09 December 2008

Towards Social Democracy in America: the Republic Window & Door Sit-In

I’m struck by the phenomenon of the Republic Window & Door sit-in in Chicago. Here are the pertinent facts as I understand them.

The company applied for a line of credit with Bank of America, which received a infusion of Federal funds for the purpose of freeing up credit as part of the bailout. The line of credit was in keeping with its past business models, and would have been approved but for the very tight market in credit which the Federal bailout was designed to address. The bank, due to lack of effective oversight in the Federal bailout program, was free to continue its restrictive lending practices, and refused the line of credit, causing the company to shut down.

Despite contractual obligations to union workers for sixty days’ notice and severance in the event of plant closure, the company gave its workers three days’ notice.

The workers are sitting in in the plant, demanding their severance, or better yet, a financial solution which will keep the company open.

President-elect Obama has expressed support for the workers.

Illinois’ Democratic governor has ordered that the state stop doing business with Bank of America unless and until it reverses its decision not to extend the line of credit.

I perceive a new current here. American working people are growing increasingly intolerant of the transfer of wealth from them to the richest. They are growing increasingly intolerant and angry about how the solution to all financial problems is seen by Wall Street as cutting jobs, never in doing more long term planning and changing public policy to keep the companies that make up the dwindling but vital manufacturing sector open and competitive, with a high priority given towards the shared societal goal of maintaining and growing high wage jobs. This approach flows from the forgotten understanding that constant expectation of short term returns at the cost of long term growth and stability have hollowed out our manufacturing economy, and that such short term returns are unsustainable, because the economy depends on consumer spending and only through high wage jobs, as Henry Ford understood, will the workers have enough purchasing power to keep the manufacturing economy functioning.

Also, there is no other word for the government equity stake in Bank of America than socialism. Socialism is perceived by conservative economists as all right if the beneficiaries are financial institutions, but not all right if its goal is to keep American workers employed, productive, and spending money. Hence the ease of approval by the Right wing in government of the financial bailout, and their resistance to the paltry-by-comparison emergency loan program to preserve the continued existence of the Auto industry.

I think there really is a major paradigm shift going on here. People see three quarters of a trillion dollars in borrowed Federal money going to bail out excessive risk-taking and leveraging in the financial sector… socialization of risk; privatization of profit. And they are getting mad as hell, and won’t be taking it much longer. They are coming to expect, and demand, that if there is going to be, as there must, public sector investment, it must go to saving jobs, saving homes, and saving the consumer economy.

I hope the sit-in works, and pressures B of A to capitulate and extend the line of credit. Maybe Republic Window & Door won’t survive, but the welfare of its workers is a more worthy goal of the Federal money that’s saved B of A than making side-betters on Wall Street whole. And it’s a case of regulation by popular uprising. I hope we see more and more of this until the public and private sectors get the message: it’s time to change the way the economy functions to see to it that more of the unearned wealth legacy that we all own is in fact made to benefit the bulk of the people, and not only a tiny sector of the very rich. Clearly, “free markets” as promoted by the economic conservative regime of public policy that has prevailed in this country in the last 30 years, have made matters vastly worse, and it is time to completely revamp the regulatory system and economic policy with these vital goals in mind.

Update: Right after posting this, I saw the news about Gov. Blagojevich's arrest on allegations of corruption in connection with the selection of a temporary replacement for Obama's senate seat. Just as two wrongs don't make a right, a wrong action doesn't negate a right one, either, so this doesn't affect the fact that the governor's action in connection with the Republic Window & Door sit-in is praiseworthy, in my opinion.

Further Update: H/T Barbara. Yahoo news reports: Workers win a big round in Chicago factory sit-in.

I would like to see the Bank forced to make enough available to keep the doors open instead of just enough to pay off fired workers, but it's better than nothing. I don't know the details of the viability of this business, of course, but it seems to me there is no better use for public funds than maintaining American manufacturing jobs in existence, as a bridge to a time when public policy changes make American manufactures more competitive again and the companies can survive on their own. And a lot of BofA's money is public funds.

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