I understand why public sector unions are big supporters of Democrats - the Democrats are the party that love government and want to expand it, which makes supporting the portsiders a natural for AFSCME. But it's a different matter for private-sector unions. The ever-sagacious G-Man over at Boots On asks a great question - why on earth would the UAW support Democrats?
The UAW is in the business of selling automobiles. Automobiles run on gasoline. But, Democrat policies designed to destroy Big Oil and make scarce the gasoline pump have already forced the closing of several GM plants. Just today, major automobile makers announced 18-28% drop in sales. This means lost jobs for UAW members.
To be precise, the UAW isn't in the business of selling automobiles - they are in the business of providing labor to the companies that are in the business of selling automobiles. But if the companies that UAW supplies labor to go under, there won't be much left for the UAW to do, so their interests are tied inextricably to the industry. And yet they support a party that is doing everything they can to make driving personal automobiles difficult.
Of course labor and the Democratic Party go way back. Walter Reuther led the UAW during its glory days and was a major figure in Democratic politics. Reuther has been gone a long time now, nearly 40 years. But his union still supports a party that is doing everything they can to hurt the companies that employ the vast majority of UAW workers. The plants that are closing, in places like Janesville, Wisconsin (where Obama appeared in the accompanying picture) and St. Paul, are UAW shops.
You would think that the UAW would put ancestral political loyalties aside and ask their ostensible patrons in Washington to make life easier by making it easier for oil companies to go after oil that is available, which would send an unmistakable price signal to the markets that would bring prices back down. In other words, you might expect that the UAW would demand that their party of choice actually deliver something that would help their members. But you would be wrong. It's puzzling, really.
12 comments:
Mark,
It seems to me that you are laying an awful lot of blame for the plight of the Big Three at the doorstep of gas prices. And an awful lot of the blame for the spike in oil prices on the lack of drilling in and around the U.S. Much of the current run up in prices is driven by commodity speculation, but that doesn’t change the fact that there is a long term structural change in oil/gas prices due to declining supply and increasing demand globally. And while part of that structural change can be attributed to the lack of drilling in the U.S., there are other supply line issues that are just as much to blame (existing infrastructure degradation, lack of refining capacity, NIMBY on refinery expansion, etc). So the effect of drilling in the US will only marginally impact the price of gas, and even that marginal impact would be a medium to long-term proposition. As I have previously noted, I am not averse to drilling. Hell, I’d drill in my own back yard if I thought that I could make a profit doing it. But this is a much more complicated issue than that, and I would guess that many union autoworkers are capable of seeing the current spike in oil, and the opposition of many portsiders to drilling in the U.S., as just two small components of a much larger problem. I would be willing to bet that many autoworkers would point to strategic blunders on the part of U.S. auto manufacturers as the primary reason for the collapse of the American auto industry. I am not sure who deserves the lion’s share of the blame, but let’s be realistic: The Big Three have had three decades to downsize their products, and they failed to act on that in any meaningful way. And all along the way, they were getting their butts kicked by the Japanese car companies, who were turning out better, more fuel efficient and more innovative cars. The guys making the Prius aren’t about to lose their jobs, but the guys making H2s might as well be working Spinning Jennys. You want to blame Democrats for that? I understand that the profit margin is higher on a $60,000 truck than it is on a $20,000 car, and the objective of any public company is to increase profit margins. But you need a little strategery and foresight as well. Short-term thinking has been their downfall, not higher gas prices.
The biggest problem with Detroit is the quarterly report. For years they have chased share price doing anything they can, in the short-term, to make that quarterly filing look pretty. They didn't drive a harder bargain with the unions because that might have meant production shut downs that would hurt that precious quarterly statement. They didn't invest in hybrid technology because R&D cuts into profits. They didn’t look at improving on diesel technology, which European automakers have improved dramatically. Instead, they concentrated on SUVs, mini-vans and pickups because they were easier to build and netted fatter margins. Meanwhile, Asian and European automakers (who have lived with much higher gas user fees for 50 years) concentrated on fuel efficiency, new technologies, and building small cars. They looked way down the road in terms of business plans. Japanese makers use higher quality parts and prided themselves on building long lasting, fuel efficient vehicles. To Detroit, such long range planning and long lasting vehicles would hurt short term profits. In a way I guess we can't blame the companies, profits are their only raison d'etre, but is a little forward thinking too much to ask? A recent article in Business Week noted that Ford had the worst fleet fuel economy of all the major automobile manufacturers globally. It seems to me that they are now paying the price for their willful ignorance.
Regards,
Rich
Rich,
Everything you are saying is true, but that's not what the post is about. It's only about what the Democratic Party is doing right now in re: oil production. And the "we can't drill our way out of this" stance has been their stance for as long as I can remember. Now, instead of looking at the current situation and potentially re-thinking their long-held opposition in light of the current reality, they are doubling down on their opposition.
I'm simply asking why a UAW member would support a party that is being this reactionary (and yes, I think reactionary is the right term) in their thinking. The reason the speculators are in the market is because they sense that nothing will be done to change supply in the short or long term. Speculators are rational people and if it becomes clear that new supplies will come on line, even if it is years away, the price will come down because it will no longer make sense to bet on futures going higher.
As long as Nancy Pelosi and Harry Reid continue on their current course of action, things won't get better. Maybe a President Obama might be able to get them to reconsider their current course of action? All I know is that the current congressional leadership is making it much more difficult for new oil to come on line, now or in the future. And if I were working in an industry that is inextricably tied to having a reliable supply of gasoline, I'd be asking why my union supports people who are acting in ways that are contrary to my interests.
Mark,
I concede your point, and actually agree with you. And I would add that reactionary is not too strong a term. I have been quite surprised by the tone-deafness of the Dems in Congress regarding drilling. It's like we're trying to ride that caribou into electoral defeat.
But I still think the Dems are better at pushing alternative forms of energy and new technologies. At least, they are perceived to be. So they come off looking better on the vision thing. I don't think the rust belt autoworkers give a damn whether they are assembling cars that run on gasoline, electricity or caribou blood. Just as long as they've got work. And if the bien pensants (h/t to you) of Detroit had an ounce of sense, they would have seen this coming and invested a lot more in R&D on alternative fuels. And I think many of the Union guys know this, so it probably tempers their anger toward the aforementioned tone deaf Dems (and a handful of Republicans) in Congress.
Regards,
Rich
I would argue that speculation on gas has skyrocketed precisely because Democrats control Congress. As long as Democrats control Congress, speculators know that U.S. oil companies will never be allowed to drill in our own backyard. Democrats are an oil speculator's best friend for the Democratic Party is determined to keep oil supplies artificially short. If a bill allowing domestic drilling were to pass congress, gas prices would fall dramatically and quickly – not because there would be an immediate increase in oil supply, but because the value of current speculation won't last once new drilling begins.
It is also worth noting that corn prices have also doubled since 2006 from $3.04 per bushel to $6.30. Thanks to Democrat policies -- aided by a few RINO's – Big Farm has learned that participation in government financed ethanol production is more lucrative than the food market.
Add the high cost of gas to the high cost of corn and everyone ends up paying more for just about every product and service that is purchased. This compound effect has a way of crippling one's disposable income – income that would otherwise be used to buy that new car.
It's true that the Big Three had sales problems prior to the 2006 election, but these problems were largely linked to price – not quality or selection. I'll agree that a few European makers offer better engines, but they do so at a premium price. Japanese makers no longer hold an advantage over the Big Three in quality, but they may in after-the-sale service. Regardless of perceived quality differences, U.S. automakers inherit costs that foreign makers may not. Therefore, the free market is not decided by cost versus quality alone.
The big issue for GM was the fact that nearly $1,000 from the sale of every new car went to health-care benefits for retirees. Actually, this is another reason why Democrats are not doing the auto worker any favors, for Democrats like the idea of forcing companies to be responsible for health insurance benefits. They have repeatedly opposed efforts to give private sector health-care insurance more freedom to compete with corporate plans. But, I digress.
I strongly disagree with the notion that downsizing of autos is the reason for the Big Three's financial woes. There is a market for trucks and SUVs and there always will be. There are many, myself included, who don't feel very comfortable putting our families in downsized coffins on wheels. (I have rolled over in a full size Ford F250 and learned to appreciate the benefits of shear mass in absorbing the shock of a high speed accident.)
Further, we are a nation of tourists and recreational drivers. We like to throw the whole family in one vehicle and pull a boat or a camping trailer to see the country. Any boat that can handle a 50hp motor or better will require a frame-based vehicle to pull it. This means a pickup or a larger SUV (like the Explorer or Expedition). If Ford had the lowest fleet fuel economy, it's not because they failed to make more fuel efficient vehicles – it's because they did a better job of satisfying market demands larger SUVs and pickups. (Fleet fuel economy is one of those useless statistics.)
If you haven't guessed, I'm not buying the premise that we need a government sponsored strategy for increasing fuel efficiency of autos or exploring alternative fuels. If design-by-committee is a bad practice, then design-by-government is disastrous.
Democrats may be perceived to be better at "pushing alternative fuels". In truth, Democrats are better at pushing government programs and squelching private ingenuity. Ethanol is a good example of why government should stay out of the energy business. It costs far more to produce than gasoline and isn't nearly as efficient to burn. Trying to get more corn out of our land is even more demanding on Mother Nature than sinking another oil drill. Ultimately, because of government's intervention, we now pay a lot more for food and are no closer to a viable alternative to gasoline – or changing global climate patterns.
The topic of fuel for energy and its effect on the environment is politically frustrating. First, because Democrats and their allies in the media have driven mass hysteria against personal transportation freedom based on a scam. Second, because too few Republicans have been willing to shine the light of truth on the issues (Representative Bachmann being one notable exception). Science is driven not by curiosity and discovery, but by the drive to continue the influx of government funding dollars – of tax dollars. It could very well be that oil itself is a renewable resource and in rich supply. But since too many politicians have waged war on Big Oil and see global warming as a vehicle for increasing their power, we may never find out. Instead, we stand to waste trillions of dollars nationally on artificially high gas prices and unnecessary scams to control the carbons we exhale.
Hard to argue with any of that, G-Man. I don't like small cars and would never buy one - the two cars I own are larger sedans and I'll probably buy another one later this year. My family rides in these vehicles and while the Democrats may think they can change laws to remake the world, they cannot change the laws of physics. And there will be a human cost if the D's try to force us into Priuses.
Your comment is so strong that you ought to post it on Boots On, good sir!
Guys,
I suppose the Democrats killed Jimmy Hoffa too. George Bush hasn't formulated an energy policy in 8 years, and Republicans have held all the cards for 6 of the last 8 years, yet Democrats are to blame for the spike in oil prices? Please. Oil is a highly volatile commodity, whose value is analyzed, gambled on, and traded just like debt, which means that intangibles outside of the world of refinement and distribution drastically affect its price. Additionally, worldwide demand from growing economies (including ours) has increased while the global oil industry has not grown its production or reserve capability at a comparable rate. Due to its status as a commodity, the single biggest contributor to the spike in oil prices in the U.S. is the dramatic devaluation of the dollar that has taken place throughout George Bush's Presidency. And the biggest reason for the devaluation of the dollar is the massive rise in our National Debt. Much of this can be laid at the feet of the President, but certainly not all of it. Both parties have been fiscally reckless with our debt, and both deserve blame. You want to see the price of oil plummet? If both Presidential candidates called a joint press conference and pledged to balance the budget in their first term, regardless of who wins, and had the heads of Congrass their nodding their heads in agreement, the price of oil would drop twice as fast as it has risen. That is the real short-term solution to the price of oil. But unfortunately, the chance of either candidate embracing such a policy is slim to none.
I see myself as a pragmatist on this issue. I am not against domestic drilling, and hope some of it takes place to help diffuse the growing price of oil, but I still contend that this is not the answer to our problems. It is merely putting a band-aid on a gaping wound. We need to find a solution to what the President calls "our unhealthy addiction to oil." This can only come about by investing in R&D and finding environmentally sound and economically sustainable technologies. If you think domestic drilling is going to accomplish this, you are kidding yourself. Unfortunately, the debate over oil has become yet another speculation-fueled tirade of ignorance dominated by politicians looking for short-term gains in the polls, obtuse news media pundits, and crusading but misguided environmentalists. I have done a lot of reading on this subject, and take pains to read both sides of the argument. The take away: there is plenty of oil in the ground, but the ecological, political, and economic costs of relying on it outstrip the threat of running out of it. So I agree that there is a lot of oil in the ground, pooled in reserves and in oil shale, but there are a lot of reasons why extracting it is not a solution to our long-term needs and will not lead to meaningful decreases in the price of oil, and continuing oil spikes.
We desperately need to move beyond our reliance on industrial era energy (coal, oil) and to sustainable technologies like wind, solar, hydrogeon, etc. While there’s no perfect clean energy solution yet, continuing to invest in and rely upon unsustainable, polluting, and price-sensitive energy systems is far more imperfect, especially when you take into consideration the pernicious effect our reliance on petrocarbons has on our national security. America needs to seize this opportunity provided by the spike in energy prices. Instead of continuing to subsidize the oil industry and pulling out two and a half to five years of oil from ecologically delicate domestic areas, I think we would be better off investing that time, money and resources into figuring out how to get off oil and onto something sustainable. The dramatic growth in industry in China, India, Latin America and Eastern Europe are not going away. Nor is the political volatility in the Middle East. I would hope that the US, where we fashion ourselves to be the most “can-do” nation in the world, we could lead the way out of this mess and keep our economic advantage over the rest of the world by leading the way in these new technologies. Telling Americans that off and on-shore drilling in the US is a potential solution to our oil problem is either misinformed, or an attempt to exploit citizens economic fears for short term political benefit. Our oil problem is here to stay as long as Americans stay complacent. Pointing fingers at each other isn't going to help.
Regards,
Rich
Mark and G-Man,
for what it's worth, if I sounded like I am laying the blame for many of these issues off on Conservatives, I apologize. I am not. G-Man, your observations regarding ethanol are spot-on. And government subsidies are always a bad idea, and are part of what lead to our reliance on oil. Moreover, trying to legislate behavior, such as what car people should drive, never works. But there are intelligent and practical ways of promoting R&D, and synergies between public and private sector entities can work. My point is that we need to stop treating this like a political issue, and start treating it like an issue of the highest national import.
Regards,
Rich
Rich,
We're probably closer than we want to admit on this. Where I differ with you is this - we aren't going to get past our reliance on oil any time soon and that means we have to keep using oil in the short term. That means exploiting what we can exploit now to ease the pain and pursuing R&D. We have to do both. And that's where the government gets in the way.
And this isn't a Democrat/Republican thing; both parties own it. Where G-Man is right is this -- since the siutation has changed, whether the change was foreseeable or not, it's worth remembering that George Bush has been calling for increased production for the entirety of his presidency. But he's never had a filibuster-proof majority in the Senate. The Democrats are four-square against these initiatives because of their fealty to the environmentalists. That has to stop now. And where the Republicans own it is this - they haven't been willing to call the Democrats out on their behavior. The time to have this discussion was when oil was trading for $11 a barrel, but my party was too busy trying to oust Clinton over his sexual malfeasance to spend time on this issue.
That's all ancient history now. So what do we do going forward? Certainly if there's a good way to get some of these alternative energy sources on line, there will be a lot of private money that will get it done. You assert that synergies between public and private sectors can work. I'm skeptical of that. And ethanol is a perfect example of why I'm skeptical. If people in government were intelligent enough to pick winners and losers, they wouldn't be in government - they'd be getting rich in the private sector bringing these technologies to market.
If the government wants to help, it can, but the best way is to stay out of the way. But it can't pick winners and losers and it certainly can't direct industrial policy. No central government has ever done it successfully.
Mark,
I find that when the government avoids using subsidies, which defacto become political entities, they can contribute to innovation. There are a lot of bright, non-politically motivated scientists and engineers working for government agencies. NASA has worked engineering marvels, and is basically a public/private endeavor. This is true in the fields of aviations, national defense, pharma...
When the goverment uses tax incentives to encourage R&D, the results can be pretty decent. Incentives work too. I was annoyed with people who were making light of McCain's idea of a 300,000,000 dollar reward for advancing the car battery. Incentives like that could work. We need to treat this like the space program, or the Manhattan project. These are great examples of massive and important projects that were accomplished through the cooperation of Business, Government and Academia.
Rich
Mark,
I find that when the government avoids using subsidies, which defacto become political entities, they can contribute to innovation. There are a lot of bright, non-politically motivated scientists and engineers working for government agencies. NASA has worked engineering marvels, and is basically a public/private endeavor. This is true in the fields of aviations, national defense, pharma...
When the goverment uses tax incentives to encourage R&D, the results can be pretty decent. Incentives work too. I was annoyed with people who were making light of McCain's idea of a 300,000,000 dollar reward for advancing the car battery. Incentives like that could work. We need to treat this like the space program, or the Manhattan project. These are great examples of massive and important projects that were accomplished through the cooperation of Business, Government and Academia.
Rich
Rich,
Your observations about speculation driving up the price of oil is spot on. But I blame Democrats for giving speculators this opportunity by over-regulating US oil companies and preventing them from drilling. Democrat driven policies have made us more dependent on foreign oil and more susceptible to rising prices due to increased foreign demand.
I don't mean to play party politics here, but it fits. Republicans do share some of the blame. Too few Republicans have been willing to buck conventional wisdom and take on the Eco Wacko mantra in the public discourse. Republicans like Mark Kennedy, Norm Coleman and John McCain, seem to assume that the battle over ANWR and Ethanol is lost and to get elected, they must play along.
Contrary to your assertion, President Bush did, has, and does have an energy policy. But, as Mark points out, Democrats have had enough votes in the Senate to block it. Where the President went wrong was when he gave Eco Wacko's undue credibility with his "addicted to oil" speech. The word "addicted" suggests that we can live without if we simply quit "using". We can't. We need a reliable, abundant energy source and oil fits the bill.
Still, I most certainly do blame the current price of gas squarely on Democrats. Existing off-shore restrictions are largely due to Democrat legislation. We had the chance to drill in ANWR in the mid-90's and President Clinton blocked it. We have among the richest coal deposits in the world, but Clinton made them off limits by executive order. The cleanest energy source known to man is nuclear power, but Democrats have blocked our expansion of nuclear power plants – including Minnesota – for over 30 years.
We have a shortage of refineries and an abundance of regulated gasoline blends across the country. All to often, we are unable to refine oil into gas quick enough to satisfy demand. Democrats have blocked the expansion of building more refineries. Democrats are mostly behind the regulation of gas blends. With 30-some regulated blends across the nation, the refineries that we do have cannot keep up.
Lest we not forget the politics of envy in which Democrats excel. Does the phrase "obscene profits" ring a bell? Exxon profited $40 billion in 2007. Obscene? Not when you consider that they paid $30 billion in income tax. Not when you consider that their profit at the pump is typically 25-30 cents while Big Government's take averages closer to 50 cents. And, not when you consider that these profits are shared among millions of shareholders, many of whom are retirees. What is obscene is AlGore making $100 million with his Chicken Little act. I'm digressing, my point is that Democrats have clearly set the stage to oppose anything that appears to benefit Big Oil. They aren't motivated to help domestic oil companies.
Then there is my pet peeve in Minnesota to which Governor Pawlenty is partly to blame. Ethanol has been regulated into our own blends – up to 10%. Soon it will be 20%. This means we get fewer mpg and risk more damage to 2-cycle engines. Sure, we can still buy real gas without alcohol, but thanks to government regulation, gas stations are only allowed to offer such gas as high-octane premium. Check the manual on your outboard or lawn mower and you will likely find a warning about using gas with more than 10% alcohol. Sorry, still digressing.
If you look at Minnesota, it is quite clear that Democrats are more driven to expanding mass transit than satisfying the needs of private transportation. Frankly, I'm not convinced that Democrats even want to see more cars sold by Detroit.
I'm also with Mark in that I distrust the notion of a cooperative effort between government and the private sector in seeking new energy solutions. Government helps innovation best when government gets out of the way. If any given endeavor has promise, it is easy to find investors. One doesn't need to turn to government funding if one has a promising idea. One turns to government funding when one's idea fails to inspire private investment.
Just look at embryonic stem cell research in Missouri. While there have been many successes in adult stem cell research – even resulting in patient treatment – stem cell research has been a failure. Private investors don't want to risk their money on embryonic research. But, if you want to perform such research without the pressure of actually having to producing results, get the government to fund it. This has made embryonic researchers in Missouri very wealthy.
I also do believe that domestic drilling and more nuke power plants will solve our energy problems for many decades to come. Not that domestic oil will fuel all of our cars, we don't need it to. But, it will give us the option of walking away from any of many foreign suppliers.
For what its worth, my guess is that hydrogen will fuel cars of the future and that American fascination in building a better mouse trap will lead to a better engine. Batteries have too many problems from short capacity to explosion to disposal. The technological race will be between building a better battery or building the hydrogen engine. In the meantime, there is enough oil to make the world go round.
One more thing. A joint, bi-partisan pledge to balance the budget is NOT the answer. Republicans tried this in the 90's and learned the hard way that balancing the budget means two different things. To Republicans, it means cutting spending. To Democrats, it means higher taxes. If we are to strengthen our dollar, I think we need to limit wasteful government spending – and most government spending is wasteful. We need to limit government's penchant for picking and choosing the winners and losers of any particular endeavor – be it the production of energy, of stem cell research, or of schools (don't get me started).
Sorry, Rich, don't mean to pile on, but I do enjoy a spirited discourse.
Mark, thanks for providing the playground.
Rich,
Just saw your latest comment after posting mine – took me too long to write it. I don't disagree that NASA has done well. But, part of NASA is still a necessary military effort in support of national defense.
I do disagree with the notion that we have an eminent energy crisis that warrants a Manhattan Project style effort to solve.
It is government's financial support of academia that has helped lead to the global warming scam. This kind of government intervention squelches true science for it rewards the scientific findings that politicians want to see. There are many renowned scientists in the field of climatology who disagree with the global warming theory that is sweeping academia. But, they all point to government funding as the reason for silencing their voices. Academic scientists who buck AlGore on global warming are warned against speaking out for fear that government funding of their school or their department will dry up.
Granted, I would prefer a McCain style reward to government subsidies for technology improvements, but this still presumes that politicians know the answer. By offering a reward for building a better battery, McCain has essentially picked the winning technology – the electric motor over hydrogen. I would prefer that the private sector offer such rewards as was done recently for the first space craft to break the atmosphere, land, then return within two weeks.
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