Union Successes in the Midwest but Will the Dems Take Credit?

Organized labor’s big (61%) win in Ohio to overturn the anti-collective bargaining rights law passed by the Republicans has led the governor to swear that he’s now heard the voice of the people. In Michigan where the candidates for the Republican presidential nomination held their latest debate, all of the candidates affirmed their opposition to the bailouts of G.M. and Chrysler – they would have let them fail. But Michigan’s Republican governor, Rick Snyder, said the bailout worked and urged everyone to look ahead – no need to thank President Obama. But outside the Midwestern manufacturing belt or what’s left of it after over 3 million manufacturing jobs were lost since 2000, will Obama and the Democrats claim credit for the rescue of the U.S. companies?

One reason why it is difficult to claim credit is that “it could have been worse” (and it would have been much worse if the government hadn’t acted) is not a compelling slogan when there were a lot of losers who lost their jobs and when many of the winners took a bruising. A second reason is that the ways in which a government (or political party) can help private groups to solve their inter-organizational problems are mostly by reinforcing a dynamic of problem-solving cooperation when the parties actually want to cooperate with each other, which was true of the two core groups in the big auto companies, namely the UAW and operations managers. But this solicitude for the groups and the visibility of government support for them can look to others outside the charmed circle of solicitude – and by 2009 those outside the circle of union-management negotiations in manufacturing were the vast majority of Americans, even in Michigan, Ohio et al. – as placating special interests rather than serving the public interest.

There is a huge technical literature about the logic of this inside-outside perception as well as political historiography that observes that “the public interest” has been defined to prevent government help to groups to overcome their collective action problems. A hundred years ago the liberal-conservative slogan was “no class legislation”; everyone was an individual. In order for Obama to claim credit for saving the U.S.-based companies (and the other companies, given the inter-twined supplier base), he has to make a strong case that “the public interest” was served by saving them. Any particular benefit that the UAW and corporate managers and investors at G.M. and Chrysler received was incidental to the larger purpose of stabilizing a significant segment of the U.S. economy at a time of virtual free-fall in the national economy. After all, what purpose in society does not have real individuals in a position to gain or lose from any public action? Moreover, “if anyone asks” about the details, the rescue plans controlled the wages of incumbent union workers, drastically cut entry-level pay, cut health care, put tens of thousands on the unemployment lines, and banned strikes for four years. What the administration’s rescue team also accomplished was to reinforce the reform coalitions within the companies that have been working on manufacturing performance and product quality. The products are better and more fuel efficient. The new contracts signed last month also brought back to the U.S. thousands of outsourced jobs. But will anyone ask? Who will tell the people? Even Democrats have shied from taking credit. They don’t want to appear too close to the unions and/or risk the charges from Republicans about crony capitalism (it is truly a weird world in which Republicans can make this argument with a straight face; just take a look at the careers of George W. Bush and Dick Cheney). Outside the Midwest, voters may be hostile to the rescue unless they get rescued, too.

But this is a bright spot in Obama’s record! The auto industry had been in a perpetual condition of upheaval since the original Japanese import surge in the late 1970’s, after which the Japanese car companies invested in manufacturing capacity in the U.S. in the 1980’s and 1990’s. During these years the UAW and the companies were in a constant mode of contentious reform. By the time that the Bush administration bailed out G.M. and Chrysler in December 2008, the companies’ managers and unionized employees had already made dramatic improvements in manufacturing practice. Thus, the key to Obama’s auto rescue was less about the exogenous forces of global market competition and a controlling state and more about the accession of a knowing political coalition that empowered the reformers to pursue their goals. The Obama administration seized an opportunity created by the Bush bailout to build on the growing experience with industry restructuring to reconfigure the place of the companies in the U.S. industrial landscape. As UAW president Bob King argues, the American companies are now the best practice in the industry because they have advanced manufacturing and worker representation.

The institutional presidency was an important resource for the U.S. auto industry’s adaptation as it can be for reformers of many stripes. Yet comparative political analysts typically claim that the U.S. government does not have the capacity to restructure an industry. But that’s wrong in this case. The presidency’s authority in economic policy may empower a president to act when this authority is enhanced by the broader network that brought him to the office. In Obama’s case, the presidential coalition included significant new resources from private equity banking and management consulting, which had been developing new capabilities of their own since the industry policy debates of the 1980’s. These groups extended their expert services to the White House for the restructuring and enabled the mostly successful rescue because they supported the union and management reformers in the companies.