits. But then, this isn't strictly a Conservative thing. After all, it was the Liberals who used built-up money from EI premiums to balance the budget. It left us ill-prepared for an economic rainy day, let alone the tsunami of a global financial meltdown.

Conspicuously absent from political discussions in Canada and the United States has been any discussion of a progressive income tax - i.e., of raising taxes on the rich. In the recent provincial election in British Columbia, even NDP leader Carole James pledged not to touch Liberal premier Gordon Campbell's corporate tax cuts. Since government budgets everywhere are swimming in red ink - deficit spending being necessary to stimulate the economy - you'd think this obsession with balanced budgets might point pundits towards the most obvious solution - raising taxes on the rich. After all, in times of economic crisis, it's the working classes that make or break a recovery. By giving people more disposable income through EI or social programs, they can afford to purchase more and help the economy recover (especially since they are far more likely to spend money quickly than the wealthy).

Unfortunately, that's the not the way our elites think. For them, any kind of limitation on their own luxurious lifestyles - no matter how small - is inconceivable. No, better to make the working masses pay for it, despite the fact that it was this parasitical financial oligarchy, with their reckless gambling on Wall Street and incessant demand for tax cuts, tax cuts, tax cut, that left us in such a precarious position today. As the always-brilliant Bill Maher pointed out, America is never short of people willing to fuck each other over for a buck - although it can easily be argued that the trait of greed is universal. But episodes like the developing plan to turn California into a Third World state are always staggering to hear about. As a kid, I admired Arnold Schwarzenegger as a larger-than-life action hero, but it turns out that he is a very small man indeed. Granted, this is institutional inertia as much as anything else, and was likely forced on him by the usual combination of corrupt politicians in Sacramento and Washington, and the wealthy donors that legally bribe them. States are unable to run a budget deficit, and so in that sense he had no choice - Schwarzenegger had to find some way to fill that $21 billion hole in the budget. Yet with raising taxes on the rich politically impossible, he took an axe to social programs with a vengeance. Many Californians will die because of these policies. But hey, you can't deny the rich their fair supply of yachts.

Of course, it all could have been prevented if President Obama had any balls. The federal government could easily have supplied $21 billion to California, but refused to. Apparently, it's no problem to give $185 billion to AIG, $45 billion to Citigroup (with $300 billion more in guarantees for that company's toxic paper), but politically insurmountable to try and save the actual people of California, one of the world's largest economies. As if it wasn't clear before, just more proof that the American government was bought and paid for a long time ago.

Blame Reagan.