The Ironical Chronicle "May I characterize the method of leadership in fascist and democratic countries as follows: In dictatorships people are led by coercion and lies. In democracies by lies only." Albert Einstein in a letter to Upton Sinclair, quoted in "Einstein, A Life," by Denis Brian, John Wiley, New York 1996.

April 19, 2005

Birdbrain Sings Another Management Tune

An earlier form of Capitalism
Dt's an ancient Capitalist strategy to use their self-inflicted profit slumps as an opportunity to cut their wage bill. What's novel this time around is the absolute transparency of the efforts of the birdseed feeders they hire to sing their propaganda line.

When US Capitalism was riding high, the line was a brassy, "What's good for GM is good for America." But, things have changed. And so has the tune.

With America's top capitalists reduced to the level of a conspiracy of stock market swindlers trying to corner the world market in oil with someone else's money, the domestic canaries have been ordered to sing a different tune. It's called Capitalism, The Innocent Victim Of Rising Health Care Costs.

But how innocent are these direct descendants of the people that swindled the Indians out of their land, brought slaves in chains from Africa, and peddled snake oil to everybody else?

Unless you're a complete capitalist dupe, you've probably guessed right.

Health care benefits as a part of wages got its start in management compensation where the IRS had left a loophole for an [unmonetized] component of salary that was untaxed. At the time, the all-important factor was that it was worth more to the recipient than it cost the employer. From the employer's perspective, it was a way of shifting a part of his wage burden onto the federal government in the form of lost taxes.

Having discovered the latter advantage and anxious to exploit it, employers were quick to build health care benefits into their wage packages for all their employees.

This brilliant innovation in capitalist wage strategy took place in an era of low inflation, which explains why no one noticed that it was an inflation-proof part of wages. Since the government has taken to inflation as a means to steal from workers by lowering their real wages, devaluing their pensions, and delaying their retirement, this formerly lucrative, employer-initiated wage strategy has backfired.

Through the long-term capitalist strategy, in collusion with the capitalist state, of destroying worker's organizations, including unions, the expectation was that only a very small percentage of workers would be able to defend their wages, including their health benefits, as employers inevitably sought to revise their compensation policy to eliminate the inflation-proof component. This expectation has been met. The only rough spots, as expected, have been in the very few industries which still have unions. The auto industry is one of them.

In the accompanying article, the NY Times makes its meager contribution to this problem afflicting one of the few manufacturing industries left in the de-industrialized United States.

Adopting the perspective of class warfare, all the Times, as a channel for propaganda, can do is to undermine the morale of its enemy. In the case of the members of the United Auto Workers, the effectiveness of this propaganda would, at most, be measured in single digit percentage points. If not the UAW member, whose very membership in a union is a testament to his having taken a side in the class struggle, then who is the Times targeting?

Everyone else.

Like the Bush regime's foreign policy, the Times is practicing preemptive propaganda against a class whose only defense is the distantly hypothetical one of organizing itself for the defense of its interests.

A more tangible benefit, for the Times itself, is that of ingratiating itself with the industry's ad agencies.


The New York Times

April 19, 2005

G.M. Reports $1.1 Billion Loss and Says Outlook Is Uncertain


DETROIT, Apr. 19 - General Motors, facing its worst financial outlook in several years, reported a $1.1 billion first-quarter loss today that it blamed on a stark turnaround in its North American operations. The company also said it was no longer certain enough of its outlook to provide earnings guidance for the full year.

"The results at G.M. North America were clearly disappointing," Rick Wagoner, G.M. chairman and chief executive, said in a statement today. "We have well thought-out plans to address GMNA's poor performance, starting with aggressive product introductions this year, value-focused marketing initiatives and further reductions in our cost structure."

The loss was in line with G.M.'s profit warning of last month that sent the company's shares to a 12-year low and led to a shakeup of the company's North American management.

G.M.'s $1.1 billion net loss was all the more stark in comparison with a $1.2 billion net profit in the first quarter of 2004. Special items included charges for restructuring the company's troubled European operations and accelerated retirement packages offered to American white collar workers. Excluding those and other one-time charges, the company reported operating losses of $839 million, or $1.48 per share, in line with Wall Street estimates, which have been revised downward since G.M. executives said on March 16 that the company would fall well short of its initial expectations for the year. Revenue fell 4.3 percent to $45.8 billion in the quarter.

The company's share of the North American market fell to 25.2 percent from 26.3 percent a year ago.

G.M. also said today that it was not ready to provide further profit guidance for the full year because of "uncertainty affecting key elements of our financial forecast, such as resolution of the health-care cost crisis."

Health care costs are a substantial burden for the company because it provides coverage for 1.1 million Americans, including workers, retirees and their families.

Copyright 2005 The New York Times Company