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William Pfaff on General Motors

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Posted on Jul 18, 2008
book cover

By William Pfaff

According to a new American book, and old theory, the reason capitalism is in crisis is that it spends too much on its workers.

The central bankers and Western governments, together with the economic analysts, seem agreed that it would be a near-mortal blow to the presently stumbling international economic system if employers paid more to workers. This threat is known to economists as “wage inflation.” The European Central Bank recently warned that it jeopardizes the interests of the European Union economy.

The book is called “While America Aged: How Pension Debts Ruined General Motors, Stopped the New York Subways, Bankrupted San Diego, and Loom as the Next Financial Crisis.” The author is Roger Lowenstein.

His argument is that paying its workers what it agreed to pay them is ruining General Motors, along with other major American corporations. GM in 1950 signed a five-year contract with the United Automobile Workers agreeing “to provide rich pensions and health care” (Lowenstein’s words) to its workers. Today that commitment and the ones that have followed have “robbed” General Motors “of its financial flexibility and its cash.”


book cover


While America Aged


By Roger Lowenstein


The Penguin Press, 288 pages


Buy the book

Why did GM sign such a contract in 1950? United Auto Workers leader Walter Reuther urged the automobile manufacturers instead to join the UAW in demanding from the government the kind of agreements that were being made in Europe, by which the state assumed responsibility for universal health care and retirement protection for all citizens.

If business had accepted Reuther’s proposals, a federal welfare system would necessarily have been funded from taxes, as in Europe. In that case Lowenstein could have written his book today on how “taxes ruined General Motors,” etc., and gone on to deplore that business had not been allowed the freedom in the 1950s to negotiate its own wages and pensions agreements with the unions.

General Motors and the other automakers, with corporate America generally, condemned Reuther’s proposals as calling for a “socialized welfare state.” Instead GM signed its individual contract with the UAW, and in subsequent years applied an equivalently “self-destructive” logic to wage negotiations with the unions. Rather than pay more, the company chose to increase worker benefits. In 1961, for example, it offered only a 2.5 percent wage increase, making it acceptable by simultaneously guaranteeing a 12 percent rise in pensions. It did not want to pay today, and the union unwisely accepted GM’s promise to pay tomorrow.

Tomorrow has arrived, and General Motors, seconded by much of corporate America, and by Roger Lowenstein, would like to be allowed to welsh on its promises.

As Lowenstein writes in The New York Times, the company’s stock is at its lowest level in 50 years, and its market valuation has plunged to $5.9 billion. It might even have to sell off Buick and Pontiac to pay its obligations.

“Who shot General Motors?” he asks. He says that by “maintaining a corporate welfare state,” the company “poured tens of billions of dollars” into its contractual obligation to fund the pensions of its workers, “an irretrievable loss of opportunity.”

One is staggered by the arrogance and social nihilism of this comment. To whom is General Motors obliged, both contractually and morally? Surely to its workers. That is one of the great social compromises making modern capitalism possible. The company also is obliged to its stockholders, on whose behalf its executives were supposed to be acting while mismanagement dilapidated this once-great corporation.

A corporation possesses the status of independent legal personality in doing business, the salient significance of which is that the responsibilities of the individual owners are assumed by the corporation. Corporate liabilities are limited to the assets corporately owned, and the assets of individual owners (in most cases) cannot be seized by corporate creditors.

This privileged status implies management responsibility to exercise proper vigilance in assuring the interests of both the owners and the employees to whom the corporation has a contractual and, more important in a democratic society, a moral responsibility.

The unstated but clearly implied position of Lowenstein is that General Motors employees unfairly enjoy pensions and insurance rights which conflict with the current interests of stockholders and managers, and the corporation’s own interest in survival.

As a layman, I would be interested to know the moral and social argument for privileging stockholder and management interests over the interests and contractual claims of employees.

In the present climate of business and economic opinion, I would assume that it would be that the survival and prosperity of the national economy is a generally good superior to the claims of any particular group in the economy. This much is true. But is the survival of a particular corporation, General Motors, a public interest superior to the well-being of its past and present workers?

Does this additionally mean that management which mismanages nonetheless possesses a claim on the corporation and its assets superior to that of the employees who suffer the direct consequences of this mismanagement? Stockholders—in theory—can dismiss management. Some stakeholders in a corporation can sue managers for malfeasance. Why can’t employees?

    William Pfaff is the author of numerous books, including “Barbarian Sentiments,” “Condemned to Freedom” and the “Politics of Hysteria.” His essay is courtesy of Tribune Media Services.

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By Auto Parts, June 27, 2011 at 11:34 pm Link to this comment

American cars are something I have always been interesting in. Sure General Motors are selling over 7.5 million vehicles all over the world but unfortunately they are still producing cars that nobody actually wants to buy anymore. Thank you for sharing this article.

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By reagd, January 26, 2010 at 10:41 pm Link to this comment

@Sabagio Mauraeno

You have a point there man! Even a mr gasket carburetor needle valve might not stand it. That’s a bad trade-off if your barrel carburetor will suck in so much dirty air I can’t afford to left my ride on a service center more often.

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By cyrena, July 27, 2008 at 4:44 am Link to this comment

Gee Hippie Pam,

Your experience sounds damn near identical to mine. (and a few dozen other folks I’ve met along the path). Different corporation, and slightly different industry, (the commercial airline industry) but all of the same stuff applies. Cut down in the process of devoting oneself quite loyally to THE CUSTOMER, since…as someone else has noted here, that’s the whole point. And then, casually tossed aside once the inevitable injury happens. Inevitable because these corps don’t want to be bothered with the regulations, (or the money) to maintain safe working conditions. Besides, at my old plantation, if an employee was injured, they spent extraordinary amounts of money to ‘prove’ that it was actually the employee’s fault that he or she had been injured. And then they would spend even MORE huge sums, to prevent paying any legitimate claims that the employee had.

I’m shocked you were ‘allowed’ to be there long enough to be injured 7 times. At my old plantation, the first hit would have had you out the door, and for good. (damaged goods just create more problems later down the road). No pension, no disability, (‘cause their lawyers would have prevented any possibility of that).

Matter of fact, I was just thinking of that the other day as I was reviewing an unrelated (to injury at least) case that a former co-worker had filed against my former employer. She lost. It got me to thinking…I can’t think of a single instance when a worker has actually WON any litigation against those slave masters.

They didn’t seem to much care about cutting everybody loose, which seemed odd to me, because back in the day, they DID make a pretty substantial investment in training. And, there was a time when companies considered there employees to be ASSETS! (conventional wisdom).

But, somewhere along the way, they started thinking and acting like Lowenstein here, and it was pretty clear that we were considered to be LIABILITIES. I was relatively certain it would eventually backfire. It has. When I left the fields nearly a decade ago, the stock was just above $80.00. I just noticed from an article the other day, that it’s now $7.35.

The only reason they haven’t lost ALL of their customers is because they ran most of the competition out of business using blatantly illegal anti-trust practices. And, a certain percentage of the population still has to rely on commercial airline transportation, so they are left with few choices.

Still, they’re just barely limping along at this point, and the losers are the customers, the employees, AND the stock holders. The execs are still sitting pretty high on the hog though. Probably somewhere in Dubai.

For me, as absolutely awful as it was to lose everything, I’ve come to think of it as a blessing in disguise. If I hadn’t been injured, I’d probably still be in that snake pit. Instead, it forced me to do something else.

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By Sabagio Mauraeno, July 26, 2008 at 4:42 am Link to this comment
(Unregistered commenter)

American cars I’ve known and regretted I’ve known.

I too owned a Rambler. A new 1960 I inherited. I was, a death trap. The windshield wipers fell off at 1 am in middle of an ice storm when on the way home from a Chicago Black Hawk game.

Two years later the front wheel fell off in the middle of the day coming down Mt. Eagle just south of Nashville.

I decided that Kismet was telling me to change mode of transportation. I went to an auction in North Carolina and bought a Plymouth Fury, a 1967, that had been a North Carolina Patrol car. My reasoning?  The car was only 2 years old, it had 8 ply tires, a 440 engine with a titanium head, super welded so it wouldn’t fall apart in a high speed chase and high speed rear end that could jump the car to go from zero to 60 in 7 seconds. I thought I had the civilian version of a tank.  It was, but the trade was not too good:it got about 12 miles per gallon on average, and the 4 barrel carburetor sucked in so much dirty air that the Fury was in the shop every few months for a tune up and exchange of clogged up fuel, transmission and air filters.  So I bought a Toyota Mark II and then a Mitsubishi Colt. In 1986 I got my last new vehicle, a Nissan King Cab pickup, straight stick, no frills. It’s still running good, 240,000 miles, and gets, about 20 miles per gallon on a good day.

Is it any wonder that American car industry leaders want a President and Congress they can love, and be loved by in return?

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By peacenik1, July 25, 2008 at 6:53 pm Link to this comment
(Unregistered commenter)

I’ve owned two American cars over the past 47 years, a Nash Rambler I (worst car I ever owned, was constantly in the shop) and later a Dodge Dart, which also had high repair bills.  I sold the Nash Rambler with 63,000 miles on the odometer.  I sold the Dodge at 72,000 miles.  There must be millions of people with similar experiences.

I hated not buying an American car since I want to support American industry, but, making a modest salary, I just couldn’t afford the upkeep of cars made in Detroit.  I then purchased a 1987 Honda Accord, drove it 140,000 miles over a period of 21 years, and sold it recently for $2,000.00!  It’s in mint condition (thanks to a great mechanic) and still runs great.

I’m now the happy owner of a 2009 Toyota Corolla which gets 34 mpg on the highway.  Yippee!

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By Sabagio, July 23, 2008 at 1:23 pm Link to this comment

Demise of the big 3 lead by GM. Could be that the beginning of the end was when Ford,GM, Chrysler put the competition out of business: Packard,Studebaker,Nash,Hudson,Willys,Kaiser and Tucker.

Then the engineers and innovators who for about 50 or 60 years had set the trends and guided the technologies of the industry were replaced by the Salemen and Beancounters(Iaccoca and McNamara come to mind), These are the folks that thought re-wrapping an old package in pretty paper and charging xtra for doing so was good for business. Demming and the science of quality control were exiled
to Japan. Training and re-training
a skilled workforce was considered not worth the money. All this was done during a period when this Braintrust thought they had a monopoly, when they didn’t.

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By jcbrap, July 23, 2008 at 10:46 am Link to this comment

I love how it’s the workers fault for the demise of the Big 3.  I have worked in the auto industry here in Detroit for the last decade and the simple fact is, the people who run these companies are short-sighted morons who couldn’t think strategically if their stupid lives depended on it. Quarterly profit reports and projections are what drive their decision making, not some long-term vision of what’s good for the company’s workers and the company’s long-term health.

Blaming working stiffs (yea, people like me who actually DO the work) is like blaming the sinking of the Titanic on the poor saps shoveling coal down in the engine room because they distracted the captain by asking for a drink of water.  Give me a break!

This author should be thrown into an auto plant and not let out until his hair falls out or turns grey.  Then he can talk about how it’s all the fault of the workers.  Disgusting!  All I can do is hope the worm turns on morons like this guy.  Then he can join the rest of us searching for new work that doesn’t exist, doesn’t pay, and doesn’t include health care.

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By Bruce M Smith, July 22, 2008 at 4:36 am Link to this comment
(Unregistered commenter)

Quite interesting both author and reviewer get it wrong: GM commited suicide, nobody shot it. Lowenstein better stick to fantasy writng and Phaff reviewing it - it’s the CUSTOMERS stupid. Not once are THEY mentioned; if they were their employees and stockholders a la Mercedes Benz would be well satisfied. Just recently the CEO of Porsche infuriated Financial Times stating in order of priority, Customers, Employees, Suppliers. Ironically, the stockholders win too. GM is part of the Military/Industrial Complex today, and couldn’t care less about its public. That’s the price facists pay, just like Krup, and - long ago - Mercedes!

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By cann4ing, July 21, 2008 at 3:41 pm Link to this comment

hippy pam, as someone who has represented seriously injured workers for more than 30 years, I wish I could say your story was the exception, but, of course, it isn’t.  On far too many occasions, workers, once injured, are discarded like the broken cog of a machine.  But the f’d without a kiss says it all.

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By thebeerdoctor, July 21, 2008 at 3:00 pm Link to this comment

I am sorry hippy pam for your misfortune. It is typical that the movers and shakers think they are entitled to everything, including the forgotten folks who created their wealth. As the late Norman Mailer once said: “why is the government so concerned with protecting the rich?” Any rights obtained for the rest of us has been wrought from long difficult struggles. Now, in the name of “new politics” so much that was achieved is being destroyed.
The whole notion of free market capitalism is a distorted lie. I once heard novelist William Gaddis say: “When does free enterprise become monopolized capitalism?”
The recent purchase of Anheuser-Busch by InBev is a very good example. Thus, I can go into a store and choose a beer. What will it be? Budweiser? Labatt’s Blue? Stella Artois? Bass? Becks? Hoegarden?
So many choices! But what do they all have in common, despite differences of recipe and geography? That’s right, the money all goes back to Carlos Brito and the boys at InBev.
Whether it is brewing, electronics, telecommunications, food etc., this is the myth of the free market. The Big Three Automakers benefited from this for a time, but now that has come to pass, due to foreign business conglomerates who would love to see General Motors as simply a wholly owned subsidiary of someone else. Such is the nature of the beast, and I do mean beast.

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By hippy pam, July 21, 2008 at 12:46 pm Link to this comment

I am a G.M. retiree who was injured,on the job,seven different times.I was injured in the course of making General Motors the GIANT IT BECAME.I am one of the FEW who came to work on time-every day-sober-and ARGUED WITH THE ENGINEERS WHEN PARTS DID NOT FIT GUAGES SO THE ENGINEERS FILED THE GUAGES DOWN TO FIT THE PARTS.[so what do they expect people that are looking for QUALITY to do?]I WILL PAY FOR MY LOYALTY TO MY JOB BY GETTING F*CKED WITH NO KISS.And the corporation will just move to MEXICO[where there are NO EPA LAWS to keep them from Polluting the environment.]I will lose my pension and health care that[under a contract-which I thought was LAW]I worked MY ASS OFF FOR.Of course-I WILL JUST BE IN THE SAME BOAT AS ALL THE REST OF YOU.Only I still have pain from my injuries and I will be on 15+ medications for the rest of my life.I guess I’ll have to go on WELFARE…

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By jackpine savage, July 21, 2008 at 6:36 am Link to this comment

Re: Sabagio

Yeah, the big three execs always say that.  And reality always seems to prove them right…except that people go out and happily buy other companies small cars.

Perhaps it’s because the big three always make crappy ass small cars in a self-fulfilling prophecy routine.  It’s like the white guy at the wedding in the ill-fitting suit that he looks miserable in.  You can hear the fight with his wife about how he hates wearing suits, but she’s making him.  So he goes out and buys the cheapest suit he can find off the rack.  It doesn’t fit well and he’s uncomfortable…proving himself right and miserable.

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By thebeerdoctor, July 21, 2008 at 12:48 am Link to this comment

from some movie: “I never gamble kid. I only bet on sure things.”
Can I get a witness? Somebody help me, I can’t spend all this money by myself!
Which reminds me, have you ever seen a shrink wrapped pallet load of hundred dollar bills, stacked into bricks? It is said there was a warehouse in New Jersey, full of skids, ready to be shipped to Iraq, which of course, is where $9 billion’s worth disappeared. Not even the late William S. Burroughs could think up the sordid twisted tales wrought from this privatization. It involves all sorts of shadowy confidence men, military types… well actually armament pimps, def-con 5 holy rollers, cheesy think tank flops with books advocating policies that only those from the science fiction loony bin could find plausible. Its an untidy, massive racket, run by the meanest bastards on earth.

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By cann4ing, July 20, 2008 at 6:53 pm Link to this comment

beerdoctor, not really much of a gamble for people like Erik Prince when they receive no-bid contracts, is it?

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By Sabagio, July 20, 2008 at 4:51 pm Link to this comment

Way back when The Big 3 automakers were beginning to feel the pinch of small car competition coming from Germany and France and the newcomer on the block, Japan, Henry Ford II as the spokesman for the Group told a Congressional Hearing that “if Ford, GM and Chrysler began mass producing small, fuel efficient cars, the American public wouldn’t get the kind of cars they were used to. They wouldn’t buy them.”

But Henry, the man who thought the Edsel would be a best seller, was wrong..again… . The Big 3 had to build small cars to stave of the competition from Volkswagen, Fiat, Peugeot, Triumph, and the motorcycle makers, Honda and Kawasaki. Their solutions: the Ford Falcon, the Dodge Dart and Plymouth Valiant, and the Corvair . Chrysler even built a “car of the future” with a turbine engine in it.  And Henry II was right. America didn’t buy them…from the Big 3. So, the CEO Braintrust went and gave the United Auto Workers   seats on their Board of Directors. I guess they were using a variation of Lincoln’s Strategy to win over the South: “I destroy my Enemy by making him my Friend.” 

And the rest is History.

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By toophat, July 20, 2008 at 3:28 pm Link to this comment
(Unregistered commenter)

Lets assume they signed themselves to a corner thats like saying , because one bad call by the referee they lost the game.

As a customer who has bought automobiles, US auto industry has missed the boat in many ways besides.

In my mind they are 100 years old and do not have the foresight of the future of this earth, its people hence are slowly fading. They have cancer and can only think of themselves instead of the world they live in.

So long, rest in peace.

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By samosamo, July 20, 2008 at 1:22 pm Link to this comment

By thebeerdoctor, July 20 at 10:45 am #

I say amen and go one futher, put prince against the wall and shoot him.

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By thebeerdoctor, July 20, 2008 at 11:45 am Link to this comment

Thank you anambrose and bat guana. As the 24/7 looting of the national treasury continues unabated, it might help to remember that many being driven to the wall blame it on bad luck. So many in the country only have the belief in luck to sustain them. Winning the power ball? Now that is the American dream. Gambling has become a weapon of mass distraction… but odds are, you’ll have fun!
Meanwhile, Blackwater has hit the jackpot. Erik Prince thanks Jesus every day. Can I get an amen from someone?

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By anambrose, July 19, 2008 at 10:16 pm Link to this comment
(Unregistered commenter)

What this reminds me of are the setups people put out as scholarly treatise that then get referred to in footnotes etc later on down the line. Like Cheney saying the lie that he said he read in the NYTimes when in fact it was his minion who leaked it to Judy Miller. This is the first whimper in the next great attempt to divide our populace on the issue of wages and pensions and social security based on age. It creates a division within the ranks of the have nots, have lesses and have some but not enoughs so the near rich, rich, really rich and super rich can exploit further privatizing what little is left of our social safety net. The windfall profits from dumping Social Security into the world financial markets have brokers creaming their pants over the commissions alone. It is a net that has holes big enough for a family of 6 to drive their gas guzzling SUV through. If as George Carlin called it the people who own everything make stupid investments in real estate, the stock bond and commodity markets and now get the Fed to bail them out as they did Chrysler and the Airlines Post 9/11 and now Bear Sterns, Countrywide, Indy Mac, Fanny Mae and Freddy Mac why not let the Fed take over GM’s pension and healthcare debt? The way to turn it around is to have congress willing to say we’ll bail you out on the condition that Usery will no longer be legal and that a significant percentage of real tangible assets intellectual property be nationalized. We would have another technological golden age as all of the energy inventions that were bought and buried by the big three would usher in a new age of transportation and get us off the fossil fuel before we become the next fossil fuel for the next intelligent life…. Cockroaches.

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By bat guano, July 19, 2008 at 7:38 pm Link to this comment
(Unregistered commenter)

Lowenstein is a complete moron. At what point did the union he blames for GM’s problems determine the product direction the company chose. The short answer is never.

In the new America - the buck stops anywhere but at the top.

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By MAR, July 19, 2008 at 6:11 pm Link to this comment

Cann4ing : if I understand it correctly, the UK has slipped to a two-jointed system, private pay if you are rich and national health service for the others. I spent several years in Canada’s system as a systems analyst, line executive and as an internal management “consultant.” I visited the British and Swedish systems.

Here, while doctors can work both on salary or fee-for-service, fees are standard and negotiated the rest of the system is not-for-profit. The current provincial govt. is letting private operators in to run long-term care facilities but payments are prescribed/negotiated by the Regional Authority. Broadly, the system is single-pay with the same eligibility and transportability across Canada. Neither corporations nor unions have any say. Admittedly I have been out of water for several years but I keep in touch.

The important objective other than economics is to preserve the dignity of the patient and his/her relationship with the physician and the hospital. I think we have succeeded there. The patient is greater than the system and where this fails the system has failed. Example. A couple of years ago a long-term care patient occupying an acute bed was arbitrarily transferred to a facility many miles away from her aging husband. They both died and there was a province-wide scandal, as there should have been.

In my opinion the British National Health Service has failed because initially under the Labour Government many doctors were driven out and the patients were treated as objects - a typical factory approach.

One thing is for sure - I wouldn’t want GM running my health system either.

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By BobZ, July 19, 2008 at 4:57 pm Link to this comment

GM started its slow decline with a failure to recognize that as cars grew more expensive, consumers started looking for quality. The quality practices that Deming put in after WW II helped the Japanese Auto companies to get back on their feet. GM thought quality was a waste of time since Americans traded their cars in every two/three years. GM also started promoting the finance people to the top echelon rather than the car guys- that is a kiss of death in the car industry. Roger Smith wasn’t even a fan of cars. The current CEO is also a finance guy. Guys like Harley Earl and Bill Mitchell who knew how to design cars retired and no one replaced them. GM had the lead on hybrid technology and gave it up to Toyota. They had the lead on electric cars and trashed that. They were successful with vehicles based on truck platforms but went to the well once to often with that strategy. They forgot how to build real cars. They are just know getting to the quality that Honda and Toyota had 4 years ago. Their six cylinder engines are anemic compared to their European and Japanese counterparts, and get lousy gas mileage to boot. The V8 technology is good but nobody wants poor mileage engines. None of this can be blamed on the workers. What is funny is that the workers are being blamed in this book for poor financial decisions made by GM executives who grew up on the financial side of the organization. This book is destined for the $ 1.00 bin and not too soon.

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By cann4ing, July 19, 2008 at 3:49 pm Link to this comment

Dr. K, plug-in technology is not new.  At one site I saw a picture of a woman plugging in an all-electric vehicle in 1912.  There have been some experiments with the use of solar panels which would reduce but not eliminate the need for recharging, though I saw one creative small company which installed solar panels on a car port as well, then plugged in at the car port.

Plug-ins really don’t draw that much from the grid, but it is a draw nonetheless.  In his recent speech, Al Gore called for the replacement of carbon based vehicles with plug ins but also called for converting the entire grid to carbon-free generation within ten years through solar, wind and geothermal.  Frankly, I don’t know why TD has not posted the speech in its AV booth, but here’s a link.

As to the distinction between single-payer & “universal coverage”—the difference is fundamental.  “Universal coverage” is a scam that corporate friendly Dems like Obama & Clinton advance to simultaneously pay lip service to the dire needs of the uninsured while reassuring the CEOs of the HMOs & for-profit carriers.  The only true health care reform is “single-payer” which is now favored by the vast majority of American physicians.  There will be no real “reform” until the parasites (HMOs/for-profit carriers) are removed from the system.  Of course, we would also need to undertake strict price controls of pharmaceuticals as well.

While there is much to be admired in Canada’s system, my own preference would be a nationalized health care system like that offered by the UK.  The health of our people is not a commodity.

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By MAR, July 19, 2008 at 2:17 pm Link to this comment

Dr, K. Some time back I mentioned hospital and medical care. As you probably know in Canada the province (state) is the single payer with the feds chucking in some. But in most cases they have moved to a “Health authority” which manages the system in toto. Here in BC we have health regional “äuthorities”  not loved by everybody. Whatever, it is single pay AND universal health care. The union influence in these programs is no longer existent as it once was when an employment benefit was involved.

There are stresses and strains but not like the crap that the AMA and the insurance companies in the States claim.

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By Dr. Knowitall, PhD, PhD, July 19, 2008 at 1:56 pm Link to this comment

cann4ing, I agree with absolutely everything you write.  I haven’t done the research but ask myself the question, if everyone goes to plug-in, how much of a load does that put on power cos. and at what expense to the environment?  What do they use to generate the electricity?  Solar panels make the most sense, especially if they can be mnfg. greenly.  Aren’t batteries ungreen?

BTW, on the matter of single-payer, you’re one of the few who use that term as opposed to current candidates who chant “universal health care.”  Every time I hear one of them say that, I scream back, “Single-payer, you idiots, not universal health care.  Get rid of the insurance cos.”

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By cann4ing, July 19, 2008 at 10:10 am Link to this comment

A better series of answers, Dr. K—forget the Prius (I own one) and hybrid technology. (Not having to purchase any gas beats the 41 mpg I get).  Develop plug-in electrics with solar panels that utilize batteries capable of a minimum of 300+ miles between charges.  End all oil industry subsidies, impose a windfall profits tax earmarked for use in the development of green technologies (solar, wind, geothermal, wave). Repeal NAFTA, the WTO and all other so-called “free trade” agreements which are designed to exploit cheap foreign labor and are the bane of a middle class existence to workers everywhere in the so-called global economy. Repeal the Bush tax cuts, and bring to an immediate end the wars we fight for oil.  End no-bid contracts and drastically reduce the billions we pour into the military-industrial complex. Adopt single-payer healthcare, thereby both eliminating the parasitic middle men (HMOs & for profit carriers) which account for 31% of our spiraling healthcare costs (as compared to administrative costs of 1% to 2% in single-payer countries) while simultaneously eliminating the burden of employer-based health insurance which gets rolled into the cost of products manufactured in the U.S.

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By ApprxAm, July 19, 2008 at 9:37 am Link to this comment

GM Post-Industrial….(Fill-in here)....


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By ApprxAm, July 19, 2008 at 9:34 am Link to this comment

I think that GM, Ford and other durable industries, live off a legacy of legacy.  An illustrious history of greatness and relevance has trapped these companies in the past. “What’s good for GM…..” can, I think, be seen as “What America still owes GM.” and I think they’re waiting.

The government and now the workers seemingly must step up to the plate and save the company that built and saved America. They’ve lived off the currency of the past for so long, even using it as a marketing staple for decades, and now that that has waned, and instead of changing its’ philosophy, they’re going to cash in at the expense of the American taxpayer. 

Every executive is tangentially connected to the company’s past, what with the history museum of oil portraits strafing the hallowed halls of HQ, the past is everywhere and everyday. Is it no surprise that the factories aren’t the only thing that can’t retooled easily.

GM is an historical institution; maybe they just can’t see the future.

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By Dr. Knowitall, PhD, PhD, July 19, 2008 at 9:26 am Link to this comment

Forgot to add Bravo! to lodipete and troublesum for their comments about my good buddy Raygun.  If one should waste his time and energy hating a politician, then you two commenters have stated exactly why I hated that “prick.”  And what made my feelings even stronger is the wide appeal he seemed to have with far too many Americans and I could never understand that phenomenon, except, as lodipete said, he was “affable and folksy”, and therefore a phony. People forgot that he was also a union man and therefore, a f*****g traitor, which is what often happens when someone loses sight of where he came from after he becomes rich and famous.

One more thing:

what must be the mindset of a traffic controller who would take a job at an airport named after that prick?  How could you not consider yourself a prostitute?  I know there’s the economic thing, but I don’t know if I could do that. The fact that the US gov. would name an airport after the Prick demonstrates its own anti-worker, anti-union position.  (Sorry, I realize this may be a bit off subject.  Please forgive me.)

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By Dr. Knowitall, PhD, PhD, July 19, 2008 at 9:11 am Link to this comment

IMHO, it’s going to take a lot more than an American- made auto to be more than just fuel-efficient for people to buy it.  It’s a history of bad quality of American-made cars that makes them unattractive to American buyers, not just bad fuel economy. 

The Prius is an attractive option to Americans, not only because it’s fuel efficient, but because it’s a Toyota.  What made Toyota a great company is the quality of its cars. 

Here’s the answer:  copy as closely as possible the Prius and make it look like an American flag going down the road with stars and stripes and tell everyone to do the patriotic thing and buy the “Americus.”  For a country concerned with flag lapel pins, fuel efficiency and reliability, it’s got to work.

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By leftyrite, July 19, 2008 at 9:04 am Link to this comment
(Unregistered commenter)

The bigger story here, the one that will blow up explosively over the next few years, will concern the evaporation of pension fund money. Huge pools of prudently saved dollars will disappear from poorly regulated pension funds, both public and private.
The dissolution of Enron, for example, involved not only the credulous employees of that firm and their pensions, but also pensioners of the Arkansas State Teachers’ Fund, to name just one public pension group.
The salient fact is that, in most states, public pension funds are lightly controlled and are monopolized in terms of their investment strategies by small groups of insiders, certainly not the rank and file, who, after all, invested the money in the first place. Did Arkansas teachers pick Enron?
Today, many in our society hate public employees.
Maybe that’s because they are told whom to hate by rightwing talk radio hosts, who are, themselves, in the employ of vultures who have benefited enormously from raiding pension funds. Anything goes in Bushworld.

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By cann4ing, July 19, 2008 at 7:58 am Link to this comment

Mar:  The article is about the demise of GM—an “automotive” manufacturer.  That is why my post features the product it sells.  You talk about foreign manufacturers making a superior product.  The thing that makes the Prius a superior product to anything currently manufactured by GM is fuel efficiency, yet when it comes to fuel efficiency, the EV-1 beat the Prius hands down.

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By pro choice lib, July 19, 2008 at 6:02 am Link to this comment
(Unregistered commenter)

Criminey, this author likes to take us back to Dickens!

Who ever gave the link up thread about Walter Reuther That is an amazing read.  We need more people like him, someone brave and real to stand up to these greedy rats.

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By lodipete, July 19, 2008 at 5:32 am Link to this comment

Ronnie Reagan was one of the great actors of all time. He played the role of the affable,folksy politician to perfection while in reality he was nothing but a mean spirited little prick.

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By troublesum, July 19, 2008 at 4:57 am Link to this comment

There has been one-sided class warfare in the US since Reagan broke the air traffic controllers strike in 1981.  Big labor has never been the same since.  One of the things which followed in the wake of that 1981 strike was the reorganization of GE by Jack Welch.  Ge plants which were unionized lost all their work to non-union plants.  The most dramatic example was in Schenectady, NY, the birthplace of GE.  Up until the mid 80’s there were 20,000 people employed by GE in that city.  Today there are less than 2000.  The plant was one of the first to be unionized and GE went along with it until Reagan set the stage for union busting.  The fact that Welch has become an icon of good business management speaks to the insignificance of the working class today.  The economic impact of the loss of those jobs has been devastating for the city of Schenectady.  You can destroy a whole city and still be a hero in the world of big business.  That’s Reagan’s legacy.  Clinton’s international trade agreements made it easier to avoid unions all together by moving jobs out of the country and the democratic party was subsumed by the business or money party.

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By Kitch, July 19, 2008 at 12:52 am Link to this comment
(Unregistered commenter)

The philosophy inspired by Rand ironically called “Objectivism” believes in the concept of man as a heroic being.  Folks like Lowenstein and Ronald Ragen have a comic book mentality when it comes to economics. They don’t like to be confused by the facts.  Every mans calling is not the great and powerful industrial icon. Some of us don’t have the need for that. But we all need fair compensation. The distribution of wealth; based often on abstract worth is ludicrous.  Speaking of shilling; check out and tell me this isn’t a shill for the oil companies.

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By MAR, July 18, 2008 at 9:39 pm Link to this comment

Canforing forgets that cars are only one (but huge)  product. And the offshore carmakers that are their bane are producing better cars in Amerca, so what’s the problem except that GM faces failure and tries to blame its workers?

At the same time America has been selling knowledge and expertise. How about Microsoft? Apple?

Of course if it were not for its devastating Iraq costs and huge purchases from China which ultimately by the poor balance of payments threaten the economy far more than the auto industry. When China calls in the debt watch the US$ tumble.

But he is right in much - the big three in there arrogance ignored where the market had to go as oil went up. The other problem is that America is being overtaken in terms of education. Assembly line jobs are not exactly rocket science.  A lot of carriage makers didn’t see the blue smoke soon enough either.

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By cann4ing, July 18, 2008 at 9:19 pm Link to this comment

Legend has it that Henry Ford took Walter Reuther on a walk through his Detroit plant, pointed to fully automated machinery and said, “Bet you’ll have trouble collecting union dues from these guys.”  Reuther replied, “Yeah, and who’s gonna buy your cars?”

Lowenstein misses the mark by a wide margin.  There are two basic components to GM’s demise.  The first is a self-inflicted wound that was revealed by the documentary “Who killed the electric car?”  It was a lack of foresight by GM management which led the company to first resist California’s former requirement for a specified percentage of zero-emission vehicles, limiting access to its EV-1 plug-in electric vehicles to leases, which GM executives later chose to destroy rather than accept a multi-million dollar offer to purchase from the remaining lease holders.  Had they chosen to do so, GM could have improved the EV-1 with solar panels and better batteries.  Instead, GM chose to manufacture gas guzzling SUVs and Hummers—surrendering the fuel efficiency market to the Prius.

The second entails a greed-based shortsightedness that extends beyond GM.  It was the focus of America’s economic elites on short term, supply side profits; an outsourcing of America’s manufacturing base under the guise of so-called “free-trade” agreements, which, because they lack basic labor and environmental protections, have proved to be the bane of middle class aspirations everywhere.  Why continue to pay union wages, pensions and health care benefits when costs can be dramatically cut by moving a plant to a country with a single-payer health care system and ready access to the $2/day laborer?

The short term success is reflected by the dramatic increase in the gap between rich and poor.  Slightly more than thirty years ago, at $1.3 million, the average annual CEO compensation was 39 times that of the average worker.  Today, at $37.5 million, it is over a thousand times that of the average worker, who experienced a ten percent loss in real wages during the same span.  And therein lies the long-term rub.  Having outsourced the jobs that once paid middle-class wages, America’s manufacturers are only now coming to grips with the fact that there are far too few left who can purchase their products.

Yet here comes Roger Lowenstein, ready to blame the victims of outsourcing for GM’s demise.

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By MAR, July 18, 2008 at 5:25 pm Link to this comment

My earlier comment about share ownership by employees is from a bygone day when GM WAS a healthy company and made real money. Enron is a joke, a disease of a corporate America which has lost all sense of integrity, honesty and probity, let alone fiduciary responsibility. No worker would want shares in a con game. Sick, sick country. I refer you again to google MacLean’s - the article is there in full

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By thebeerdoctor, July 18, 2008 at 4:44 pm Link to this comment

troublesum makes a very point here. The history of labor has been erased from taught history because an awareness of the continual struggle for the dignity of the worker would not sit well with the Chief Executive as God mythology that portrays such creepy people as Jack “neutron jack” Welch and Bill Gates as heroes.
This conditioning has worked. From people applauding Reagan’s dismissal of the air traffic controllers, to screaming when MLB players went on strike. Management is never at fault.
Stock ownership by the company proles is often touted as a way to equalize matters with management. Tell that to the former employees of Enron, who were instructed to purchase more company stock, by their genius CEO “Kenny boy” Ken Lay, while he and other top members of the board were dumping millions of shares as he spoke.

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By Jon Oleson, July 18, 2008 at 4:44 pm Link to this comment
(Unregistered commenter)

“But is the survival of a particular corporation, General Motors, a public interest superior to the well-being of its past and present workers?”


Please, think about that for a moment. Um, the answer to that question is yes, yes it is. The author seems to say that GM’s survival would be detrimental to the well-being of its workers, which is a little mind-boggling. If General Motors does not survive, it’s rather difficult to see how they’d be able to pay any wage, fair or otherwise, to any of their workers, past or present.

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By Xntrk, July 18, 2008 at 4:36 pm Link to this comment
(Unregistered commenter)

I have many thoughts about this book review and how tall the tree should that we hang a few Corporate Moguls and their lobbyist friends from, but I am distracted by the last two posts. Accusing William Pfaff of shilling for the corporations based on this book review is ludicrous!

The book about General Motors was written by a guy named Lowenstein who apparently makes McCain’s buddy Gramm look like a flaming liberal when it comes to workers rights. Pfaff wrote the review because he disagrees with the premise that workers are to blame for General Motors, and by inference, our financial problems.

>>Does this additionally mean that management which mismanages nonetheless possesses a claim on the corporation and its assets superior to that of the employees who suffer the direct consequences of this mismanagement? Stockholders—in theory—can dismiss management. Some stakeholders in a corporation can sue managers for malfeasance. Why can’t employees? <<

Does that sound like a guy that thinks it would be OK to cancel long-standing contractual agreements for retirement and medical benefits? I haven’t read Lowenstein’s book, and probably won’t as my life is much too short for drivel about the poor corporations. OTOH, I did read this article before I read the comments and decided to comment.

Too bad some others didn’t try that before they demonstrated how well they can operate a keyboard with head up their ass!

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By TJ, July 18, 2008 at 3:58 pm Link to this comment
(Unregistered commenter)

I just can’t forget the Wagoner quote I read in the LA Times business section about 6 or 7 years ago reporting that GM has dropped its hybrid operations because it doesn’t see a future in it.  The beauty of capitalism is that it punishes those who ignore reality and operate on ideology.  Why anyone would believe anything that Wagoner says about his current plan to get GM back on track and invest their hard earned money in it is beyond me.

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By troublesum, July 18, 2008 at 2:58 pm Link to this comment

Only in the United States of Amnesia could such a book be published and taken seriously.  The history of the American labor movement has been entirely erased from the history texts used in public schools which is why books like this get published.

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By Dr. Knowitall, PhD, PhD, July 18, 2008 at 2:52 pm Link to this comment

BTW, I think I recently heard Wagoner say that GM
wasn’t in trouble, that it had tens of billions in cash and a line of credit that would choke a horse if they needed it.

If a corp. is spending too much on its workers, then how is that much cash on hand explained?  Does it follow then that, if it weren’t spending too much on its workers, it would have a hundred billion cash on hand and, with that, it would improve some part of its operations to improve profitability? 

Change the name to BSMotors.

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By CRHope, July 18, 2008 at 12:51 pm Link to this comment
(Unregistered commenter)

Who is Pfaff shilling for? Why, no one. He is one of that special breed of ultra economic conservatives who, no matter what evidence is presented to him, no matter what lessons are learnt over time, his ideology is simply unassailable. In his world, it just can’t be argued with, and like zombies from a cheap ‘50s horror film they just keep coming back until their heart is torn out or their head cut off. Sadly, just like zombies, there are lots of poor hapless ‘traditional’ conservatives who can’t see the threat until bitten, and that he’s as far removed from their world as any marxist. Too much Ayn Rand at bedtime is the most likely cause.

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By frank67, July 18, 2008 at 11:14 am Link to this comment
(Unregistered commenter)

The last of the dinosaurs - GM, Ford, and Crysler (Daimler is so sorry now), are dying off.  When I walk in the early mornings, I marvel at the numbers of cars on all the lots along “Auto Street.”  And that includes Honda, Nissan, Saturn, and Kia dealerships along with a GM dealer.

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By Eric L. Prentis, July 18, 2008 at 10:48 am Link to this comment
(Unregistered commenter)

Who is William Pfaff shilling for?

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By samosamo, July 18, 2008 at 10:17 am Link to this comment

By MAR, July 18 at 7:14 am #
“GM, Ford and Chrysler richly deserve the spot they have found themselves in. The tragedy is that the workers will suffer and government hasn’t got the guts to call them on it. Think junk, produce junk and treat the workers like disposables.”

And I can only think that the government will find it necessary to bail out these bloated irresponsible dead weights to our country just like maintaining freddie mac, fannie mae, bears stearn and all on life support better known as ‘elitist’ welfare as if they are national treasures.
There just has to be something about to happen that is making the government to bail legitimate loosers and failures that deserve to go the way of the dodo but instead, make the people take another sucker punch. And that something will most likely be a depression and the undeserving ones being bailed out are the trash the ‘elites’ don’t want to or can’t leave behind.

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By lodipete, July 18, 2008 at 9:04 am Link to this comment

Don’t all those countries whose auto makers are kicking the Big 1 and a half’s ass give out all those benefits that Lowenstein is crying about? And they even make cars that are worth a crap besides.

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By Grousefeather, July 18, 2008 at 8:35 am Link to this comment
(Unregistered commenter)

I think this author, and Jesse Helms, are right. In order for General Motors, Ford, and the rest of the predatory-capitalist/investor-class to optimize profits, the Emancipation Proclamation must be rescinded.

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By Dr. Knowitall, PhD, PhD, July 18, 2008 at 8:20 am Link to this comment

There’s absolutely no reason on Earth that the workers on whose backs was built the largest, wealthiest corp. in the world should not share handsomely in its wealth.

For years, the Japanese have been making inroads into GM’s market and the hapless, inept GM management didn’t have the smarts to figure out why or to do anything about it.  In fact, they seemed to go 180 in the opposite direction.  Any recent MBA graduate with a 2.0 could have done a better job.

The even greater downside to GM’s thinking is that, should they survive this, they still won’t learn anything from the experience that would increase their chances to survive the next crisis. 

They deserve to die.  In fact, they’re the perfect metaphor for the US government.

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By MAR, July 18, 2008 at 8:14 am Link to this comment

In the early fifties GM made a proposal to the unions involving profit-sharing - the periodic issuance of shares to workers from which dividends would effectively increase their pay and benefits. The union turned this down flat as it recalled the performance of stock in the Great Depression. I think the benefits - tangible and intangible would have been enormous. In effect the workers would become part-owners - history has shown the benefits of that in many situations - industrial peace, better-off workers and so on. But for an assembly-line situation such the auto industry don’t expect that kind of appreciation for the nature of the offer. My contacts at the time in the UAW said it was risible. (Äctually, they sneered.)

The truth is that GM believed it’s own myth - what is good for GM is good for America.

Then it unwisely granted long-term benefits from short-term thinking. And it still doesn’t understand that quality, economy and simplicity sell. Part of that is the nature of the market that wants what it wants now. Who really needs a GPS and navigator. What is the matter with commonsense and a map?

In my many years I have had all sorts and makes of cars. In the early seventies, I fulfilled a life-long dream by buying an Olds Cutlass, the choice car of bank robbers. What a dog! Hampered by pollution controls hung on it in haste and getting at least 12 miles per imp gallon, it was a fat, sloppy, lead sled. Leaving out a disastrous flirt with that Ford piece of crap, the Taurus 4 cyl 4 on the floor “sport” model, I kept at it.

The sum total of lessons to be learned in owning an auto I found in three successive Toyota Corollas. Inexpensive, 40 real miles to the Imperial gallon for 16 years, no, I repeat no repairs other than normal maintenance and replacement.

GM, Ford and Chrysler richly deserve the spot they have found themselves in. The tragedy is that the workers will suffer and government hasn’t got the guts to call them on it. Think junk, produce junk and treat the workers like disposables.

Why are Americans - and business - so afraid of what we call social democracy? In Canada we have a “mixed economy” - some social programs such as universal hospital and medical care and so on.And there must be some regulation.  But business and industry have to be healthy to support the taxes implied. This not the time and place to argue, but the average Canadian is much better off than the average American. For a detailed comparison google the current issue of MacLean’s magazine (a sort of Canadian “Time”. Just think, a country without Bush! Our right-wing PM wwould be considered left wing in the States.

As for GM it deserves to go down the tube for its attitude to its committments to labor.

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By thebeerdoctor, July 18, 2008 at 6:26 am Link to this comment

Just look at the discrepancy between the wages of the worker and the executives, over the past forty years. Just look at the money GM spent to get H. Ross Perot to shut the hell up. Just look at their refusal to embrace fuel efficiency. Go ahead, don’t be afraid, just look.
It used to be said that what was good for GM was good for America… well look at the state of GM now.

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By JP, July 18, 2008 at 6:17 am Link to this comment
(Unregistered commenter)

Sure, Lowenstein, GM’s problems have nothing to do with its reliance on SUVs and gas-guzzling monstrosities, or in other words a lack of foresight and probably a collusion with the oil industry.  It’s a reflection on the wider malaise in our system that is dependent on how gluttonous our consumption can be.  The management at GM is to blame for not recognizing the stupidity of putting its eggs in the basket of stupid vehicles.

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By KISS, July 18, 2008 at 6:03 am Link to this comment

Walter Reuther should be classed with those other great humanists Sam Gompers and John L. Lewis. The worker’s plight and health were addressed when no corporate executive would do so. Walther Reuther was right about health care being a government responsibility but repugs always the whiners could not see the trees before the forest. As the execs became more belligerent and greedy the business at hand became foggy and the giants are toppling. The hubris and egregious ways of corporations are a disgrace to our country. But worse is the sanctity given to the corporation by our elected politicians. Not to criticize the wonderful auto industry try reading about Ford Auto machine-gunning workers on public streets..than try Michael Moore’s “Roger and Me”.

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By Purple Girl, July 18, 2008 at 4:52 am Link to this comment

Having both grandfathers work to build these companies- before unions-I am disgusted by the Big 3’s ‘use them and abuse them’ doctrine.
but this is not the only crime they have committed against our country. Let US not forget the ‘70’s and and ‘80’s when they refused to produce cars to combat the oil & gas shortages. Not until the Japanese Began kicking their asses did they start to build fuel effiecent cars- For a Blink of an eye. Then reverted back to ‘lead Sleds’ marketed as ‘Soccor Mom Must Haves’- back to gas guzzlers, which increased our dependency on forgeign oil and effectively left US vulnerable to their whims and fanatizisms. There is just as much blood on the hands of the Big 3 as there is on the Oil industries and the Political Whores for these M.E. ‘Royals’.
Henry Ford helped pay for my Grandfather to return to school -get his H.S. Diplomna, which he used to start his own company in the 30’s. He must be spinning in his Grave over what has become of the American Co he built with the help of such workers all those decades ago. May He and all those who built these companies from the ground up Haunt these Traitors every night!

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By jackpine savage, July 18, 2008 at 4:21 am Link to this comment

But see, when GM signed those contracts they expected the workers to die before they had to pay out.  Now there are GM retirees who have been retired as long (or longer) than they labored.

I’m not making excuses for GM.  I’m a born and bred Detroiter, so i know just how rotten GM really is.  Always playing for today and not thinking about tomorrow…it’s like the corporate motto.

As an aside, they’re also cutting retirement benefits to “white” collar workers now…workers who were never in the UAW or covered by those contracts.

Aside number two, Detroit is probably the only cit in America with a freeway named after a genuine communist: Walter Reuther.

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By Paskalis, July 18, 2008 at 2:57 am Link to this comment
(Unregistered commenter)

Of course GM workers are to blame for the demise of the company. They made, and keep making, cars that nobody wants to buy.

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