Saturday Soother – October 5, 2019

The Daily Escape:

Fall colors, Adirondacks, NY – October, 2019 photo by nikhilnagane

You can be forgiven for not focusing this week on the UAW’s strike against GM, which is now in its 19th day. Shares of GM have plunged by double digits since the strike began, mostly because the automobile sector has reported weak sales figures. Wolf Richter reports that:

“New-vehicle deliveries in the US…were…flat, at 4.32 million vehicles in the third quarter. For the nine months, deliveries were down 1.6%. This puts new vehicle sales on track for about 17 million…in 2019, the worst level since 2014, and below 2000….”

So, automobile unit sales are at the same level that they were 20 years ago in 1999-2000. With the strike, GM vehicle production has ceased at nearly all of its North American plants. This hasn’t really hurt GM yet, because they had around 90 days’ sales worth of vehicles in inventory as the strike started. They typically have more like 60 days on hand. So shutting the plants helps work down their inventory bulge.

Back to the strike: Julianne Malveaux reports in the WaPo about how GM betrayed the UAW after the union made sacrifices when GM nearly folded in 2008:  

“General Motors was on its knees in 2008. Amid a global financial crisis, the company was so financially challenged that it had no choice but to accept a federal government bailout. In 2009, the United Auto Workers joined the feds in saving GM, making concessions on wages and benefits to rescue the beleaguered company.”

The partnership paid off for GM. The company has earned $35 billion in profits in the last three years, partly as a result of the concessions the workers made over a decade ago.

But, does GM owe the UAW anything in return? The protracted strike shows that GM feels it doesn’t owe them much. Darrell Kennedy, a UAW striking worker said in a video:

“We gave up a cost-of-living increase, a dollar-an-hour wage increase we were due, tuition assistance and more…”

The union wants to include non-union workers who are part of GM’s three-tiered wage system. Those hired before 2007 (the union members) are Tier One workers who earn roughly $31 per hour, plus guaranteed pensions. Those hired after 2007 are Tier Two workers, earning about $17 an hour and have the opportunity for 401 (k) participation. The third tier are temporary workers who earn less than Tier Two workers and have no benefits.

The union wants better pay for Tier Two workers, and a path to job security for Tier Three employees. But since GM plans to move toward electric vehicles which use less labor that gas-powered cars, they are uninterested in commitments that reduce their flexibility in the future.

In business, Wrongo learned the hard way that making concessions, and expecting it to create good will that helps a future negotiating position, is usually a bad idea.

But, in this case, it’s difficult to work up enthusiasm for either side.

For example, GM spent $10.6 billion since 2015 buying back its own shares, some of which went to the UAW, who originally owned about 17.5% of GM after the bailout. The UAW has now sold over half its GM stock. Since the 1960s, GM has consistently demonstrated poor management. Their share of the automobile market has decreased from about 50% to about 17%. If it wasn’t for the government bailout, GM wouldn’t be here.

The UAW is rightly trying to grow its membership by advocating for GM’s Tier Two and Three employees. OTOH, in 2009, the union didn’t agree to cooperate with GM out of any sense of benevolence. They were saving their jobs. Finally, since the bailout, GM’s UAW workers have a profit-sharing deal. In 2018, the 46,500 UAW hourly employees earned up to $10,750 each.

Wrongo is very pro-labor, and often pro-union. In this case, it’s difficult to get behind the UAW’s strike.

Time to move past which State Dept. official in the Ukraine texted what about the Bidens, or how much more blatant Trump’s overtures to foreign governments will get. Let’s enjoy a Saturday Soother!

Start by thinking about the leaves piling up outside. Friday night brought frost to Mansion of Wrong, so our fall clean-up is in full swing. If it’s warmer where you live, enjoy the last of the warm weather.

No coffee today, get outside and do something physical. But before you go out, let’s remember the great Jessye Norman who died last Monday. She was a gifted singer with one of the greatest and most beautiful voices ever. She had all the qualities to make a performance both convincing, and memorable. Here she is singing “Ave Maria” by Schubert:

Those who read the Wrongologist in email can view the video here.

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Saturday Soother – September 21, 2019

The Daily Escape:

Badlands Storm, South Dakota – September 2019 photo by Bill Frazier

It’s officially the end of summer. We now move towards shorter days, sweater weather, and at least in the Northeast, raking leaves. But, in politics, few things change with the seasons.

Consider this factoid from Bloomberg about what the Trump administration has done to support farmers hurt by his China trade war:

“At $28 billion so far, the farm rescue is more than twice as expensive as the 2009 bailout of Detroit’s Big Three automakers, which cost taxpayers $12 billion.”

Remember the auto bailout? Republicans were largely against it. The government shouldn’t pick winners and losers, let Mr. Market do it. While the auto industry was bleeding jobs, the bailout saved GM and Chrysler. It also helped restore jobs. Marketplace reports that in the Great Recession, auto-manufacturing lost 334,000 jobs, and membership in the United Autoworkers Union (UAW) fell by 150,000.

Since then, as vehicle sales rebounded, those job losses were gradually reversed. In July 2016, US auto-manufacturing employment surpassed its December 2007 pre-recession level of 957,000 jobs. The UAW however, remains more than 50,000 members short of its pre-recession high.

Back to the farmers. Because of the tariff war with China, farmers will receive $19.5 billion in direct government bailout money in 2019, the most since 2005. That doesn’t include an extra $10.5 billion in federally subsidized crop insurance payments, the main vehicle of the farm subsidy program.

This is a move to protect Trump’s political advantage with his Midwest base for the coming election in 2020. But, who is benefiting? It’s mostly the corporate farms, and the largest individually-owned farms. From Modern Farmer:

“The idea is fairly clear: the larger a farm is, the more it has to lose, and thus the more money it takes to make whole.”

The Environmental Working Group (EWG) analyzed USDA data and found that 82 farmers collected over $500,000 each in 2018-2019. In comparison, the EWG found that the bottom 80% of farmers received less than $5,000 each.

This latest tranche of government money comes after the USDA changed the rules regarding who qualified. Previously, each farmer applying for assistance had to have an average adjusted gross income of less than $900,000 per year. Now, there’s no limit on the size of an applicant’s income, as long as 75% “is derived from farming, ranching, or forestry related activities.”

That opens the trough to the biggest corporate farms, to super-rich investors, and the biggest family farms. Not surprisingly, since the Trump administration’s efforts are aimed at protecting those who are among his large donors, rather than the most vulnerable farmers, there are no cries that this is “socialism” by the GOP.

Apparently, this is capitalism at its best, but what we did to save the auto industry was socialism.

On to our Saturday Soother, that interlude in the week when we try to forget what Trump may have promised to a foreign leader, or what Cory Lewandowsky did to Jerry Nadler. We focus instead on what excuses we can use to avoid the coming fall clean-up. Here, on the fields of Wrong, we are taking in our bluebird houses, the fledglings left a week ago. A few hummingbirds are still around, but will certainly be gone next week. The apple trees have lost most of their leaves, and the deer are eating the fruit that falls to the ground. We’re trying to wait until early October to turn the heat on, but the last two nights have been in the high-30s.

Let’s warm up today by brewing up a hot, steaming cup of Ethiopia Sidamo Gora Kone ($19/12 oz.) from Sacramento, CA’s Temple Coffee Roasters. The roaster says it has a sweet-savory structure with a crisp, lightly satiny mouthfeel. You be the judge.

Now settle back and listen to a musical selection for the change of season. Here is “Autumn” a petit adagio from Alexander Glazunov’s “The Seasons”. The music was written as an allegorical ballet, but we’re going to listen to a symphonic treatment. It was composed in 1899, and first performed as a ballet by the Imperial Ballet in 1900 in St. Petersburg, Russia. Here, it is played by the Czech Radio Symphony Orchestra of Bratislava conducted by Ondrej Lenard:

Those who read the Wrongologist in email can view the video here.

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