GM Bankruptcy is Killing Us Softly

General Motors Bankruptcy is Bad News for GM, Worse News for American Workers

Conventional discourse on the state of the economy appears to veer off the crusty core of the issue: We're undergoing a significant re-configuration, if not a total transformation of the way we make a living, exist, eat, clothe and house ourselves. All these will change in ways unfathomable during the 1990s age of innocence—reflected in the financial catastrophe of the present. That's an uncomfortable subject for most Americans...

General Motors' historic bankruptcy [1] is an ugly reflection of that, and it goes well beyond the relatively rosy (and unrealistic) expectations of a "new beginning" for a company that was once credited with our post-World War II boom. Hence, recent coverage of the bankruptcy focuses more on the "New Start" aspect of it, such as this piece in today's NEW YORK TIMES. [2] That 21,000 workers will soon be unemployed acts as a coughed-up footnote. There goes that "lagging indicator," again. And, how analysts are suddenly projecting recovery in the very near future is something rather befuddling, considering that three quarters of the economy is built on consumer spending. How do people spend when they're not working? More importantly, how do people recover without jobs?

Former Labor Secretary Robert Reich places nail on head with one of the more compelling aspects of GM bankruptcy in a recent FINANCIAL TIMES piece [3]:

The only practical purpose I can imagine for the bail-out is to slow the decline of GM to create enough time for its workers, suppliers, dealers and communities to adjust to its eventual demise. Yet if this is the goal, surely there are better ways to allocate $60bn than to buy GM? The funds would be better spent helping the Midwest diversify away from cars. Cash could be used to retrain car workers, giving them extended unemployment insurance as they retrain. But US politicians dare not talk openly about industrial adjustment because the public does not want to hear about it. A strong constituency wants to preserve jobs and communities as they are, regardless of the public cost. Another equally powerful group wants to let markets work their will, regardless of the short-term social costs. Polls show most Americans are against bailing out GM, but if their own jobs were at stake I am sure they would have a different view.

"Industrial adjustment" is the key phrase here. One could make the argument that, in some ways, automaker insolvency was a planned event. Nefarious, multi-layered conspiracy? Probably not: just cold-blooded, practical fiscal discipline. For too long, foreign competitors - most particularly the Japanese - could tout efficient manufacturing methods, better sales and stronger profit due to the containment of overhead. Meaning: They weren't "held back" with high salaries, inflated health care bills and bloated pensions. The current "recession," a really sophisticated and fashionable euphemism for the "depression" we're really in offers that opening for traditional industries to finally adapt in ways only previously dreamed.

The irony hits home in this Sunday WASHINGTON TIMES cut on black men and the recession:

Those numbers are particularly gruesome among young, black males, which is beyond worrisome for the black family and community, experts in those areas say. For example, for black males ages 20 to 24, the unemployment rate is close to 50 percent; in the black community overall, men have absorbed 100 percent of the job losses; 463,000 jobs since the recession started in November 2007.

In the context of automaker bankruptcy, this is the real story: Over 20,000 African American autoworkers have already lost their jobs since November 2008, a 14 percent decline in employment compared to the overall 5 percent manufacturing worker decline seen nationally. As cities like Detroit literally crumble under the weight of economic pressure [4], so does the legacy of black workers who migrated North from South in search of economic and social stability.

Rather than rip the band-aid off, bankruptcy pulls it slowly. That "unequal" chasm Reich speaks off is widening, rather rapidly, and in ways which will redefine how we perceive race and class. The implicit message here is "you're own your own," perhaps explaining the recent demise of "empathy."

—CHARLES D. ELLISON