No more bailouts for the rich!

Workers need struggle for jobs, wages,
social programs and homes!

(from Detroit Workers' Voice #77, December 8, 2008)
(CV #43, June 2009)


. The economic crisis began with people losing their homes. From Fresno, California and Seattle, Washington, to Athens, Georgia, tent cities of the homeless have sprouted up across the country. But the recession is far more than just a housing crisis. We see more and more people losing their jobs, more than half a million in the last month alone. Large firms like Chrysler and GM may collapse. And workers with jobs are also affected. They have seen their pensions go down the drain, and face cuts in wages and benefits. Meanwhile federal and state services will be cut back next year. The string of economic disasters is going to continue.

. In this situation, Congress and the Bush administration have chosen to help not the homeless and the unemployed, but Wall Street. A $700 billion bailout was authorized in early October, and then an additional $800 billion in November. And that's not all. The government has also guaranteed trillions of dollars of Wall Street investments against default. If one adds this all together, the bailout has reached $7. 8 trillion. (See the New York Times, Nov. 25) Thus, in the space of a few months, the Bush administration, backed by the Democrats, has rushed to back Wall Street with an amount of money equal to two and a half times the entire federal budget.

. But when it comes to helping workers, it's another story. Democrats and Republicans in Congress are uniting to insist that auto workers must take wage and benefit cuts, that jobs should be cut, and that the health care and pensions of auto retirees is too great a burden. The same politicians who said we must throw money at Wall Street can't wait to tear up the union contracts and throw auto workers into poverty.

. We must say no to the Wall Street bailouts, and no to making workers sacrifice during industrial bailouts. We can't simply stand aside and let the free market do what it will, as the conservative Republicans demand. Nor should bailouts go to the rich, as Bush, Obama and the Democratic Congress insist. We can't put aside the class struggle. We need mass struggle against what the companies are doing to us and to demand that the government programs be directed to help workers, not subsidize the rich.

Who is to blame?

. Who is to blame? Why is the economy collapsing?

. The politicians and the news media tell us that everyone is to blame. Why, if the banks made bad loans, people took out bad mortgages. This is bull. It's not workers who determine what type of mortgages are offered, or who set interest rates, or who make the decisions about the economy. If we did make these decisions, do you think we would be cutting our own wages? If auto workers have seen their wages cut in half at company after company, isn't it clear that they aren't the ones in charge?

. No, the blame lies squarely on the capitalists who run the economy. This is a crisis of free-market capitalism.

The crisis of the free-market

. The housing bubble and the financial crisis are the fruit of several decades of deregulation. For years the conservatives have told us that all the problems of life are due to government regulation. And the liberal Democrats, too, bowed their heads in deference to market-based forces. And so the banks and corporations have been deregulated and allowed to do anything they want. They can sell mortgages with complicated rules and hidden clauses. They can cheat their customers as they please.

. This is called "neo-liberalism", and it is based on the belief that the market is always right. Even now we are being told that the stock market always goes up -- don't panic, just wait a few months or years and your pension will be back. Supposedly it would be better to have money in the stock market then to get Social Security. Even "welfare as we know it" was eliminated under President Clinton, because who needed welfare when supposedly anyone could get a good job who wanted?

. Now this is all coming home to roost. As one investment scheme collapses, it takes down many. Pensions, school funding, local and state government funds are all being cut to ribbons due to stock market declines and the collapse of investment houses.

. For years, the financial sharks told us to let them alone because they were the ones who knew how to create prosperity. They were allowed to use unlimited amounts of other people's money -- from pension funds, 401Ks, insurance funds, mortgage income, government assets, whatever -- on wilder and wilder bets. They got huge bonuses when they won the gamble, and now they want the government to pay when they have lost their gamble. The neo-liberal sharks, one and all, have turned out to be nothing more than a gang of Enron-style swindlers, and neo-liberalism nothing more than a huge pyramid scheme that was bound to crash sooner or later.

An overproduction crisis

. But the deepening recession is about more than financial swindling. It isn't just a crisis of the banking system. It is also another overproduction crisis of capitalism, with the auto industry, the airlines, and other industries having large excess capacity. Unemployment had been going up for some time before the financial bust.

. The truth is that capitalism periodically crashes. No amount of bank bailouts will stop the recession because the capitalists can't prevent the business cycle. The marketplace has always been subject to ups and downs, to busts and depressions as well as booms and bubbles. Capitalism is a hell of insecurity for the workers, where families who have labored for decades to make something of themselves can find themselves ruined in an instant. What we need are measures to help people survive.

Down with the trickle-down bail-outs!

. But Bush and the Democrats said that money had to go to the rich. So trillions have been given to financiers. This is a crime. The capitalists who are responsible for the crisis, and who benefited from the orgy of profits that paved the way for it, are being rewarded. Those who are rich are being reimbursed, while the poor are fed on empty promises.

. With money being poured into the Wall Street bailouts, the government could have helped millions of people facing homelessness. It could have helped maintain and improve schools, mass transit, and health care across the country. But the money doesn't go for that. It goes to pay off the debts of Wall Street investment houses; indeed, it even goes to paying dividends to the rich stockholders. Thus the Washington Post reported on October 30 that "U.S. banks getting more than $163 billion from the Treasury Department for new lending are on pace to pay more than half of that sum to their shareholders, with government permission, over the next three years."

. But what about the conservative Republicans, who refused to vote for the bail-outs. Were they championing the people? No, not at all. They don't want to help the workers. They simply repeat free-market dogma: let the economic problems work themselves out without interference -- the free market forever. That is just as much a crock as the bailout of Wall Street. It means letting millions of people suffer for years on end. It means letting the social programs be cut as part of the economy just working itself out. It means pushing workers into the dirt.

Bailing out the auto magnates on the backs of the workers

. The plight of the Big 3 auto companies and the incompetence of their management is a sign of how deep the crisis is. The auto industry used to be the pride and joy of American capitalism; and now the auto magnates can't even keep their companies afloat. So long as super-rich CEOs and financial parasites run the economy, this story is going to be repeated over and over.

. Now, what would happen if these companies go bankrupt? They would likely be restructured. Part of the auto industry would be closed down so as to deal with the question of excess capacity. And the rest will be made "leaner and meaner", as the capitalists like to say. This means that the bankruptcy judges, as they have done in the last few years, would order that workers' contracts be reopened, and their wages and benefits be cut.

. But the same thing is happening with the proposed bailout. The auto CEOs talk of cutting tens of thousands of jobs, and of paying less to the rest of the workers. The Big 3 may survive longer with a more bailout, or several bailouts. But a bailout for the auto companies isn't going to be a bailout for the workers.

. If the companies face ruin, it's not their executives and owners who should be bailed out. If the factories and research facilities of the Big 3 are to be maintained, they should be taken out of the hands of the millionaire owners who have ruined them. These companies should be taken over, without reimbursing the capitalists for their now-worthless equity in them, and the factories should be directed to producing things of use. This could be either better cars, instead of present models that are environmentally obsolete, or other useful environmental or infrastructure projects.

. But Congress won't expropriate the Big 3. And even if it did, Congress would still impose cutbacks on the workers, just as it is doing now, and it will keep the workers out of any say on how the companies run. The truth is that the Democratic and Republican politicians, far from being the workers' friends, are actually pushing the auto capitalists to be even harsher towards the workers.

We must not depend on the benefits from corporate bailouts
trickling down to us

. In this situation, the auto workers are going to have defend themselves by mass struggle. This is true whether there is a bankruptcy settlement, a bailout, or even expropriation of the Big 3. The auto workers need to put forward their own interests, as distinct from that of the CEOs and owners who have been exploiting them from the day they set foot in a factory. Auto workers, just as workers throughout the country, should denounce the idea that the benefits of the bailouts will trickle-down to them.

. But to do this, the auto workers will have to fight, not just against the capitalists and the politicians, but against the present UAW leadership. Ever since the Chrysler bailout of 1979, the UAW leadership has been gradually giving bigger and bigger concessions to the auto capitalists. Today it sees its task as holding hands with the auto capitalists and helping them out with Congress. And so the UAW leadership has agreed to tear up the current UAW contracts.

. As part of this, UAW President Gettelfinger has already agreed to suspend the jobs bank. This means that the laid-off workers will be left in a desperate position. But so long as there are some workers left to pay UAW dues, Gettelfinger doesn't care what happens to the one-third or so of auto workers who will lose their jobs. (New York Times, Dec. 4)

. Similarly, Gettelfinger has already agreed that the retirees should be sacrificed. The companies can now suspend payment to the retiree health funds.

. And all this is not surprising. Gettelfinger is fresh from betraying the American Axle workers earlier this year. They walked picket lines for three months to preserve their wages and benefits, but Gettelfinger had already agreed prior to the strike to deep cuts.

. Clearly workers can't rely on such union leaders and their futile path of class collaboration. We are going to have to build up rank-and-file organizations which really stand for defense of the workers' interests. What workers need unions for is to fight the employers, not have them act like little corporations.

What will the Obama administration do?

. The election of Barack Obama caused a lot of enthusiasm. Workers are sick and tired of Bush-style rule and of racism against black people and other minorities. So this sentiment for Obama is understandable. But unfortunately Obama supports the rule of the rich over the working class just as the other Democrats do. That's why he joined with Bush in backing the Wall Street bailouts.

. True, the Democrats differ with Bush in supporting a few more benefits for the people. That's fine. But such measures are only the bare minimum, and Obama isn't even sure how he will carry out his promises, such as providing some jobs. So far, the Democrats have put the overwhelming bulk of federal money into bailouts for the rich. And they are telling the workers -- the auto workers today, and the rest of us tomorrow -- that we will have to pull in our belts still further. Remember that Obama, as soon as the election was over, immediately began saying that one shouldn't expect him to carry out his promises right away -- change would take years to accomplish, or even more than one presidential term.

. Meanwhile Obama's economic and financial advisors are experienced Wall Streeters. They will sigh about how all the money which could have gone for social programs has already been spent. And they will point out that the war in Afghanistan, which Obama wants to escalate, costs a lot. And Obama's "responsible" withdrawal from Iraq, which means staying for still more years, will cost money too.

. We should not be satisfied with the half-measures the Democrats will offer us. They will continue to ask us to shoulder the financial burden for bailouts for the rich, and will tell us that everyone is in the same boat.

What's to be done?

. So what does the working class have to do to protect itself from the crisis?

. First of all, we must denounce the Wall Street bailouts. Not millions, not billions, but trillions of dollars can be found at the drop of a hat for the bankers, while we are being told there isn't money to help the homeless, to finance health care for children, or to improve the schools. And when it comes to the auto bailouts, we are told that the wages and benefits of the auto workers must be slashed and the promises to retirees broken. No! This is unacceptable! We must demand that the workers, not the rich, are protected.

. They tell us that it pains them so much to bail out the financiers and corporations, but they must do it for the good of all. Why, they say, if the banks collapse, then there will be no one to make loans. But that's nonsense. The banks could, if necessary, be taken over and run by the government. They tell us that manufacturing will collapse if they don't give billions to the corporations. But if essential factories are bankrupt and unable to live up to their obligations, they could be expropriated by the government. And if the companies that collapse aren't essential, then the support should go to workers who used to work there. Either way, there's no reason to pay trillions to try to convince the financiers and CEO's to stop being incompetent.

. Second, we need measures to allow the working people to survive while the capitalist business cycle goes through another bust. We must not scale back our demands on the plea that the money has all gone to the bailouts. If the government could find money to bail out the rich, which is a useless expense, they should find the money to help the masses. They should tax the capitalists, who have been taking out an ever-increasing share of the national income: it's time they gave some back.

. Third, we must not simply agitate for government measures, but organize at the workplace and in the community. And we must do this independent of the Democratic Party and the union bureaucracy. The Democratic and Republican politicians represent the rich. They only give workers what they are forced to give. People have hopes in Obama, but he has always appealed to big business, and his advisors are recruited from the backers of big business. No, we can have no faith in the politicians or even the union leaders who back them. We need to develop rank-and-file organization that will wage militant struggle.

. It's true that this is difficult when companies are collapsing. But what happened in the Great Depression of the 1930s? That's when some of the largest mass struggles broke out. That's when the unionization of the mass production industries began. The horrors of bad times disorganizes the struggle at first, but eventually gives rise to mass determination to resist.

. Fourth, the politicians will say that regulations are the answer to the previous deregulation. But we must have no faith in the regulations they propose or nationalizations they carry out. We must remember that the capitalists can use regulations, as well as the free market, to exploit. We must not be seduced simply by "regulation" as the answer to "deregulation", and still less regard this as "socialism", but must ask -- these particular regulations accomplish what? benefit whom?

. And finally, we should never forget the clash between the interests of worker and capitalist. The bourgeoisie says that we're all in it together. That's not true, as the bailouts show. Even in the midst of the worst world economic crisis in decades, the bourgeoisie can think of nothing better than to bail out Wall Street while letting the people starve. We should never forget that they have done this. <>

Back to main page, write us!

Last modified: December 11, 2008.