Broadband Suffers From Lack Of Big Government

Yet another area where the U.S. trails the rest of the world. Via Paul Waldman at TAPPED:

But a new report on global broadband shows that the country that invented the Internet, the microchip, and most of what makes our global digital village possible ranks a pathetic 18th in broadband speeds. The top spot is taken, as usual, by South Korea, where their smoking fast connections give them an average speed over three times as fast as what our pokey little modems give us. We also don't score too well when it comes to broadband penetration (the proportion of households that have broadband, as opposed to the actual speed people are getting). Our slow broadband is also really expensive. So that's nice.

We trail countries like Romania, Sweden and the Czech Republic. And on a year-to-year basis, all the countries in the top 10 saw a boost in speed. Ireland topped the list with a 73 percent gain. What about the United States? We were hit by a 2.4 percent decline in speed.

Waldman says they are multiple reasons we lag so far behind, but "the most important one is probably that we don't have enough big government. With a combination of public infrastructure investments and regulations forcing ISPs to share lines, other countries have driven down prices and driven up speeds."

Republicans have been too busy giving tax breaks to the rich and taking care of their corporate cronies over the past couple of decades to care about our public infrastructure. Thankfully, the stimulus bill President Obama signed in February provides $7.2 billion for projects that will increase the spread of broadband. He also instructed the FCC to come up with a plan to achieve universal high-speed access.

Those are good first steps, but something also needs to be done about bringing the price down or making it available for free to low income individuals. Voters depend on the media for information about our democracy and that information shouldn't be limited only to those who can afford to buy it.

Bottled Water Tax: "The People Deserve To Get Something In Return"

LG John Cherry has an op-ed in the Detroit News today that talks about his plan to restore the Michigan Promise Scholarship with a water bottle tax. Go read it, but here's the best part (emphasis mine):

Right now, bottlers across the state remove water from our wells essentially for free, and we lack the necessary funding to safeguard this precious resource. In other words, we're losing one resource -- our talented work force -- while giving away another resource, our water, for free.

You don't need a Ph.D. in mathematics to solve this terrible equation. It's time for the bottlers to pay their water bill, just like you and I do. We can use the proceeds from that water bill to fund the education that our young people need to compete, as well as protecting the water resources that Michigan desperately needs.

By conservative estimates, a charge of 10 cents per bottle, paid by bottling companies that operate in Michigan, would raise $118 million per year. The cost of the Michigan Promise Scholarship, on the other hand, is about $100 million per year. Not only would this modest charge on each bottle of water that leaves Michigan raise enough funds to pay for the entire Michigan Promise program, we'd still have $18 million a year to spend on wetlands regulation and other conservation initiatives. [...]

This is the people's water, and the people deserve to get something in return.

Ironically, employers like to point out they need an educated workforce to be successful and profitable, and Nestle, the parent company of Ice Mountain, is no exception.

Like every Michigan employer, we rely on an educated workforce.

Yet Nestle is complaining that Cherry's proposal penalizes Michigan employers, risks jobs, and that bottlers may resort to supplying products from outside the state in order to remain competitive on the price consumers pay for bottled water products.

A Nestle Water Company spokesman also claimed that the tax would nearly double the price consumers paid for a case of water.

"Let's look at the math," said Flaherty. "Most bottled water is purchased in cases of 24 bottles of .5 liter size, for about or less than $4.00 per case -- putting the price per bottle at about 16 cents. A 10-cent per bottle tax on Michigan manufactured products nearly doubles the price for consumers, and would be unsustainable in the highly competitive beverage marketplace.

"Consumers are very savvy, and rarely could be convinced to pay nearly double for Michigan-produced bottle water when lesser-priced options exist," said Flaherty. "I challenge you to ask consumers if they'd pay $6.50 for a case when they can pay less than $4 for the same product made elsewhere."

True, consumers are savvy, but we also care about educating our children. I have a suggestion for Nestle. You pay the 10 cent tax per bottle on the water you currently get for free without passing it on to consumers and in return you'll get an educated workforce, an improved "corporate neighbor" image and the gratitude of citizens who just might go out of their way to buy your product. I'd say that's a win-win for everyone involved. After all, your company admitted that bottled water profits were down in part because of public criticism. Why would you want to anger us even more?

The Stock Market is Up, I'd Rather Have a Job

Robert Reich has an article on the disconnect between stocks and jobs that asks a great question: How can the stock market hit new highs at the same time unemployment is hitting new highs?

Simple. The market is up because corporate earnings are up. Corporate earnings are up because companies are cutting costs. And the biggest single cost they’re cutting is their payrolls. So they let people go and, presto, their balance sheets look better and their stock prices rise.

Reich points to Caterpillar as an example. They earned $404 million in the third quarter, or 64 cents a share, yet analysts had only expected 5 cents. So how did Caterpillar manage to drive their stock up 165 percent since March? They cut 37,000 jobs.

Or consider this example from Too Much:

The latest case in point: the just-announced $4.5 billion merger deal that will fold the 99-year-old Black & Decker tool-making powerhouse — the folks who brought us the world’s first pistol-grip power drill — into its chief tool-making rival, Connecticut's Stanley Works.

“It’s a match made in heaven,” Stanley flack Tim Perra told reporters last week.

Heaven for who? Not consumers. The new “Stanley Black & Decker” may soon have enough marketplace dominance, says Morningstar business analyst Anthony Dayrit, “to raise prices” on do-it-yourself gizmos that range from power tools to window locks.

And workers won’t find much heaven in the merger either. Black & Decker and Stanley together currently employ a workforce just over 40,000. The merger the two companies announced last week will eventually cost an estimated 10 percent of those workers their jobs, starting with staff at the Black & Decker headquarters just outside Baltimore.

And here's yet another example from economically depressed Las Vegas:

Last February, Las Vegas kingpin Steve Wynn announced an across-the-board wage and hour cutback for all employees at his resort empire. The total savings for Wynn Resorts: between $75 and $100 million. Last week Wynn Resorts announced a special $4-per-share dividend. Total cost of the dividend payout to Wynn Resorts: $492 million. Total dividend check that will go to Steve Wynn: $88.6 million.

The Great Recession has been a boon for corporations and CEO's. As Reich points out, "They’re using this sharp downturn to cut payrolls even below where they were when times were good. Outsourcing abroad, setting up shop in China and elsewhere, contracting out, replacing people with software and automated machines – they're doing whatever it takes to get payrolls down so earnings bounce up."

Higher earnings may be good for Wall Street, but not so much for Main Street. More from Reich: "Yes, the economy is growing again, but the surge in productivity is a mirage. Worker output per hour is skyrocketing because companies are generating almost as much output with fewer workers and fewer hours." The bottom line: Higher productivity doesn't put money in the average worker's pocket. Since 1980, productivity has grown 70 percent, but wages only increased 5 percent.

But, but, but... I can hear the Jim Kramer's of the world already. Higher stock prices=higher fund balances for all Americans. That's true. But what good does a 5 or 10 percent increase do me if I'm out of work and have to live off of that money? It buys me short-term security today but leaves me financially insecure when I retire. Instead of worrying about stock market profits, we need policies that put people back to work at decent wages and keeps them working.

A High Stakes Game of Chicken

Remind me never to play poker with President Obama. I have a feeling he's good.

After receiving $25 billion in taxpayer-funded TARP funds, greedy J.P. Morgan Chase decided to play hardball with the auto task force when it came time to negotiate over debt recovery before and during the Chrysler bankruptcy. According to the WSJ:

President Barack Obama's auto task force heard a blunt message early this spring from J.P. Morgan Chase & Co., the largest lender to Chrysler LLC. In any deal to remake the troubled auto maker, Chrysler would have to repay its lenders all $6.9 billion it owed.

"And not a penny less," said James B. Lee Jr., vice chairman at the bank, in a call to auto task-force boss Steven Rattner on March 29.

The next day, Mr. Obama called the banker's bluff. The president stepped before a podium to announce that Chrysler could face a disorderly bankruptcy or even liquidation. His meaning was clear: If that happened, the lenders would get nowhere near $6.9 billion.

A few hours later, Mr. Lee called Mr. Rattner back. "We need to talk," he said.

The banker's about-face was a vivid example of the government's tightening grip on a humbled financial industry. Pulling a trick from the hedge-fund playbook, the government used its leverage as the sole willing lender to Chrysler, either in bankruptcy court or out, to extract deep concessions from some of the country's biggest banks.

h/t to Epicurean Dealmaker who explains that the WSJ made it appear that almost all the lenders involved understood exactly what type of game they were playing:

Many of the lenders believed the administration wouldn't let Chrysler file for bankruptcy. "The plan was to call the government's bluff. The game was to game the government," said a manager of a distressed-debt fund.

Gaming the government is essentially the same as gaming the taxpayers. The good news according to E.D. is that the system worked exactly as it should.

The government simply did what any hedge fund driven by fiduciary duty and self interest would have done if it held the reins: it dictated the terms it wanted to see, and it told the creditors to pound sand if they didn't like it. The creditors, on the other hand, seemed to sally forth onto the field of battle without fully considering who was supplying their reinforcements (the Treasury), where they were fighting (in the forum of public opinion, as well as the arena of commerce), and the outside chance that their primary opponent might be smarter than a bag of hammers (and therefore realize and exploit its advantages). In return, they got schooled, but good.

Oh, yeah, he also had a comment for the whiners complaining about the government's involvement in economic affairs:

Deal with it. Buck up, and move on. Find a less lopsided game to play in.

Because I can guarantee you the government and 95% of the people who elected it to power don't give a rat's ass that you're going to lose money on your Chrysler bonds.

Yeah!


(Cross-posted at Blogging for MI.)

The Crime No One Talks About - Wage Theft

I haven't had much time to read lately, but Kim Bobo's book, Wage Theft in America: Why Millions of Working Americans Are Not Getting Paid - And What We Can Do About It, will be the next one I pick up. Bobo is the Executive Director of Interfaith Worker Justice.

Here's a short synopsis from Joe's Union Review:

Bobo says wage theft in America is the crime wave no one talks about, and she is right. Billions of dollars' worth of wages are stolen from millions of workers in the United States every year. The scope of these abuses is as staggering as it is wrong - paying workers far less than the legal minimum wage, purposefully misclassifying employees as independent contractors, and illegally denying workers overtime pay. But now people are starting to take notice -- and it is my hope that they do so starting with this very good book.

Chapter 5: Organizing to Stop Wage Theft: Why Unions Matter, starts with a story of 39 year-old Mercedes Herrerra. She came to this country from Mexico, lives in Houston since 1994 and works as a janitor for staffing agencies cleaning buildings and sports facilities. Bobo says she was never paid for overtime!

Her employers would tell her, "There is no overtime. After 40 hours you work for someone else." (This is not legal).

The story continues that after Hurricanes Katrina and Rita, the worker was hired by a cleaning firm contracted to clean the Reliance Center. She was in charge of keeping the bathrooms clean. Her staffing agency charged her $100 per week for her shoes, gloves, masks, cleaning supplies, and shuttle rides to the Center. She wasn't told when she was hired that such charges would be taken from her paycheck. As a result, her hourly wage fell significantly below minimum wage. (This is not legal).

The lower paid workers in our country are treated like crap. Union activists have been saying this for a long time. Some claim we blow it out of proportion or distort the reality -- for Herrerra, according to Bobo, worse than the wages stolen was her ill treatment. Managers would scream at her and her colleagues. Some would tell workers they were old and worthless.

You can read more here and here. Ted Kennedy has said the book offers "bold, practical, and progressive solutions for how policymakers and advocates can end the growing crisis of wage theft in America."

(Cross-posted at Blogging for MI.)

Michigan Has Become a Buyer-Beware State

Michigan has a dirty little secret and it's driving people out of our state.

Lindsay Duneske said she discovered how weak Michigan's Consumer Protection Act has become after the company that built her new home in Milan kept putting off needed repairs.

She said she and her husband bought the house in 2007 for $306,000, after receiving assurances that the builder would fix buckling roof shingles and vinyl siding, leaky windows and other problems.

After the builder reneged, Duneske said, she couldn't find a lawyer to help her because home builders are no longer covered by the Consumer Protection Act.

She said the builder eventually went out of business and its lawyer got a court order to stop her from pestering him.

"We have been totally and completely cheated," Duneske said, adding that she feels betrayed by state officials. "We are looking to move, and it will be anywhere but Michigan." [emphasis mine]

Builders aren't the only ones exempted from the law. Banks, mortgage brokers, debt collectors, finance companies, home improvement contractors, new and used car dealers, auto repair shops, funeral homes, and plumbers and electricians are included. And according to a State Bar of Michigan Consumer Law Section study, consumers are at risk:

The study, titled "Consumers at Risk: Are Most of Michigan's Worst Business Practices Exempt from Our Consumer Protection Act?", examined businesses on the state Attorney General's list of top 10 consumer complaints for 2008. It found that 72 percent of businesses generating the most complaints are exempt from the state's Consumer Protection Act due to Michigan Supreme Court decisions. [emphasis added] That includes nearly all the businesses in the top three complaint categories – credit and finance; gasoline, fuel and energy; and telecommunications, satellite and cable TV.

Michigan Supreme Court decisions (a Republican Supreme Court majority installed by former Gov. John Engler) in 1999 and 2007 turned the law into mush according to former State Attorney General Frank Kelley, leaving people in the lurch. Frank says he's "sick about what happened," and he added that, in his judgment, the court's interpretations have "been against the public."

A decade ago we had some of the nation's best consumer protection laws on the books, now we're ranked with Rhode Island as "the Terrible Two" by the National Consumer Law Center.

"While these two states have UDAP statutes that appear strong on paper, they provide almost no actual protection to consumers," the Boston-based advocacy group said. Such statutes are known in the consumer protection community as Unfair and Deceptive Acts and Practices (UDAP) laws.

"In fact, the UDAP statutes in these states are worse than ineffective, as they give the appearance of providing protection for consumers while actually providing nothing."

Where has AG Mike Cox been this whole time? He's been busy keeping his name in the papers and doing seminars on worthy projects which might just propel him to be the governor someday. And attempts to fix the law have gone nowhere because business groups and the MICOC oppose any changes.

"The Chamber of Commerce has a long-standing policy in opposition to expanding the Consumer Protection Act," said its Lansing lobbyist, Wendy Block, who spoke out against a 2007 measure to restore the act. She said the legislation would open the flood gates to needless lawsuits.

Because of their opposition, consumers are left holding the bag when unscrupulous companies take advantage of them.

State Rep. Robert Jones (D-Kalamazoo) introduced corrective measures to protect consumers, but these groups opposed the plan and it died. The Democratic House plans to reintroduce the measure soon, not just to protect consumers, but also honest businesses that Jones says, "often can't compete with fly-by-night operations whose promises – although deceptive – sound better than the offers of honest merchants."

The Free Press says it's time to pass the legislation. They also have some questions for Mike Cox, Mike Bishop and their Republican colleagues:

Is it really their intent to exempt three-quarters of Michigan businesses from the ethical rules laid down in the MCPA? Or did the justices who defanged the state's consumer protection overreach?

My money is on exempting three-quarters of Michigan businesses. When did Republicans ever do anything for consumers?

Washington Has Public Health Care, So Should We

Forty-eight million Americans now lack health insurance and 73% of voters want a choice of a private or public health plan. Support for that choice is bipartisan too - Democrats 77%, Independents 79%, and Republicans 63%.

With that kind of consensus, you'd think health care reform would be a slam dunk, right? Think again. There are lots of rotten apples in the bushel (insurance, big Pharma and for-profit corporations) trying to sink public health care and their rot is spreading to Republicans and Democrats.

Convert Arlen Specter is one example. He recently told David Gregory that he would not support a public plan. (News flash, Arlen. You're not really a Democrat, you're an opportunist.)

Sen. Evan Bayh of Indiana said he is “agnostic” about having a public plan as part of health care reform, and Senate Finance Committee Chairman Max Baucus of Montana said that he believes health care reform can be accomplished “without” a public option. Ha-ha. Baucus is a real comedian. Private health insurers have been cherry-picking patients, denying claims and refusing to insure people for years, and their costs are higher than public plans like Medicare. In fact, when Republicans opened Medicare to private insurers in the name of competition, it ended up costing the federal government 12 percent more. That's not reform.

Private insurers don't want to see their gravy train end and they're spending big money trying to keep public health care from expanding, just ask Sen. Ben Nelson of Nebraska. His biggest campaign donor is the insurance industry. According to Open Secrets, Nelson received $608,709 from the insurance industry in 2007-2008. That money won him over. Nelson said he's not interested in a public option. HuffPost explains why:

Nelson’s problem, he told CQ, is that the public plan would be too attractive and would hurt the private insurance plans. “At the end of the day, the public plan wins the game,” Nelson said. Including a public option in a health plan, he said, was a “deal breaker.”

So let me get this straight. Our politicians have the best public health care plan taxpayer money can buy, yet they're essentially saying we can't have it because they want to protect private insurers. What hypocrites. Americans voted Republicans out of power because they kowtowed to corporate greed and now we have Democrats doing the same thing. It looks like we need to do some housecleaning and throw some more rotten apples out of office.

Greedy Hedge Funds Stomp Feet and Pout

Wizardkitten asked if hedge funds were trying to force Chrysler into bankruptcy and Jonathan Tasini answered: American Car Industry Held Hostage by Greedy Hedge Funds

...in a blazingly short amount of time, the Administration has forged a deal that could save thousands of jobs at Chrysler--the major banks are on board, the UAW has made more significant concessions. But all that may come crashing to a halt because of a few hedge funds who are holding the entire car industry hostage because, boo-hoo, they aren't getting enough out of the deal. What a spectacle.

Spectacle? Yeah, in a Bonnie & Clyde or Godfather sort of way.

As Tasini points out, the president lived up to his pledge, the UAW accepted concessions...

On top of concessions already given in 2005, 2007 and 2008, the UAW members have agreed to accept cuts in pay and benefits.

And even the major debt holders were on board.

Led by J.P. Morgan, the banks holding 70 percent of Chrysler's debt agreed to a deal that would effectively mean they would have to write-off a health chunk of change.

Everyone sacrificed and the administration even tossed more cash on the table and it still wasn't enough for the greedy hold outs.

Three of the bank-debt holders on the bank-steering committee, Oppenheimer Funds, Perella Weinberg Partners' Xerion Capital Fund and Stairway Cap Management, told J.P. Morgan and the other large lenders on a bank call Tuesday that they wouldn't support the deal and would advise other lenders not to support it.

I'm not a financial expert, but I think that's just dumb. Tasini thinks it's dumb too.

Even if the hold-out hedge funds refuse to make a deal by midnight tonight, forcing Chrysler to file for bankruptcy, they are unlikely to do any better in the swift bankruptcy proceedings envisioned. Do the geniuses at Perella et al. think that a bankruptcy judge, looking at a deal that has the blessing of the U.S. Treasury, the banks holding 70 percent of the debt, and the the union representing tens of thousands of workers (not to mention Fiat, which is waiting in the wings to scoop up Chrysler) will dramatically alter the outlines of the deal? No.

But, here we are: American workers, the Administration and the public generally is being held hostage by a few deal makers who run the very kind of financial firms that evaporated trillions of dollars in wealth. [emphasis mine]

And they wonder why a majority of the public believes corporate America (and particularly the financial industry) needs a new moral direction.

Health care reform still important to majority of Americans

A majority of Americans continue to say they would pay higher taxes if it meant health insurance for everyone, and health care is second only to the economy as a major domestic concern, so it makes perfect sense that a conservative group is launching a $1 million ad buy designed to scare people about a government-run health care system. If Americans want it, are willing to pay for it, and badly need it (45 million uninsured and rising at this point), rich conservatives will fight to prevent us from having it.

In this case, the group is Conservatives for Patients' Rights, headed by Richard Scott. The organization plans to spend at least $20 million on the effort and Scott is willing to throw in at least $5 million of his own money.

Who Is Richard Scott— and Why Is He Saying These Things about Health Care Reform? Scott is the former CEO of Columbia/HCA Healthcare Corp., a for-profit hospital chain that was the offspring of a merger between Columbia Healthcare and Hospital Corporation of America. His goal wasn't to improve health care and make it more accessible to people. As a hospital executive, "Scott limited “choice” and “competition” by buying up “hospitals by the bucketful” and routinely placed profits ahead of “accountability” or quality of care. During Scott’s tenure at Columbia/HCA, his cost cutting methods threatened patient care and safety."

His methods also got him in trouble with the law.

In Scott’s case, that happened a short three years after he became CEO of Columbia/HCA. In July of 1997, the FBI swooped down on HCA hospitals in five states. Within weeks, three executives were indicted on charges of Medicare fraud, and the board had ousted Scott.

The investigation revealed that the hospital chain had been bilking Medicare while simultaneously handing over kickbacks and perks to physicians who steered patients to its hospitals. One can only wonder how many of those patients really needed to be hospitalized—and how many were harmed.

The company did not fight the charges. In 2000, HCA (which by then had expunged “Columbia” from its name) pleaded guilty to no fewer than 14 felonies. Over the next two years, it would pay a total of $1.7 billion in criminal and civil fines.

Did I mention hospital bonuses?

Internal hospital records would later show that hospital executives were paid enormous bonuses, not for reducing infections or lowering mortality rates, but for meeting financial targets such as “growth in admissions and surgery cases.” In 1995 one-fourth of Columbia’s administrators won bonuses equaling 80 percent of their salaries—or more. When bonuses become that large, some critics charge, they no longer function simply as incentives. They invite fraud. Scott also did his best to avoid needy patients, questioning whether hospitals should throw their doors open to one and all. “Do we have an obligation to provide health care for everybody? Where do we draw the line? Is any fast-food restaurant obliged to feed everyone who shows up?

GoozNews has the best take on Scott and CPR:

His group shouldn't be called Conservatives for Patients Rights. It should be called Hospital Moguls for Bilking and Bankrupting America.

By the way, guess who Scott and Conservatives for Patients’ Rights hired as their public relations firm. CRC. The same group known for their work with the Swift Boat Veterans for Truth. That pretty much tells you how they plan to run their attack campaign against health care reform. Lies. Baseless attacks. Fear. Socialism. Blah, blah, blah...

You can read more about the ongoing fight to provide public health care to all Americans here, but when you hear these ads from CPR and Rick Scott remember one thing, they have health insurance. They're not worried about you. They're only worried about protecting corporate profits.

Save American Jobs: Boycott Chase Bank

This is cross-posted from Emptywheel. Marcy Wheeler is asking everyone to help save American jobs by boycotting Chase Bank.

JP Morgan Chase wants to push Chrysler into bankruptcy so it can jump the line ahead of retirees and US taxpayers to get paid back.

If JP Morgan Chase does that, 300,000 people will lose their jobs.

That's sorry thanks we get from a company that has gotten $25 billion in TARP funds from American taxpayers--plus billions more in other benefits from the Wall Street bailout.

My husband and I decided the only way to pressure JP Morgan Chase to negotiate in good faith with Chrysler was to close our Chase accounts. We want our money to go to a bank that is investing in rebuilding Michigan--not bankrupting it.

Now, FDL and Progress Michigan are calling on others to join our Chase boycott.

Sign the petition

Join the FaceBook group

Find your Michigan Chase branch and close your account

Explain why you're closing your account

Michigan resident and progressive radio host Nancy Skinner is joining the boycott and closing her accounts. She'll have Jane Hamsher on her show today, at 3PM ET, to talk about this action. You can listen in here.

One other thing: PASS THIS ALONG and ask your friends and family to take action.

(If you're reading this and don't live in Michigan, it doesn't matter. These job losses won't be confined to Michigan alone, so find your branch, close your account and/or sign the petition.)

Unions Can't be Blamed for Job Losses

How do the right-to-work cheerleaders explain this? Using the February numbers, five of the 10 states with the biggest growth in unemployment are in the South.

State and percent increase in jobless rate since recession began (with current unemployment rate in parentheses)

1. North Carolina: +6 (10.7% -- 4th highest in country)
2. Oregon: +5.4 (10.8%)
3. Rhode Island: +5.3 (10.5%)
4. Nevada: +4.9 (10.1%)
4. Indiana: +4.9 (9.4%)
4. Florida: +4.9 (9.4%)
7. South Carolina: +4.8 (11% -- 2nd highest in country)
7. Georgia: +4.8 (9.3%)
9. Alabama: +4.7 (8.4%)
10. Michigan: +4.6 (12%)

Source: Bureau of Labor Statistics, via Wall Street Journal

The Institute for Southern Studies says unions can't be blamed for these losses.

One interesting point about those high unemployment numbers in the South: They certainly appear to disprove the argument, put forward by opponents of the Employee Free Choice Act, that unions cause higher unemployment.

The Carolinas -- which have among the lowest union density rates in the country -- have also seen some of the largest growth in joblessness.

This suggests that, as many other studies have found, unemployment rises and falls due to a vast array of changes in the economy -- and can't be pinned on unions.

So much for the idea that right-to-work (for less) laws give states a competitive edge.

FedEx Blackmails Congress

This smacks of corporate terrorism. (h/t TPM)

FedEx could cancel contracts for $10 billion in American-made planes if Congress makes it easier for unions to organize the delivery giant's workers.

In a Securities and Exchange Commission filing, the Memphis-based company disclosed that purchases of Boeing 777s are contingent on FedEx Express' continued coverage by the National Railway Labor Act.

The disclosure serves as a warning shot to lawmakers seeking to put FedEx Express workers under the National Labor Relations Act, a move seen as helping the International Brotherhood of Teamsters.

"It's FedEx political hardball at its finest," said analyst Donald Broughton with Avondale Partners. In a research note Monday, he wrote: "We see FedEx's action as a deft political move that aligns the interests of Boeing and GE with FedEx, and pits the interests of the Teamsters against the interests of the machinist and several other trade unions."

FedEx is threatening to buy French-made Airbuses to upgrade its fleet instead. Why does corporate America hate our country and its workers?

UPDATE: FedEx isn't the only corporation that likes to play hardball. Via Washington Monthly comes information about a recent WSJ article. It basically says banks sent the following message to President Obama after Congress moved to tax their bonuses:

When administration officials began calling them to talk about the next phase of the bailout, the bankers turned the tables. They used the calls to lobby against the antibonus legislation, Wall Street executives say. Several big firms called Treasury and White House officials to urge a more reasonable approach, both sides say. The banks' message: If you want our help to get credit flowing again to consumers and businesses, stop the rush to penalize our bonuses.

Real patriotic, huh? These bankers ruined our economy, put people out of work and literally on the street, and they still want to call the shots. And they wonder why Main Street is so outraged.

UPDATE 2: I should clarify that I interpreted FedEx as threatening to buy Airbuses because of something I read on Wikipedia:

FedEx Express was to have been the launch airline for the Airbus A380 freighter, having ordered ten for delivery between 2008 and 2011 with options on ten more. The company had planned to introduce the first aircraft into service in August 2008 for use on routes between hubs in the United States and Asia. Faced with A380 delays of more than two years, FedEx canceled these orders[20] and replaced them with an order for fifteen Boeing 777 freighters with an option for fifteen more, to be delivered from 2009 through 2011. FedEx has said that Airbus will allow it to transfer its nonrefundable deposits to purchases of future aircraft, and has stated it may consider the A380F when the A380 program is less affected by construction delays. In December 2008, FedEx posponed delivery of some of the 777s: four will be delivered in 2010 as previously agreed, but 2011 deliveries will be only four, rather than the 10 originally planned. Five more will arrive in 2012, and two in 2013.[21] In January 2009, FedEx exercised its options to buy 15 more 777 freighters and acquired options for a further 15.[22]

What better way to wiggle out of their contract, slam the unions and get those planes they previously wanted from Airbus?

Gallup: Majority Support Employee Free Choice Act

The latest Gallup Poll shows that 53 percent of respondents favor a new law that would "make it easier for labor unions to organize workers" versus 39 percent of respondents who oppose such a law. This is amazing support considering the efforts big business is taking to fight it.

Citibank, BOA, Wal-Mart, Burger King, and a couple hundred other U.S. Chamber of Commerce companies are prepared to spend $200 million on advertising and lobbying to block the Employee Free Choice Act. They're also saying some pretty strange things in the process, according to economist Dean Baker.

Recently, they have sought to promote the argument that unions lead to higher unemployment. To help push this case they have been circulating a study that examines differences in unionization rates and unemployment among Canadian provinces. This study purports to find that a 3 percentage point increase in unionization rates leads to a 1 percentage point increase in unemployment. Based on this study, the opponents of the Employee Free Choice Act argue that any resulting increase in unionization will cost millions of jobs.

This propaganda is actually being pushed by "something called the Alliance to Save Main Street Jobs" — an alliance that happens to include that bastion of "Main Street," the U.S. Chamber of Commerce."

Baker questions their reasoning:

Of course the immediate response might be to ask, if this study's findings are accurate, why Canada's unemployment rate isn't 7 percentage points higher than the U.S. rate? Canada's unionization rate is about 20 percentage points higher than in the U.S., yet its unemployment rate is somewhat lower.

He also goes on to point out that there's a large body of research on this topic, and the most recent research finds no link between unemployment and unionization rates.

In 2006, the Organization of Economic Cooperation and Development (OECD) did an exhaustive analysis of the research on this topic and concluded that there was no link between unionization rates and unemployment. It is easy to find examples of countries with very high unionization rates and low levels of unemployment. For example Norway and Denmark have unionization rates near 80 percent. Before the current crisis their unemployment rate was under 3.0 percent.

Of course we don't have to go overseas to prove the case that unions don't lead to unemployment. If we go back 40 years, the unionization rate was over 30 percent. Presently, it is just over 12 percent. In the 60s, the unemployment rate fell as low as 3.0 percent and was below 5.0 percent for most of the decade.

Unions don't lead to higher unemployment, but the act of unionizing can lead to firings. According to the Center for Economic and Policy Research, "our estimates suggest that almost one-in-five union organizers or activists can expect to be fired as a result of their activities in a union election campaign. Since 2000, illegal firings have marred over one-in-four NLRB-sponsored union elections, reaching 30 percent of elections in 2007."

That's why we need to pass the EFCA. It would strengthen penalties for companies that coerce or intimidate employees when they try to form a union, but more importantly, it would help revive America's middle class. And that's what scares corporate America. They want all the profits for themselves.

(To learn more about the EFCA, read Citizen K's excellent post on the subject. His money quote: "Passing EFCA is not only an important step for unions and employees who want to unionize, it's an important step for anyone with a job.")

Takin' It To The Streets

This goes out to DJ, who's angry with conservative ideology that favors the rich over the poor and middle-class, and to Bruce Fealk, who wonders why Republicans "want to be so unpatriotic as to think Americans shouldn't earn good wages, have access to health care and a decent pension to live on during their golden years."

Bruce also asks, "When do we take to the streets en mass and call these idiots out? When do we say, ENOUGH!"

That day may be coming soon if Europe is any indication. Large demonstrations sparked by the economic crisis broke out recently in France, Greece, Iceland and Russia, and only a couple of weeks ago thousands of people marched in Dublin.

MORE than 120,000 workers surrounded the Dail, or Irish Parliament, to protest against bail-outs for wealthy bankers, soaring unemployment and the Fianna Fail government's attempts to force public-sector workers to take a pay cut. [...]

"There is anger, because everybody knows that this crisis is not our fault, that a business elite has destroyed our economy and has as yet to be made accountable for it," Mr Begg told the huge rally at Merrion Square in the heart of Dublin.

Workers are angry because the government plans on docking 7 percent from the paychecks of 350,000 Irish workers "amid revelations of shady dealings and irresponsible lending at banks now getting taxpayer's help." Sound familiar?

The Irish Times labeled it "a case of the bankers’ billions versus the worker’s mite."

The General Secretary of the Irish Congress of Trade Unions, David Begg, said "those involved in what he called corruption had done huge damage to Ireland and described their actions as economic treason." Addressing the rally, Begg also added that "there is anger, because everybody knows that this crisis is not our fault, that a business elite has destroyed our economy and has as yet to be made accountable for it."

And Patricia McKeown, president of the ICTU, decried the "casino capitalism that has brought this country to its knees."

"An economy cannot be built on shady financial deals, privatisation of public services and the ever insatiable greed of the very, very wealthy," she insisted.

"But we face a government which wants the workers who built the economy to now sacrifice while it protects and bankrolls those who wrecked it. We are not prepared to live in that type of society," Ms McKeown declared.

Ironically, John McCain bragged about Ireland's economy on the campaign trail last year, pointing to their low business taxes as an example of what they can do for a country. Just like DeVos missed indications that Michigan wasn't the only state showing signs of economic stress, McCain missed signs that Ireland was having problems too.

The roots of Ireland’s fall date to more than 20 years ago, when a clutch of economists, politicians and civil servants put their heads together in this very pub and planted the philosophical seeds for the Irish economic miracle. ....

Known widely as the “Doheny & Nesbitt School of Economics,” these beery musings soon became government policy that chopped taxes in half, sharply reduced import duties and embraced foreign investment...

So how is Ireland's economic miracle working out? Their housing prices have fallen by as much as 50 percent, bank shares have plummeted by more than 90 percent, and unemployment is approaching 10 percent. No wonder one of London's senior police officers is warning that law-abiding middle-class individuals who would never have considered joining demonstrations may now seek to vent their anger through protests this year.

The public's rage with the banks and the Government is growing by the day. Thousands are losing their jobs through no fault of their own ... Homes are being repossessed across the country, but not the penthouse flats and country piles of bank bosses who thought nothing of taking home vast seven-figure bonuses, and consider £1 million a year a modest income.

The innocent are being punished while the guilty continue to lead affluent lives.

British police are preparing for a "summer of rage" as people protest the growing economic crisis. Europeans have had enough. Americans have had enough too, and as David Sirota says, "It is only going to get worse if genuine change doesn't happen in short order."

(Cross-posted at BFM.)

Buy American, Buy Local

In spite of the U.S. Chamber of Commerce's opposition to the "Buy American" provisions in the stimulus bill, the progressive movement (i.e. unions, consumer groups, the blogosphere) won according to David Sirota.

First, the Buy America provisions survived the conference committee and remain in the stimulus package. These provisions, which were vehemently opposed by multinational corporate lobbyists, encourage government agencies to purchase American-made goods in spending the stimulus money, so as to make sure the money creates as big an economic multiplier effect for our economy as possible.

Second, I'm told by Capitol Hill sources that the Sanders-Grassley amendment prohibiting bailed-out banks from using taxpayer money to outsource jobs remains in the final bill. The amendment followed the Associated Press's report that many banks were using the cash in conjunction with their ongoing efforts to abuse the H-1B program and outsource information sector jobs.

Of course, you won't hear the Mackinac Center, Republicans, or conservative mouthpieces like Lesley Stahl singing the praises of Buy American. They argue we're being protectionists and other countries will look upon these provisions as hostile. That's garbage according to this CEO who told 60 Minutes...

"The whole purpose of your stimulus package, and it's the right purpose, is to stop the bleeding of jobs and to create new jobs here in America, not overseas, not in China, not in Europe," Dan DiMicco, the CEO of Nucor ...

DiMicco said that the counter argument - trade retaliation by other countries - is not true. "It's all garbage," he told Stahl. "People can say what they want. What we have around the world, all right, is a trade war against the United States that we have not showed up for."

DiMicco denied he is a protectionist. "I am a person who says there's no such thing as free trade. Free trade is an academic luxury the real world doesn't enjoy. If you want to study it at Harvard, study it at Harvard. It doesn't work in the real world. It has no application."

The EPI agrees: "These companies are self-interested, simply wanting unlimited access to imports, many of which are illegally subsidized and unfairly traded."

Our economy is badly crippled and people are hurting. Taxpayer money should be used to help Americans and put our own house in order first, and that means the government has to make sure the money isn't used to widen the trade deficit, not if it wants to create and preserve jobs.

Suppose the government spends, say, $100 billion on bridges and buildings, and that $500 million of that is used to buy steel. If it is used to buy imported steel, and if that $500 million doesn't come back to the United States in the form of demand for its exports, then you can subtract $500 million from the stimulus. And you can be pretty sure--given our current trade deficit--that something like that would happen. So, without a requirement that these government projects use domestic steel (with mills currently running at 43 percent capacity!), there is a very great possibility that the government would be throwing away money rather than doing anything about the problem. [emphasis added]

Republicans are hoping Obama fails. What better way to make sure that happens than to push to use the stimulus money to buy materials from foreign countries?

How do most Americans feel about the "Buy American" provisions? A national poll found that 84 percent favor the requirements and only 4 percent strongly oppose them. The overwhelming support was consistent regardless of gender, age, income level, education, or region, proving once again that Republicans are out of touch with mainstream America.

Republicans are out of touch with local Michigan communities too. A group in Genesee County says it's important to think about the American economy, and they're going even further with a campaign to buy local. A series of business leaders in Grand Blanc, Swartz Creek, Flint and other communities recorded a series of messages that play regularly on four radio stations that are part of the local Cumulus Radio Group.

Jet Kilmer, President of the Grand Blanc Chamber of Commerce, recorded one message that explains how 83% of money spent with a local merchant stays in the community vs. 43% spent outside. The message urges people to consider buying local, or to hire local contractors to do needed work.

And according to Crain's Detroit, "the state Agriculture Department projected that if Michigan households earmarked $10 a week in their grocery purchases to made-in-Michigan food products, it would generate $30 million a week in economic impact."

What's good for big business isn't always good for Americans. If we don't have jobs and decent wages, we won't be able to buy what they're selling no matter how much they mark it down. That's why we need to keep the stimulus money in this country. Americans should come first. Period.

Labor Gets an Early Christmas Gift

This is a good argument in favor of unions. h/t Kevin Drum

Felix Salmon, after noting that FedEx has announced across-the-board pay cuts for just about everyone:

There's been a huge shift in power in recent years from labor to capital: corporate profits have been rising much faster than wages for some time now. It makes sense that capital would make use of its newfound power to reduce labor costs in a deflationary environment of rising unemployment. During the boom, companies laid off workers because those workers demanded, and cost, too much money. Now that workers have lost their negotiating leverage, we might start seeing more across-the-board pay cuts.

Drum summed it up perfectly: Heads I win, tails you lose! In boom times you get laid off, in slack times you get your pay cut.

Labor may finally be gaining an ally in Washington. Rep. Hilda Solis of California will be nominated as labor secretary by President-elect Barack Obama. Solis co-sponsored the Employee Free Choice Act in the 110th Congress and earned a 100% rating from the AFL-CIO last year.

Maybe there really is a Santa Claus after all.

(More on Solis at BFM.)

Think losing the Big 3 will be a mere blip? Think again.

Why is Paulson allowing this kind of wheeling and dealing to take place with the $700 billion dollar bailout fund? It should be used to help save the jobs of hundreds of thousands of auto workers, who also happen to be productive, taxpaying consumers. You know, the same consumers Bush called on after 9/11 to help keep the economy going.

What a double-standard, one that could very well touch your life or that of someone you know. Watch the video and you'll get a good idea of just how many people's lives are affected by Detroit's auto industry.


I wanted to mention those $71 dollar an hour autoworker wages and benefits the papers keep talking about. What they don't tell you is those figures are based on old contracts and include the projected cost of lifetime health care and pensions. Under a new contract negotiated last year, union employees will make considerably less than that, some as little as $14 per hour, and benefits have been reduced too. (Another reason we should have universal health care.)

Union workers aren't the fat cats the media makes them out to be. In fact, UAW members are actually losing their edge against foreign automakers. From the Detroit Free Press, February 2007:

Workers for foreign automakers don't pay union dues, but they do share the costs of insurance and retirement plans. UAW-represented autoworkers get health insurance and a full pension after 30 years -- valuable perks they will fight to keep during contract negotiations this year.

But even accounting for Toyota employees' health care spending -- $700 per year on average, according to the company -- the [Toyota] Georgetown workers still made more in 2006.

General Motors Corp., which lost $10.6 billion in 2005 and didn't issue profit-sharing checks last year, paid its production workers an average of $27 an hour, GM spokesman Daniel Flores said. That would be a base of about $54,000 a year, based on a 2,000-hour work year. The $30 average at Toyota's Georgetown plant, which includes a bonus, equals $60,000 a year.

Ford Motor Co. and Chrysler Group representatives said GM's base pay figures are similar to theirs. Only Chrysler, which had a 2005 profit, paid a bonus last year. The $650 bonus was not enough to surpass Toyota's pay. [...]

Assembly workers for Detroit automakers last year remained a bit ahead of Honda's U.S. hourly workers, who made an average $24.25 an hour, or $26.20 with the $4,485 bonus they received. In November, Honda paid bonuses for the 21st consecutive year, the longest streak in U.S. auto history, said Ed Miller, Honda spokesman.

Nissan workers are paid $24 an hour in Mississippi and $26 an hour in Tennessee, but company officials would not disclose employee bonuses.

Hyundai Motor Co. pays its U.S. production workers less than other automakers. Wages at its Alabama plant start at $14 an hour and grow to $21 an hour after two years on the job, according to a January 2004 company release.

Detroit's automakers have been shedding workers by the thousands over the past decade and the average wages will continue to fall, but the difference between union and non-union autoworkers isn't as vast as the media makes it out to be. In fact, by 2011, Toyota's labor costs could exceed the Big 3 because they've been here for 30 years now and a growing number of their workers are paid top wages.

The domestic automakers are competitive with foreign ones, but they currently find themselves in trouble not of their own making. Credit has dried up, people can't get loans, and cars aren't selling. Don't blame the middle-class auto workers, blame those highly compensated Wall Street and Washington types who made a mess of things.

UPDATE: Dean Baker did a better job of clarifying claims that GM auto workers are paid $70 an hour than I did: "The trick is to add in GM's legacy costs, the pension and health care costs for retired workers. These legacy costs are a serious expense for GM, but this is not money being paid to current workers. The person on the line in 2008 is not benefiting from these legacy costs."

Modern Day Charles Dickens Era

In the midst of the bailout crisis, I worried that taxpayers were being played. It looks like my concerns were well-founded. Via Dean Baker:

Remember way back to last week when it was going to be the end of the world if Congress didn't pass the bailout package? Remember the Washington Post's account in which Treasury Secretary Henry Paulson told President Bush, "there is no Plan B."

Well, it looks like the Fed has discovered a Plan B. It turns out that the Fed can buy commercial paper directly from non-financial corporations needing credit to maintain operations. This will keep the credit markets working even if the zombie banks aren't up to the task. In other words, the threat of a complete meltdown in the absence of a bailout was nonsense and the media once again got taken for a ride by the Bush administration.

Adding insult to injury, we now find out that the limits on executive compensation were essentially meaningless too. When do we get our bailout, or do we have to work till we drop over dead? That scenario becomes more probable with each passing day.

Via the AP:

Americans' retirement plans have lost as much as $2 trillion in the past 15 months, Congress' top budget analyst estimated Tuesday.

Public and private pension funds and employees' private retirement savings accounts — like 401(k)'s — have lost some 20 percent overall since mid-2007.

Rep. George Miller, D-California, summed it up best: "Unlike Wall Street executives, America's families don't have a golden parachute to fall back on. It's clear that their retirement security may be one of the greatest casualties of this financial crisis."

Drill, drill, drill is a Big Oil handout

What do we know about the Republicans drill, drill, drill plan? We know that new offshore drilling won't have a significant impact on domestic crude oil production or prices for almost 20 years, and the amount we'd save at the pump would be less than 6 cents by 2025.

So, what's the point? Who's really going to benefit from opening up our coastal shores to oil drilling? Bill Scher says we should "follow the money."

While coastal drilling amounts to nothing in regards to lower energy costs for you and me, it does amount to a fat giveaway to Big Oil.

How so? More domestic oil=more exports for U.S. oil companies. A recent Reuters-UK article had some figures showing just where the oil goes. (Hint. It doesn't stay in our country.)

While the U.S. oil industry wants access to more federal lands to help reduce reliance on foreign suppliers, American-based companies are shipping record amounts of gasoline and diesel fuel to other countries.

A record 1.6 million barrels a day in U.S. refined petroleum products were exported during the first four months of this year, up 33 percent from 1.2 million barrels a day over the same period in 2007. Shipments this February topped 1.8 million barrels a day for the first time during any month, according to final numbers from the Energy Department.

The surge in exports appears to contradict the pleas from the U.S. oil industry and the Bush administration for Congress to open more offshore waters and Alaska's Arctic National Wildlife Refuge to drilling.

Mexico, Canada, Chile, Singapore and Brazil get the lion's share of exported U.S. oil products, yet Republicans continue to blame tight supplies for our record prices.

While the administration argues that more supplies would help to bring down prices, U.S exports of diesel fuel in April averaged 387,000 barrels per day, up almost seven-fold from 59,000 barrels a day in the same month a year earlier.

To recap, Republicans want to open more land to drilling so oil companies can export more oil out of the country, which will keep supplies tight here at home and keep prices high. Who wins? Big oil and the Republicans who benefit from their donations. Who loses? Everyone else.


(Cross-posted at Blogging for MI.)

American Axle strike paid off for one already rich man

Remember the American Axle strike earlier this year? Workers settled after 11 weeks for a contract that cut wages as much as $10 an hour, froze pensions for those with less than 20 years seniority, and scheduled two plants for closure.

Union workers ratified the contract, but the fallout continues:

American Axle & Manufacturing Holdings Inc shares surged 10 percent on Wednesday after analysts said the parts supplier plans to eliminate about 670 salaried jobs on top of factory job cuts now underway.

Analysts at Lehman Brothers and JPMorgan said in research notes that hourly headcount cuts will be accompanied shortly by white-collar cuts at a three-to-one ratio, citing a meeting with American Axle's executives late on Tuesday.

There was one person who came out smelling like a rose. [my emphasis]

American Axle and Manufacturing Holdings Inc. Chairman and CEO Richard Dauch has been awarded an $8.5 million bonus in part for leading the auto parts supplier through a bitter strike.

The bonus revealed Friday in a filing with the Securities and Exchange Commission is in addition to his earlier reported 2007 compensation valued at $5.55 million.

And the rich get richer...


(Cross-posted at BFM)