Dissenting Account of the Republic Settlement

by Dollars and Sense

An interesting dissenting view, from Darren Hutchinson of Dissenting Justice on the settlement between Bank of America and workers who staged a sit-in at Republic Windows and Doors in Chicago. (See our recently-posted article about the sit-in and settlement here; our January/February issue will include a comment by UMass-Boston economist Randy Albelda on the financial crisis and the shredded safety net.) The back-story about the company's political connections is particularly interesting. I think part of what is going on is that people are so unused to any kind of labor militancy that they were quick to take anything they could get. An Argentine-style takeover of the factory (with or without help from the state) would have been even better than state-supported safety-net provisions and retraining, no?.

What (I Think) Progressives Should Have Done for Workers of Republic Windows and Doors

A comment from a reader is the immediate reason for this blog entry. But I feel obligated to keep this subject "in play" because the mainstream media have failed to examine this issues surrounding Republic Windows and Doors and its former workers deeply and critically.

In a comment on Dissenting Justice, reader "Brian" says:

"While you point out some important reasons to continue the fight against irresponsible employers, if the UE union didn't take action fast, the Chicago workers would have been screwed. Hindsight is 20/20, but Christmas is coming, and these good folks in Illinois needed their paychecks. Since Bank of America was the easiest political target, these people will be having a merry Christmas. My question for you is, what should progressives have done to ensure that these folks got their due and that what should we do to ensure that Republic's owners get their's?"

Well, Brian, first of all, the angle I have taken is not "hindsight." The very first article detailing the Iowa move came before Bank of America caved to political pressure. This article appeared in the Chicago Tribune. But holding that aside, here's what I would have rather seen happen.

Better Analysis of the Bailout

I agree that the bailout helps banks. A lot of those banks engaged in risky lending and other bad investment practices. In many ways one could even construe the bailout as a "handout" to banks. Previously, I analyzed the bailout from this perspective, and I stand by those arguments.

But the bailout is also a tool of macroeconomic policy. Holding aside the bad behavior of lenders and consumers, pumping money into the nation's financial institutions can provide necessary liquidity to fuel economic activity, which is undeniably sluggish. The protestors acknowledged this aspect of the bailout, but they also distorted its purpose when they argued that participation in the bailout obligated Bank of America (or any other recipient of federal assistance) to "lend money on demand." Poor lending practices contributed greatly to the nation's poor economic conditions. Encouraging additional bad lending cannot fix this problem, but liberals nevertheless implied that Republic Windows and Doors was entitled to loan assistance simply because its creditor participated in the bailout. This is untrue. It is also pretty unwise as a matter banking policy.

I also do not agree with your implied assertion that the "ends justify the means" because the workers now have money for Christmas. First, this does respond to the true problem -- that distressed workers and unemployed people need stronger emergency aid. Also, this argument shifts responsibility away from the culpable party: the management of Republic Windows and Doors.

Getting to the True Problem: The Need for Emergency Aid

A central problem of the bailout with respect to "Main Street" is that in many instances, banks will not (or should not) deliver relief to distressed individuals or companies at all (because of derogatory credit histories or a lack of income or revenue). Even when individuals qualify for credit, banks might not deliver assistance rapidly enough. Rather than distort the intent of the bailout by arguing that it mandates lending to anyone, progressives should have advocated that state officials deliver emergency relief and more sustained welfare assistance to needy individuals.

The laid-off workers will need job training (potentially), health care, education, extended unemployment benefits, welfare payments, housing assistance, and other forms of relief. Beating up Bank of America does not give them these things. By contrast, emergency state aid could have provided them benefits by Christmas and beyond. If Illinois, a blue state and home to Obama/Lincoln, cannot provide rapid assistance to laid-off individuals in the face of intense national scrutiny, then we may as well retire all "hope" for "change" at the national level.

Additionally, because the Left validated a public narrative which depicted Bank of America as the sole enemy of workers, politicians involved in the protests can now claim "victory" without working to ensure a more longterm package of benefits for these workers and others who have lost their jobs. Their work is now done. Jesse Jackson delivered 300 turkeys, but will he do more after Christmas?

Strengthening the economic safety net is a matter of national and local importance. None of the politicians in this situation, however, publicly advocated a policy solution that focused on improving social welfare policy. Instead, they placed responsibility for solving the human dimensions of the recession on the bailout, which is principally designed to shape macroeconomic activity.

Now that Bank of America has capitulated, progressives and the media are treating the workers as yesterday's news. Absent public scrutiny, it is unclear who will help them once they exhaust their remaining salary and benefits. The argument against Bank of America will no longer have persuasive force (barring some bizarre chain of events).

Strange Silence Surrounding Republic Windows and Doors

As I have stated before, the most troubling aspect of this situation is that progressive advocacy has permitted Republic Windows and Doors to discard its workers, restart its operations in another state, and escape any bad press or liability. But the company is the most culpable (probably the only culpable) party involved in this scenario. If the company can afford to restart its operations in Iowa, then it could have delayed that move and paid its workers the wages and benefits to which state and federal law entitled them. By ignoring the employer, however, progressives helped direct public scrutiny away from the only party that violated the rights of workers.

According to scattered reports, the owners of the company seem well connected to the "Chicago machine." Mayor Daley helped them secure nearly $10 million dollars from the city to build a new factory, and his brother, who chairs JP Morgan Midwest, helped secure $400,000 in loans to pay the workers. Progressives could have pressured these known contacts to persuade the company to pay its workers. In other words, powerful officials connected to Republic Windows and Doors could have urged its managers to obey the law.

Instead, progressives cheered as recently indicted Governor Blagojevich made a rash, unfair -- and probably illegal -- decision to ban Bank of America from transacting business with the State of Illinois. If this is how a progressive victory looks, then I can do without it.

This is the full post; click here and scroll down for related earlier posts on Dissenting Justice.

Labels: bailout, Darren Hutchinson, Dissenting Justice, financial crisis, Republic Windows and Doors, sit-in, United Electrical Workers

 

Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!).
12/14/2008 01:32:00 PM