Ezra Klein

by Christopher Hayes

Matt links to a McClatchy piece about how the Bush administration, in concert with the Chinese government, worked against tightening inspection and regulation of toys manufactured in China. Dog bites man, to be sure. But what's really striking to me is how Democrats have completely failed to use the steady and growing trickle of stories about dangerous products emanating from the unregulated factories of China to make the broader case for importance of regulation. When I took intro economics at the University of Chicago, I remember my professor dismissing with a caustic laugh the very notion of public health inspection of local restaurants. "I don't think the Medici would stay in business very long if they took to poisoning their customers."

That's more or less the belief system (if you can call it that) that the Bush administration has marshalled to combat something as commonsensical as, you know, making sure children's toys aren't coated in lead paint. So this is as teachable moment as they come, and you can bet that, if, say, the national healthcare system in France was accidentally poisoning its patients, we'd be hearing a chorus of conservatives making the case that this was example of the ideological bankruptcy of state-run healthcare.

So where's the chorus on the other side? Rick Perlstein has been eloquent and consisent in calling attention to the connection between the ideological commitments of modern-day conservatism and the inevitable degradation of public infrastructure and regulatory standards. Other bloggers have joined him, but this is an object lesson in the inability of Democratic politicians to wholistically articulate a social democratic vision even when the opportunity is handed to them on a platter.

Posted by at 10:49 AM | Permalink | Comments (18)

I've given Democracy (a journal of ideas!) a bit of a hard time in recent months, but their latest issue is genuinely fantastic. It contains a couple of articles I want to talk about, but the most important is Aaron Chatterji and Siona Listokin's ferocious critique of the corporate social responsibility (CSR) movement. As they argue, liberals have largely abandoned attempts to change the economy through government regulation and action and begun seeking instead to convince individual corporations, by way of PR campaigns and lobbying efforts, to become better economic citizens. This is foolish, in addition to being ineffective.

As Chatterji and Listokin document, corporations have become scarily adept at using the atmospherics of CSR to escape real regulation or public outrage. Here's how it works:

Imagine a world with one voluntary code of conduct governing the operation of apparel factories. Let’s call it the Golden Code of Conduct (GCC). This is a strong code that calls for the provision of a living wage, recognition of unions, and limits on working hours. Now suppose another set of companies who do not want to abide by the code, but still care about consumer perceptions, creates their own code, called the Super Code of Conduct (SCC). Their code lacks many of detailed provisions of the GCC, but it has some vague language about treating workers with respect. Companies must decide which code to adopt, and the SCC is clearly cheaper to institute. For high-minded companies that want to live by the more stringent code, the high costs could make them uncompetitive in supplying retailers. Meanwhile, the benefits are only significant if consumers can tell the difference between the two codes. If a company can retain the benefits of an improved image but not incur the cost of improved working conditions, there is no reason to expect them to choose the less stringent code.

Meanwhile, the willingness of progressives to accept corporate self-policing diminishes demand for government action that could impose standards not just on a few individual businesses, but on whole industries. That's a far more sustainable strategy. CSR, after all, means that those who choose virtue will become almost instantly less competitive, while their competitors will see no similar change. Indeed, part of Wal-Mart's rise was exploiting the higher labor costs of older retailers who'd emerged at a moment when they were expected to compensate employees fairly and generously. By ignoring such voluntary restrictions, Wal-Mart undercut, and out-competed, an array of retailers who'd made the mistake of demonstrating some CSR. And if the shaming campaigns of Wal-Mart Watch and Wake Up Wal-Mart miraculously succeed at forcing a similar moral epiphany in Bentonville, some currently unknown retailer will emerge in a few years to start the process all over again.

Continue reading "Corporate Responsibility Must End!" »

Posted by Ezra Klein at 1:33 PM | Permalink | Comments (21)

Without sucking up to the new boss too much, let me highly recommend this Harold Meyerson piece responding to Kos's Libertarian Democrats manifesto. I recommend it despite finding it an enormously frustrating piece of work -- I have, after all, spent the last few months of blogging and my September feature story trying to say what Harold does in these three paragraphs:

there are some basic Democratic principles that are not libertarian, and that even Markos’ Mountain State mavericks still affirm. None of them have called for privatizing Social Security. None of them have called for abolishing Medicare. They may be civil libertarians and to some degree social libertarians, but they’re not economic libertarians. And for good reason: Economic libertarianism has never been more preposterous.

For the dominant social fact in America today is this: The corporate safety net is fast disappearing. Risk has been transferred to the individual—a decision in which individuals, as such, haven’t had a say (though their apprehensions about privatizing Social Security did nip that idea in the bud). Corporate pensions are vanishing and 401(k)s don’t provide equivalent retirement security. Fewer and fewer companies are offering medical benefits, even though corporate profits are at a 50-year high as a percentage of GDP. Companies that persist in offering such benefits are placed at a disadvantage when their competitors don’t. And consumers clearly can’t afford those benefits, either. As some recent surveys have made clear, precious few Americans can afford to buy medical insurance on their own or to utilize the Health Savings Accounts that the president is peddling.

In short, as the balance of forces in capitalism shifts entirely towards investors and executives and away from employees, the need for a state that takes the burden of economic and health security off employers who won’t pick it up and employees who can’t pick it up is increasingly urgent. It’s hard to predict what exactly the tipping point will be as our private-sector welfare state continues to contract. But at some point, the Democrats will embrace a decisively larger role for the state in these matters because the public will demand it—not because the public will suddenly identify itself as liberal, but because there will be nowhere else to turn.

Quite so. It's not that the rhetorical cover of libertarianism isn't a clever or useful one, or that the American people will suddenly turn against the concepts of individualism and autonomy. It's simply that the trends will obviate all that. As wages stagnate, the corporate welfare state contracts, health costs go up, economic insecurity increases, inequality accelerates, and worker power continues to decline before globalizations, something will have to be done. Folks will demand it. And cute as it is that large swaths of the conservative movement are convincing themselves that Americans will respond to excess risk and financial exposure by demanding more risk and financial exposure, I'm just not seeing it.

Posted by Ezra Klein at 1:58 PM | Permalink | Comments (23)

The quick-moving conversation on whether liberals have anything to say to libertarians who believe corporate power is only dangerous when united with state patronage is an interesting one, and worth thinking seriously about. The libertarians involved argue that liberals -- many of whom want to extend, enlarge, or at least perpetuate state power -- are unwittingly but unerringly strengthening the corporations they seek to constrain. Many of the liberals involved think that's nonsense.

Part of the problem here is the simplicity and inadequacy of "Big Government" as a descriptor for much of anything. You can have a huge, interventionist, and corporatist government that doesn't do much to advocate for the public interest, but is nevertheless interventionist in nature and monumental in scale. As LB points out, after the Pinkertons would finish beating strikers, the police would throw the bloodied laborers into jail. That was Big Government, but not in the sense that the left means it.

At other times, government has been a pretty determined enemy of corporate power. It shattered Standard Oil, broke up AT&T, and curtailed Microsoft. It passed seatbelt laws, the Clean Air Act, and opened the door to unionization. It worked to elevate the interests of society over those of business. But yes, as the libertarians say, it can be as evil as it can be good. That warning suggests that it's not the size of government, but the type of government, that matters. Many libertarians reject the possibility of a positively-oriented state -- capture is inevitable. Liberals are fundamentally more optimistic on that front, and note that, in any case, the small government ideology has proven to do little but rechannel the state's efforts into promoting corporate power. So if liberals focus on the possibilities for restoring elements of the progressive movement into the state, they do so because nothing else has proven even partially capable of counterbalancing corporate power. Government may be a blunt tool, but it's the only one we've got.

Posted by Ezra Klein at 11:16 AM | Permalink | Comments (13)

Anyone paying attention to this site will know I happily deviate from the orthodoxy favored by full-throated, anti-government, free marketeers. I routinely call for greater government intervention in health care, fret over Wal-Mart's monopsonistic might, and wonder, loudly and regularly, if the coming service economy can possibly sustain a decent society without government or union intervention. Katy bar the door!

In the post Ryan's referencing, however, I merely noted the illogic of the stock market cheering Republican elections despite doing historically better under Democrats. This spurred Ryan to write: "I don’t get this. What did the markets do to Ezra? There is a difference between being a Republican or a conservative and appreciating economics–often a very large one." Indeed there is. And it's terrifically unsettling that merely noting a political quirk within markets is enough to get one kicked out of the economics appreciation club.

There is, I think, little more beautiful or elegant in life than markets. Even Wal-Mart -- in fact, especially Wal-Mart -- is an awe-inspiring entity, gorgeously efficient and innovative and strong. But markets fail. As Ryan notes, there's a whole body of economic literature on when, why, and how that happens. And even a beautiful beast can attack if not watched and restrained. However, to note that markets have outcomes oriented towards ends not eternally or intrinsically constructive for society is somehow beyond the pale. To worry that the unceasing obsession for cost reductions by the greatest economic force in our age might harm labor standards and supplier autonomy somehow ejects you from polite company. Why?

Continue reading "Economics And Me" »

Posted by Ezra Klein at 3:30 AM | Permalink | Comments (21)

Taking on a topic I've been meaning to get to all week, my boss Harold Meyerson writes:

Wal-Mart...will shift to more environmentally responsible practices -- demanding greater mileage of its truck fleet and better packaging of its products. It will offer more affordable health insurance to its employees, cutting the monthly premium in some cases to just $11. It will monitor the environmental and health and safety practices of its foreign suppliers. And it will lobby for a higher federal minimum wage.

There's an interesting argument here as to whether these policy shifts are wholly positive advances or mediocre markers of progress that'll weaken the case for organizing Wal-Mart. The answer, probably, is both: Wal-mart's proposed insurance plans are sound and include both preventive and basic care that's sheltered from the deductible. Monitoring its foreign suppliers while decreasing its domestic environmental footprint is good news all around. And pressuring for a minimum wage hike is disingenuous, but positive: Wal-Mart pays slightly above the absurdly low minimum wage, and since many who shop at their stores are lower income, raising the bottom's paychecks by a buck or two will give them more money to spend at Wal-Mart stores while not forcing Wal-mart to offer out an extra cent.

The problem, however, is one of incentives. Wal-Mart does not want a wealthy, economically secure society. Back in the day, the auto companies had to pay their workers enough to buy their cars, which meant raising their living standards up to the middle class. All Wal-Mart has to do is lobby against poverty so abject that the working class can't shop at dirt cheap big box retailers selling Chinese goods. But they don't want their workers or low income Americans to move up income quintiles. Give them much more money and current Wal-Mart begin going to Target, Coscto, supermarkets, Amazon. For Wal-Mart, the incentive is a moderately poor society, always teetering on the edge of solvency and terrified of what news the bills will bring. In that context, Always Low Prices is the preeminent concern, and where Wal-Mart makes its goods, how they cut costs, and what they do to the economy is ignored.

Posted by Ezra Klein at 12:06 PM | Permalink | Comments (15) | TrackBacks (1)

Credit where it's due, Wal-Mart's done a damn good job on hurricane relief:

Wal-Mart's response to Katrina -- an unrivaled $20 million in cash donations, 1,500 truckloads of free merchandise, food for 100,000 meals and the promise of a job for every one of its displaced workers -- has turned the chain into an unexpected lifeline for much of the Southeast and earned it near-universal praise at a time when the company is struggling to burnish its image.

When it comes to Wal-Mart, I'm a cynic. But even if this was a play for positive headlines and media praise, it's still $20 million for relief, trucks packed with essentials, food, and jobs. Indeed, take a look at their preparations compared to FEMA's poor handling of the situation:

In Brookhaven, Miss., for example, where Wal-Mart operates a vast distribution center, the company had 45 trucks full of goods loaded and ready for delivery before Katrina made landfall. To keep operating near capacity, Wal-Mart secured a special line at a nearby gas station to ensure that its employees could make it to work.

I'm always struck by the irony of the "first CEO president" turning a markedly efficient federal government into an incompetently run, poorly led, and completely unprepared sluggard. A CEO, presumably, would know to appoint qualified individuals to head important agencies, they would know to fund the aspects of the company that guard against disaster, they would know to not overextend the corporation's resources while simultaneously cutting its revenues. Under Clinton, government shrank, revenues raised, the budget was balanced, and federal agencies became more responsive. Bush, through his aggressive incompetence, has made the organization he runs look totally pathetic compared to other large entities. Harvard Business School must be so proud.

Posted by Ezra Klein at 2:05 PM | Permalink | Comments (45)

By Ezra

So how about that Merck case?

Jurors deliberated more than 10 hours in Angleton, Texas, before awarding $24.4 million in actual damages and $229 million in punitive damages to the family of Robert Ernst. Shares of Merck, the third-largest U.S. drugmaker, fell to a six-month low, erasing $5.2 billion from the company's market value.

$229 million in punitive? As my girlfriend noted, this was a white male jury in Texas, for them to side so harshly against the company means bad things a-brewing for the drug industry. The damages aware were almost unquestionably excessive which makes them seem more like an expression of anger at Big Pharma (and maybe Big Business in general, particularly post-Enron) than anything else. And while it'll be reduced on appeal, if the environment has shifted in such a way that juries simply want to stick it to corporations, the slew of suits in the offing will give them plenty of chances to do so.

Posted by Ezra Klein at 7:46 PM | Permalink | Comments (22) | TrackBacks (1)

The best part of the unshockingly bold crony-captialism Matt ferrets out is that it won't work. GM is suffering from a cash flow problem in the same way I'm suffering from old age arthritis: it isn't. The company is still paying a stock dividend, their CEO still got a $2.5 million bonus this year, and they've got $20 billion in on-hand cash. The company's got money, the problem is nobody buys their cars. And that's not because of retiree health care costs or unions, it's because they make poor-quality automobiles that are totally unsuited for today's gas prices.

So GM, I'm sure, can get Congess to bail them out. But it won't do them any good. GM's problem isn't in their bank account, it's in their product line. Pumping up the former won't do them a damn bit of good; it's the latter that needs an overhaul. And they're going to have a hard time doing that with a furious workforce and congressional oversight. Reacting with cries for help, as they are, is so wholly pathetic, so obviously unsuited to the situation, that it's left me ashamed of my wimpy domestic ubercorporations. That's why I, for one, welcome our new Toyota overlords. Maybe they'll give us back some of that can-do American spirit.

Posted by Ezra Klein at 11:44 AM | Permalink | Comments (6)

Watching Japan rocket past our auto industry was bad enough, but is China poised to follow suit?

they have initiated new fuel economy standards for cars and trucks sold in China. The first phase of the standards went into effect this year and range from 38 miles per gallon for the lightest cars to 19 miles per gallon for heavier trucks. In 2008, the standards will increase to 43 miles per gallon and 21 miles per gallon, respectively. Because the Chinese standards apply to each individual vehicle, rather than a vehicle class average as in the United States, American automakers may struggle to sell their vehicles, especially oil thirsty trucks, in the Chinese market. China is not stopping with efficiency requirements. They are also purchasing hybrids from abroad for immediate use and developing their own hybrid and fuel cell designs and manufacturing capabilities for the future.

If this goes as promised, American automakers may lose their ability to effectively compete in China's market, but Chinese automakers, powered by huge domestic demand and government investment, might get very good at building very cheap cars very quickly. If they're also able to develop top technology, they'll be a real force. Meanwhile, Ford is licensing hybrid technology from Toyota, GM is basically waiting for imaginary fuel cells, and the Japanese makers are perfecting their homegrown engines.

We're falling behind. Again.

Posted by Ezra Klein at 3:27 PM | Permalink | Comments (13)

Brad's post on the pro's and cons of Wal-Mart is a good one, not least because he's more balanced than most shrill lefties (read: me) on the subject. One thing I do have to take issue with, though:

The low prices increase wages for other people. (Wal-Mart's entry in an area can drive down grocery prices 15 percent.) For low-income families, groceries are a somewhat big percentage of the budget.

Wal-Mart's low prices are severely overstated. The company's done such a good job of branding itself your checkbook's guardian angel that folks have begun to believe them. It's not so, though. Wal-Mart squeezes pennies on about 1% of a store's merchandise, what are called cost-sensitive items.

How does the number-one retailer maintain an image of low prices? First, by actually making sure its prices are lower than its competitors, at least on key items. These items are called "price-sensitive" items in the industry, and it is commonly believed that the average consumer knows the "going price" of fewer than 100 items. These tend to be commodities that are purchased frequently.

A mid-size Wal-Mart supercenter may offer for sale 100,000 separate items, or stock-keeping units (skus). Wal-Mart and other major retailers believe that the general public knows the going price of only 1 to 2 percent of these items. Therefore, each Wal-Mart store shops for the prices of only about 1,500 items in their competitors' stores. If it is ever found that a competitor has a lower price on one of these items than Wal-Mart, the store manager will immediately lower his or her price to be the lowest in the area.

These items are, of course, given prominent display throughout the store, further tattooing Wal-Mart's low-prices brand into consumer minds. Other pieces of merchandise aren't at such low prices and, in some cases, are surprisingly expensive, but because consumers don't know what they should cost, that goes unnoticed. The point here isn't that Wal-Mart is enormously cheap on many things, but that it's not so cheap on so many that it can justify the labor standards, labor abuses, or hostility to unions. This isn't a competition issue, it's a branding issue. And progressives shouldn't let it be rephrased into a liberal hostility to lower prices.

Posted by Ezra Klein at 12:10 PM | Permalink | Comments (48) | TrackBacks (1)

Via Nathan Newman comes this NY Times article on how Costco became the anti-Wal-Mart. These pieces pop up every so often to contrast Costco CEO Jim Sinegal's pro-worker philosophy with Sam Walton's throw-them-in-pits attitude. What I love, though, are the clockwork quotes from analysts upset at Costco's good labor practices. Even though Costco's stock price has jumped more than 10% in the last year, even though they sell stock at 23 times what their earnings would predict (Wal-Mart is 19 times), it's not enough. If you're not squeezing the workers, say the analysts, you're not doing your job:

Costco's average pay, for example, is $17 an hour, 42 percent higher than its fiercest rival, Sam's Club. And Costco's health plan makes those at many other retailers look Scroogish. One analyst, Bill Dreher of Deutsche Bank, complained last year that at Costco "it's better to be an employee or a customer than a shareholder."
...
Emme Kozloff, an analyst at Sanford C. Bernstein & Company, faulted Mr. Sinegal as being too generous to employees, noting that when analysts complained that Costco's workers were paying just 4 percent toward their health costs, he raised that percentage only to 8 percent, when the retail average is 25 percent.

"He has been too benevolent," she said. "He's right that a happy employee is a productive long-term employee, but he could force employees to pick up a little more of the burden."

That reporters can regularly solicit quotes condemning the CEO of a wildly successful business for being too attentive to consumers and workers is such a perfect window into the skewed values informing business that I feel I should frame each and every one. But much to my surprise, I never need to. There's always another analyst willing to play Greed's advocate.

I have, incidentally, a personal affection for the Costco-Wal-Mart feud as a metaphor for Democrats and Republicans. In some ways, the economic divisions in this country really are about who you favor: owners and shareholders, or workers and consumers. And, Democrats who're always trying to figure out how to talk about better wages and benefits without being labeled anti-growth, would do well to keep the Costco example in mind. What's hurting workers in this country, by and large, isn't the need for business to remain competitive, it's the pressure on CEO's to squeeze out a few more dollars for shareholders at worker expense. With the decline of the labor movement, workers have no powerful counterforce speaking for them: for Democrats, that should be the role of government.

Posted by Ezra Klein at 1:06 PM | Permalink | Comments (23) | TrackBacks (2)

I'm not particularly concerned by the Chinese government's bid (through CNOOC Ltd., which they control 70% of) to buy Unocal. If they offer a better deal than Chevron, why not? Worries that Chinese ownership somehow compromises our national security strike me as way overblown. If we and China ever get to a point where we threaten each other, who owns Unocal and its relatively minor energy assets will be the least of our problems. Moreover, in wartime, business ownership is something less than an inviolable fact of nature. Stateside Unocal assets would be nationalized by America, not allowed to continue production for the hostile Chinese under some bizarre fetishization of property rights.

Further -- and this is really an important point -- we're not going to war with China. They do not threaten our national security. They are not our enemy. Purchases they want to make should not be subjected to a extra level of scrutiny as they are not a hostile, or even threatening, power. America certainly has the right to be annoyed at Chinese monetary policy, but a country attempting to keep their export industry at a comparative advantage is hardly unheard of and shouldn't be seen as a more aggressive move than it is.

China's growing. We all know that. They will be powerful. Many of us fear that. But we, and them, will be in infinitely better shape if we cultivate a constructive and friendly relationship rather than create a self-fulfilling prophecy by treating China as a threatening power. If they want to buy Unocal and are willing to outbid Chevron, more power to them. We want as many nodes of interconnection as we can have in order to ensure the disincentives to future hostility -- on either side -- are as significant as possible.

Posted by Ezra Klein at 2:35 PM | Permalink | Comments (12)

Two unrelated stories today dovetail quite nicely.  John Aravosis takes issue with some who have apparently criticized him for the awful sin of actually making a tolerable living fighting the good fight for liberals.  His post and the comments, are all worth reading.  Steve Gilliard and Digby both have interesting things to say on the topic as well.  I'm not going to excerpt any of the posts; click through and read them.

Then, at Confined Space (which should be a daily stop for labor news), Jordan Barab notices who crisis manager Chris Lehane works for when he's not working for Democrats:

Chris Lehane, 37, helped the Clinton White House spin the Whitewater investigation, spoke for Vice President Al Gore on the 2000 presidential campaign trail and advised former Gov. Gray Davis during the 2001 energy crisis and 2002 gubernatorial campaign.

Now he's working for KFM Joint Venture, the contractor building the Bay Bridge's new eastern span. The Oakland Tribune has reported welders' accusations that many of the project's welds are defective and that unsafe working conditions existed on the job site. An FBI investigation is under way, and lawmakers are calling for probes of their own.

And it's not just the incipient construction fiasco that Lehane is helping KFM manage, but also the dispute between KFM and former KFM employees alleging unsafe working conditions and manganese poisoning.

Continue reading "Serendipitous" »

Posted by at 8:31 PM | Permalink | Comments (2)

Business Week steps forward with the obligatory article on how United Auto Worker intransigence is worsening Detroit's woes. But midway through the piece, a passage flashes by that explains the difference between yesteryear's take-one-for-the-team unions and today's seemingly immovable objects. The difference? At one point, there was, in fact, a team:

When Chrysler wrung mid-contract cutbacks from the UAW in 1981, the company was strapped. Chrysler (DCX ) canceled its dividend, top execs took a 10% pay cut, and then-Chairman Lee A. Iacocca worked for a dollar that year. Today, both GM and Ford still pay a dividend, and GM CEO G. Richard Wagoner Jr. got a $2.5 million bonus for 2004 -- on top of his $2.2 million in salary. Both companies also have huge cash hoards -- $20 billion at GM and $23 billion at Ford. Until the companies are close to bankruptcy, union leaders see no reason to give up benefits.

What Wagoner did to deserve that bonus is far beyond my limited comprehension (helped his brand die?), but the idea that workers no longer see the top rungs sacrificing even as concessions are demanded of them is, indeed, a powerful one for explaining why so few unions seem interested in pitching in during periods of hardship. After all, it's pretty hard to explain to your union why you agreed to chip away at their health care coverage while the shareholders were paid a dividend and the executives got a bonus and the company's afloat in cash (if not profits).

If GM, Ford and their kind want to survive, they will need to restructure radically -- no one doubts that. But if they decide their only really pressing priority is ripping health care from their retirees, they're going to quickly find that the unions are deeply unimpressed with the survival plan. And even if they were able to force it onto the workers, it wouldn't save the companies' anyway. This isn't about retirees, it's about bad cars plus worse management, and leadership like this is certainly proving the latter part of that equation.

--Ezra

Posted by Ezra Klein at 10:31 AM | Permalink | Comments (9) | TrackBacks (2)

There was a time in this country when corporations sought not to cut and run from pension plans, shift health costs onto employees, and shortchange their workers. Indeed, their was a time when companies sought to invest in their workforces, under the assumption that their workforces would respond in kind. This comes from page 23 Of Robert Collins' More:

The relationship between General Motors and the United Automobile Workers exemplified the new turn in class relations. General Motors had embarked on a massive $2.5 billion post-war expansion program designed to boost production by more than 50 percent over prewar levels, building new plants in California, Texas, Ohio, and New York and increasing its blue-collar workforce by 25 percent. To safeguard this expansion, GM needed stability and predictability. On the other side, the UAW wanted higher pay, better benefits, and relief from the press of post-war inflation. In 1948, GM and the UAW agreed on a contract incorporation both a quarterly cost-of-living adjustment (COLA) tied to changes in the consumer price index and an "annual improvement factor" (AIF) wage increase based on the increase in GM productivity. Two years later, the auto giant and the trend-setting union expanded the agreement in an unprecedented five-year contract -- the so-called Treaty of Detroit -- that sweetened the COLA and AIF provisions of the earlier deal, guaranteed workers a 20 percent increase in their standard of living over the life of the contract, and committed GM to provide a corporate pension and underwrite half the cost of a new health insurance plan.

My how far we've fallen.

Posted by Ezra Klein at 5:17 PM | Permalink | Comments (11) | TrackBacks (1)

What's that you say?

Now there's a decision to be made here. People need to either say out loud that they're willing to pay more in Wal-Mart so the workers there can make more (and be willing to put their money where their mouth is) or they need to shut up. Until or unless they are willing to do so, something they have proven unwilling to do in the case of Mom and Pop, they don't have anything to say about this.

This is between Wal-Mart and its employees, and none of anyone else's business.

So it's not the business of us taxpayers paying billions each year to subsidize Wal-Mart's "Always Low Wages, Always"? Why? And does McQ still not understand that the way Wal-Mart functions effectively chokes off, then kills the competition? For most, it's not a choice of where to spend your dollars. You have to go to the retailer still operating in your town. And, after Lee Scott's store comes in, the others have a strange propensity to stop operating.

One thing I never understand about these Wal-mart arguments is that they act as if we still live in an unregulated world. As if the simple decision of a consumer to buy something at a low price sanctions all abuses and crimes committed along the production line. And yet we as a society have made a number of decision detailing what is and is not acceptable behavior for our employers. Our goods would be cheaper if we allowed slave labor, but we don't. They'd also be cheaper if we allowed child labor, still no go. They'd be cheaper if we didn't have environmental regulations and stopped demanding that garment factories have proper regulation, but again, we hold firm.

The current conversation is just another version of that evolving argument. Wal-Mart pays their workers unlivable wages, imports most of their goods from overseas sweatshops, and uses the savings to drive smaller companies out of business, thus ensuring local monopolies for itself. Right now, society is beginning to decide whether or not that's acceptable. McQ's contention that such a conversation is beyond our purview is simply absurd.

Posted by Ezra Klein at 11:25 AM | Permalink | Comments (6)

From the LA Times:

General Motors Corp. on Tuesday posted a first-quarter net loss of $1.1 billion, its worst quarter in 13 years, due to disappointing sales in the crucial North American automotive market and soaring healthcare costs.
...
Other analysts, though, said GM could be holding back as part of its negotiations on healthcare costs with the United Auto Workers. Last week, the union said it had no intention of revising its current labor contract to help the automaker lower medical expenses but would do what it could within the agreement to help lower costs.

GM has warned that its U.S. healthcare costs could grow to $5.8 billion this year. Making things look as bleak as possible would help GM persuade the union to pass on some of the company's healthcare costs to its hourly workers, analysts said.
...
Although healthcare costs are the company's principal long-term concern, getting its product mix right for the competitive U.S. market is the more immediate concern, he said.

Sounds like some corporations are chafing under the weight of health care costs. Now what to do, what to do...

Posted by Ezra Klein at 3:42 AM | Permalink | Comments (9) | TrackBacks (1)

Saying Wal-Mart is antiunion is slightly less shocking than calling Tom DeLay unethical, or noting that I have an elbow*. Nothing could be better known. But I think most are confused, like I was for a long time, over how Wal-Mart can actually stop the unions. So one day, I called up an organizer buddy of mine and asked. The answer was so simple that it barely qualified as an answer at all. If workers unionize, or threaten to unionize, or feint at unionizing, or think about unionizing, or see a union hall on their way to work one day, Wal-Mart shuts down the store.

Oh.

Nevertheless. it seemed a bit odd to me. Pretty drastic measure, knocking down a whole store because they formed a union, can they really do that? Indeedy-do, they can and they have. In fact, they just did it in Canada. The workers in Jonquiere, Quebec, signed the cards creating a union and, immediately thereafter, everyone lost their jobs and the town lost its Wal-Mart. Now the city's got deep divisions between those who wanted the union and those who blame the union-wanters for destroying their jobs, Quebec's other Wal-Marts -- which are a focal point for the union movement there -- are rejecting the organizers because some job is better than no job, and every Wal-Mart manager can, if their employees try to organize, sit them down in a coercive meeting and go through the sad case of Jonquiere, Quebec, where the union would have just been too expensive and Wal-Mart simply had to close the store.

And they don't want that, do they?

Continue reading "Always Low Wages. Always." »

Posted by Ezra Klein at 12:39 PM | Permalink | Comments (12)

That Nathan Newman sure knows how to drive home a point:

Prosecutors announced they were dropping all criminal charges against Wal-Mart for its use of contractors employing undocumented workers in exchange for paying an $11 million fine, a hefty sounding amount but a pittance for a company with $288.2 billion in sales last year. Let's put it this way-- this is an equivalent financial hit to an average person making $50,000 per year being hit with a $1.90 fine for illegal activity.

Wow. I mean, really, Wow. I don't make enough in income to even be taxed, but I spent too long getting books from my room today and got a $40 parking ticket. Let's say, for argument's sake, that I make 20,000 a year. My parking ticket comes to .2% of my imaginary income. Not a whole lot, but remember, all I did was dawdle a bit while my car was in a loading zone. Wal-Mart, having employed illegal workers at wages barely above indentured servitude, was hit with a fine equalling .0038% of their income. Comparatively speaking, their fine for employing illegal immigrants was 1.9% of my parking ticket. Their fine for sustaining illegal immigration was 1.9% of my parking ticket. Fuck class warfare, there are times when I yearn for a French Revolution. And remember, Wal-Mart isn't being protected by those soft-on-illegal-immigration Democrats, this is a Republican company through-and-through. The same Republicans who demand tougher border controls and an end to all illegal, and much of the legal, immigration. And they're shielding the companies who fuel the cross-border fugitives. Beautiful.

Posted by Ezra Klein at 8:16 PM | Permalink | Comments (10) | TrackBacks (1)

The special exemptions and rules given to Wal-Mart should really be a national shame. That a case concerning illegal child labor has ended with the transgressor getting a 15-day advance warning before any future inspection of its stores and a 10-day abatement period to rectify any abuses found during the prescheduled inspections is just flabbergasting. Imagine that -- not only does Wal-Mart have half a month to clean up a store before a visit, but in the event that they don't do a thorough job, they get a second chance to sweep violations under the rug. What happened to personal responsibility? To basic logic?

I'm glad that House Democrats are holding Chao's feet to the fire on this, but we should really be throwing her into the furnace. This is a disgrace, it's the kind of deal that's reached in the third world when popular opinion forces a puppet government to "investigate" the guy pulling the strings. This administration isn't just in bed with corporations, it's sweaty and panting and the sheets are tangled around their feet. We should be sending this snapshot of their adultery to every mailbox in the country.

Posted by Ezra Klein at 1:19 PM | Permalink | Comments (3)

Matt's post on the increasingly narrow social outlook of big business is worth thinking about. I'm not in any place to evaluate this, but I've heard a number of people smarter than I attribute it to the shift towards quarterly earning reports. When business thought in the long-term, it made sense to take a wider view of society, because the long-range health of the one would dictate the health of the other. But as the race refocused on immediate earnings, the perspective shifted to cutting costs and maximizing profits in the now, and so the political outlook narrowed to take in only what would pay immediate dividends.

Posted by Ezra Klein at 2:16 PM | Permalink | Comments (11)