Publisher's Note — April 15, 2009, 9:34 am

Wall Street Sharks Circle the UAW

John R. MacArthur is publisher of Harper’s Magazine and author of the book You Can’t Be President: The Outrageous Barriers to Democracy in America. This column originally appeared in the April 15, 2009 Providence Journal.

Barack Obama’s commitment to helping labor has always been suspect, but handing over the American car business to the investment banker Steven Rattner might well turn the president into the last great union buster.

To be sure, we’re already long past the point where industrial unions have any real clout in our so-called service economy— this thanks to “free trade” (that is, guaranteed cheap labor in foreign locales and low import tariffs on foreign-made goods) and Bill Clinton’s alliance with the Democratic Leadership Council (DLC). Franklin Roosevelt’s old party of labor is now almost entirely the party of Wall Street and only a severe depression might alter this political reality. When Obama sent economist Austen Goolsbee to reassure the Canadian government that the candidate’s criticism of the North American Free Trade Agreement during the Ohio primary didn’t mean anything, he meant it.

But this isn’t to say there aren’t a few remaining pockets of working-class resistance to the money power that Wall Street and the DLC would like to crush. And right now, Rattner and the Treasury Department task force’s biggest target is not the overpaid executive staff at General Motors, but the United Auto Workers union, the country’s best and traditionally most honest mass labor organization.

Just wait a few weeks, and the demands for concessions from the allegedly overpaid and cosseted UAW members will rise to levels of shrillness far greater than the very brief — and ineffective — outcry over the AIG bonuses.

It wasn’t so long ago that the UAW set the standard for successful collective bargaining and trade-union integrity. Its greatest leader, the leftist Walter Reuther, was so powerfully independent that in 1968 he even dared to bolt from the AFL-CIO and its reactionary boss, George Meany.

The break stemmed in part from the longtime rivalry between industrial and craft unions— Meany started out as a plumber— but it also resulted from Reuther’s greater radicalism and vision. It was the UAW that early on organized black workers, won excellent medical benefits for its members and initiated the innovation of “pattern bargaining” with the auto industry, targeting one car company at contract time instead of taking on the whole business.

Reuther could do this because he had a huge number of members who owed their middle-class status to the UAW, as well as to the G.I. Bill and Lyndon Johnson’s Great Society.

At its peak, in 1979, the UAW boasted a membership of more than 1.5 million and a close relationship (perhaps too close) with the leadership of the Democratic Party. Even into the 1980s, the UAW remained so important that Douglas Fraser, Reuther’s protégé and eventual successor, was elected to the Chrysler board of directors, the first union leader to serve on the board of a major American corporation. Fraser and the union had helped Chrysler through its 1979 crisis, successfully lobbying for government loan guarantees and accepting wage cuts and layoffs to keep the company out of bankruptcy.

Chrysler’s bailout and revival were organized by the company’s chief executive, Lee Iacocca, who saw the handwriting on the wall written in Japanese characters. I’m no fan of this self-promoting blowhard (his opportunistic hypocrisy on tariffs and trade policy is stunning), but at least he was a car person with a degree in engineering and a sense of what sells. Nobody in the Carter administration or Congress told Iacocca to resign, or Douglas Fraser to stay off the Chrysler board, as a condition for the loan guarantees.

They wouldn’t have dared.

Today, Barack Obama consorts with the hedge fund/banking crowd that gave so much money to his “transformative” campaign, while he makes believe that he cares about unions. So beholden is the president to finance that he fires the General Motors CEO, Rick Wagoner, and puts in charge a banker who knows how to break up businesses, not build them— Steven Rattner. It doesn’t cost Obama anything politically because the industrial lobby hardly counts anymore, especially compared with a Wal-Mart/retail lobby that loves “free trade” for its Chinese imports made by 50-cent-an-hour labor.

Meanwhile, Obama feels he has nothing to fear from a UAW that has shrunk to a mere 460,000 or so members and believes (falsely) that it has no alternative to supporting the Democratic Party. Have you ever seen UAW President Ron Gettelfinger on TV?

Right-wingers still whine about “big labor’s” supposedly disproportionate influence, but campaign contributions tell a different story: The finance, insurance and real-estate sector (FIRE) gave Obama just over $38 million in this last campaign, while labor gave a paltry $466,324, according to the research group Open Secrets. Granted, UAW political-action committees donated $2.32 million to various Democratic candidates in the latest election cycle (according to the FEC), but this is loose change in the world of Steven Rattner and his wife, Maureen White, a former banker and one-time national finance chairwoman of the Democratic Party. Combined, the bundled contributions of Goldman Sachs, Citigroup, and J.P. MorganChase, just to the Obama campaign, amounted to $2.28 million.

Nevertheless, we will hear no end of the overpaid and gluttonous autoworkers who dared to demand health insurance, pensions and good wages. Isn’t it outrageous that a GM production worker can make $28 an hour, including benefits, and that he or she can retire in some comfort after decades on the assembly line? Isn’t it terrible that GM is contractually obliged to take care of its workers? God forbid we protect Americans by raising the 2.5 percent tariff on imported cars to compensate for indirect Japanese export subsidies.

But the UAW’s critics needn’t worry. Whether Obama eases GM into Chapter 11 bankruptcy— that wonderful system of corporate protectionism— no doubt favored by Austen Goolsbee and Lawrence Summers, or whether he forces the UAW to destroy itself with givebacks, we’re headed for the end of the line for middle-class unionism.

Bankruptcy would make it easier to break union contracts, but the UAW, relentlessly attacked for being too successful for its members and so far unable to organize Japanese car plants in the United States, will probably cave in for PR reasons before it comes to Chapter 11. If that happens, it won’t be a union anymore.

Meanwhile, autoworkers (and automakers) in Japan will continue to benefit from government-funded national health insurance unavailable to American employees of non-union Japanese plants in the U.S. And Steven Rattner can go on throwing benefits for Democrats at his home on Fifth Avenue.

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