Volkswagen-UAW Debacle Another Step Towards Becoming Third World Nation

On Friday night, when employees at the Volkswagen plant in Chattanooga voted 712 to 626 against joining the United Automobile Workers Union, the Republican Party received a further boost in their effort to turn the country into a third world nation on behalf of the super rich.

From the moment Reagan declared war on the unions, and America bought into the Republican myth of trickle down economics, the living standards of middle class Americans have fallen behind no less than a dozen European countries. Look at the stats: We now resemble a third world nation.

Consider that from 1949 to 1979, the productivity of American workers grew by 96.8 percent, while the hourly compensation of the average worker grew by 93.7 percent. During that period, management, shareholders, and workers shared corporate profits equally or proportionately.

Now let's look at the 30 year period that followed. From 1980 to 2010, the productivity of the U.S. worker rose 80.1 percent, but the wages of the average worker rose only 4.2 percent. In short, management and shareholders almost exclusively hold corporate profits, while worker's incomes have gone nowhere.

Since 1980, the decline of middle class wages mirrors the decline of union membership. In 1980, union membership was 27 percent. Today it's 7 percent. The destruction of labor has been so comprehensive that first-world nations now offshore their jobs to the U.S. In other words, we’ve become the new India. Foreign companies now see us as the world’s cheap labor force, and we have the non-unionized South to thank for that. Chuck Thompson, author of Better off Without Em, writes, “Like Mexico, the South has spent the past four decades systematically siphoning auto jobs from Michigan and the Midwest by keeping worker’s salaries low and inhibiting their right to organize by rendering their unions toothless.” Average wages for autoworkers in the South are up to 30 percent lower than in Michigan.

In Sweden, the minimum wage is $19 per hour and workers enjoy a minimum of five weeks paid vacation every year. In the U.S., the minimum wage is a tick above $7 per hour and workers can expect no more than 12 days of annual vacation. So guess what? IKEA has set up a factory in Virginia. Volkswagen has set up in Tennessee, and the likes of Hyundai, KIA, BMW, Honda, and Toyota have all set up in the South to take advantage of the world’s latest cheap labor source. Moreover, the profits of these foreign companies goes toward stimulating their economies instead of ours.

Michael Lind wrote in the Daily Beast, “Unable to compete on the basis of public investment and public education, the South of the 21st century, like a broken banana republic, now uses anti-union laws and low taxes to lure corporate investment from the rest of the country.”

So, it’s amusing when Republicans blame Detroit’s bankruptcy on liberal policies because nothing could be further from the truth. Detroit is bankrupt thanks to the Republican business model that has turned the entire South into a third-world banana republic. A business model that the rest of the country is forced to compete with, i.e., lower wages, low corporate tax rates, low property taxes, and low environmental and labor protection, which results in a migration of industry and jobs from the northern states, which means a shrinking of the tax revenue base in cities like Detroit. Since 2000, the population of Detroit has fallen 20 percent and property tax revenue has plummeted 26 percent. Take this as an illustration of how Republican economic policies have us in a never-ending death spiral race to the bottom.

There is simply no countervailing power to capital, but Volkswagen, to its credit, gave their employees the opportunity to join the United Automobile Workers Union. Unlike most American companies, Volkswagen pledged to remain neutral, in some ways offering quiet support to the union. The company also urged third parties to stay out of the voting process in order to let the workers decide.

Volkswagen did not oppose the U.A.W. partly because management were eager to create a European-style works council, a committee of managers with rank and file workers who develop factory policies on issues like work schedules, benefits and vacations. Volkswagen, which has unions in all of its 105 other plants worldwide, views such councils as crucial for improving morale and increasing productivity.

Of course, that wasn't good enough for the Republican Party and its plutocratic sponsors, so the GOP bombarded the airwaves with anti-union propaganda to ensure Volkswagen’s 1,600 workers heard the competing argument. Governor Bill Haslam, a Republican, warned that auto part suppliers would choose against locating to the Chattanooga area if Volkswagen unionized. GOP state senator Bo Watson threatened to withhold state aid to Volkswagen if its workers voted for a union. So much for "free trade,” huh? Tennessee Senator Bob Corker threatened that his state would ban the company from adding a new SUV production line. Grover Norquist, the anti-tax crusader, erected 13 billboards in Chattanooga, warning that the city might become the next Detroit if the workers voted for the union.

Eventually, big money shaped the outcome of the vote with Volkswagen’s workers voting against their own self-economic interests. Steven Greenhouse of the New York Times writes, “The union’s defeat — in what was one of the most closely watched unionization votes in decades — is expected to slow, perhaps stymie, the union’s long-term plans to organize other auto plants in the South.”

Hedrick Smith, author of Who Stole the American Dream?, warns that, “These trends have left not only union members, but the middle class in general without a voice with sufficient clout to negotiate for moderate, gradual adjustments to technology and globalization rather than instant slashing by Corporate America.”

In the post-war years, America built the Great Middle Class through a combination of a sensible tax code, favorable government policies, and trade union collective bargaining. Paul Krugman says this period “succeeded in equalizing incomes for a long period – more than thirty years – and the era of equality was also a time of unprecedented prosperity, which we have never been able to recapture.”

In the last 30 years, we have experienced an unraveling of that shared prosperity with three decades of trickle down economics; the monopolization, privatization and deregulation of industry; and the destruction of labor protection having resulted in 50 million Americans living in abject poverty, while 400 individuals own more than one-half of the nation’s wealth.

Ultimately, big business and the Republican Party win again, but at the expense of whom? That's right: the American worker. Corporations will continue their migration to the de-unionized South in search for cheap labor and even greater profits, which all but ensures America will continue on its path to becoming a third world country.


CJ Werleman is the author of Crucifying America, and God Hates You. Hate Him Back. Follow him on twitter: @cjwerleman

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