“I’m so bored. I hate my life.” - Britney Spears

Das Langweilige ist interessant geworden, weil das Interessante angefangen hat langweilig zu werden. – Thomas Mann

"Never for money/always for love" - The Talking Heads

Sunday, September 18, 2005

the Ampel election

PS -- The following was written before the results started coming in. Astonishing: the CDU actually managed to lower its percentage of the vote. We will see how the CDU godfathers treat Merkel; conservatives in Germany, as in the U.S. in 2000, are coming into power as the minority.

LI wanted to have its say on the Ampel [stoplight] election in Germany. The consensus view is that the worst thing of all would be a grand coalition between the CDU and the SPD. We think that, of all the grim options, it would be the best thing. In this, we disagree with figures we usually trust, like Claudia Roth, the Green candidate in Bavaria. Roth is a shrewd commentator. She is correct, we think, that Lafotaine’s supposed Linksopposition party is disturbingly reactionary. Her comment that “Lafontaine is operating on the lines of a graceless Right Populism” is essentially correct. And her concern about a coalition also makes sense. In Roth’s words:

“We remain by our clear position that the party of social coldness and of ecological madness is no partner for us. Therefore we are not going to cooperate in a stoplight coalition.”

Unfortunately, the Greens are a para-party – they have never had to confront the macro-economic issues, since they have grown up in the shadow of the SPD. This has encouraged their self-limiting tendencies.

In our opinion, the best thing would be a grand coalition. Drift is better, at the moment, then the loss of worker’s rights that are supposed to be traded for a supposed resurgence of entrepreneurial activity. Entrepreneurial activity, here, means a predators ball of mergers and acquisitions and hedge funds and the like, with only a small amount of that activity really going to the working class, and the large amount swallowed up by the already bloated upper class.

We are afraid of the chute effect from what we read in the press about the election. The Anglo-American press would dearly love to dump a mooing Germany down the free market chute, and watch the state strip workers of their rights while rewarding the parasitic upper ten percent class. You can feel that raw hunger – that contemporary entitled sensibility which combines the work of the butcher and the gourmand - in everything that is written about the German election in the NYT, or in, of all places, the Guardian (see James Meek’s incredibly stupid article ), or in the Times of London. As the Guardian leader put it, in the butter won’t melt in our mouth tones so beloved of the Blairites:

“There is little doubt that Mrs Merkel is better placed to bring about the kind of radical structural changes that Germany needs.”

Radical structural changes and reform are the words to watch out for whenever the governing class knocks you down and picks your pocket. You can see exactly the acids that stir in the guts of the mainstream press, which has been an important part of the machinery that has worked to make sure that the most prosperous time in history has mainly benefited a class that is now placed as far above the average worker as the great landholders in Roman times were above their agricultural slaves. The slaves had a bit more social mobility – lucky ones acquired more power and influence than any of the downtrodden in the 9th Ward are likely to get. According to the unanimous opinion of the bien pensants, we cannot afford a social welfare system in this most competitive of all worlds. And in the style section, we cannot afford to do without, say, the latest pair of 2,000 dollar shoes. It is odd, this social poverty on the global scale and the gilded age regilded on the private scale. It is odd that we can afford any number of wars and trillions of dollars of mortgages, but we can’t afford retirement. And to those who point to something out of wack, here, it is easy to write them off as anachronisms from another age. As though the other age were a richer one, instead of, as it really was, a vastly poorer one. Which is the paradox that the press is going to keep firmly mum about: the richer we are, the poorer we are.

However, an American sidelight has more to do with what should be, and is not, at stake in Germany than the sick “reformist” fantasies of Britain’s premier labour paper. There is an article about the new way to wealth for the old grabbers of semi-wrecked companies. These entrepreneurs are wringing wealth out of old steel companies, and old car parts manufacturing companies. And they are doing it not by the old fashioned way of productivity, or cutting upper management salaries, or anything stupid like that, but by the new and improved way of radical structural reform. They simply reform away the pension plan. Neat, isn’t it? You take a company like Bethlehem steel, and you take the contractually guaranteed pensions of the retired workers of Bethlehem steel, and you throw those benefits out – let the government take care of it! Is this reform at its most needed or what?

“ROBERT S. MILLER is a turnaround artist with a Dickensian twist. He unlocks hidden value in floundering Rust Belt companies by jettisoning their pension plans. His approach, copied by executives at airlines and other troubled companies, can make the people who rely on him very rich. But it may be creating a multibillion-dollar mess for taxpayers later.

As chief executive of Bethlehem Steel in 2002, Mr. Miller shut down the pension plan, leaving a federal program to meet the company's $3.7 billion in unfunded obligations to retirees. That turned the moribund company into a prime acquisition target. Wilbur L. Ross, a so-called vulture investor, snapped it up, combined it with four other dying steel makers he bought at about the same time, and sold the resulting company for $4.5 billion - a return of more than 1,000 percent in just three years on the $400 million he paid for all five companies.

Two years later, as the chief executive of Federal-Mogul, an auto parts maker in Southfield, Mich., Mr. Miller worked on winding up a pension plan for some 37,000 employees in England. The British authorities balked at the idea, fearing that such a move would swamp the pension insurance fund that Britain was creating; it began operations only last April. But the investor Carl C. Icahn has placed a big bet that Federal-Mogul will pay off after the pension plan is gone; he has bought its bonds at less than 20 cents on the dollar and is offering money to help the insurance fund. He, too, stands to make millions.”

As the Guardian noted about Schroeder:

“Schroeder has failed to bring down unemployment, now almost five million, and struggled to liberalise a social model that, like France's, seems a relic of an earlier time.”

Those relics of earlier times – why they are so dusty, so dirty, so full of, well, frankly people who you just can’t have a stimulating conversation with about democratization in the Middle East while forking up the camembert. What you have to do with relics is sell them off – and isn’t Mr. Miller doing a very fine job of that! You have to look at this model and ask: how could any nation resist?

As for the brave New World ahead of us, in which family togetherness is boldly encouraged, Grandpa having the choice of sleeping in the streets or being taken in by his entrepreneuring children living the two wage earner life style we all just love, it is all prepared for us from the relics of the ancient, bad times:

“James A. Wooten, a pension-law historian who is a professor at the University at Buffalo Law School, said that Congress knew it was creating an imperfect system when it established the pension corporation in 1974, and that it expected to make improvements later. The bill was highly contentious, and Congressional leaders struggled mightily to achieve compromise in the last chaotic months of the Nixon presidency, with the Watergate scandal roaring around them.

In the beginning, they set pension insurance premiums at a token $1 per employee. Today, the basic premium is up to $19 a head, but Congress has found it hard to raise the rates even remotely enough to cover growing claims. Some companies have warned that if they have to pay more for their pension insurance, they will stop offering pensions.

"They took cautious steps, and those cautious steps weren't enough to prevent the abuse of the insurance program," Mr. Wooten said. "Once there's insurance, you have an incentive to run up liabilities to get more out of the insurance."

MR. MILLER'S arrival at Delphi in July, and the intense labor negotiations that have followed, are signals that the auto parts industry may be in for a long cycle of bankruptcies and restructurings, like those that reshaped steelmakers and are beginning to transform airlines.”

Luckily the government’s spending now – which is, surprisingly, about the same amount of the GDP as it ever was – is being put to good use. Instead of those terrible social insurance guarantees, it is the ownership society that we are pouring our money into – or at least as much of it as we can borrow.

2 comments:

Brian Miller said...

Bravo, roger! I'm so sick of hearing the casino culture of the coupon-clippers idolized and worshipped. You want to see entrepenurial energy, look to China. Certainly not to the sclerotic Anglo American world, where economic growth consists of new ways to package debt and suck of the government teat (Did you read that the good FOW (Friend of W) who got "Brownie" appointed to FEMA has now been given a $200 million contract for reconstruction?)

roger said...

Brian, hate to toot the old LI horn, but hey, we pointed to that Allbaugh contract in some post last week. Can't get nothin' past us, man!

Yeah, the question that is seemingly overlooked by the media, as they press us to get reform ourselves out of those silly social security benefits and the like, is why is it that we could afford them when we all made half as much? Oh, but I'm forgetting the answer -- it is that cutthroat global competition. Funny, though, global competition is what they are always urging on us.
If journalism was medicine, we could all sue the NYT for malpractice.