Chrysler, the UAW, and a Small Car Named Desire

| Fri May 1, 2009 12:26 PM EDT

What’s news about Chrysler is not that the big auto maker was pushed into bankruptcy or that a small number of greedy mutual and hedge fund operators tried to screw the deal–but that the United Auto Workers Union  has emerged with a 55 percent stake in the new company. Even amidst all the concessions and temporary plant closures, this is a victory of sorts for labor and for this union, which once stood at the forefront of progressive politics in the United States. 

The deal, of course, also has serious downsides for the UAW, which took deep cuts in pay and benefits, especially for new workers, and gained its 55 percent stake by accepting Chrysler equity for half the $10.6 billion obligation that the automaker owes a retiree health-care trust. Harley Shaiken, a labor expert at UC Berkeley, cautioned that if Chrysler fails in the long run, the equity could turn out to be worthless. Shaiken told Bloomberg News today: “The union will have a tough fight in the future to make sure competitiveness results in high-wage jobs rather than coming at their expense.”

Yet the deal was approved by an overwhelming majority of union members. And Obama’s announcement of an agreement that effectively includes union ownership is not just a strike at Wall Street; it could reach far beyond, to hit at the heart of the ruinous policies of our celebrated corporate industrial complex. 

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For more than a century, a main tenet of big business has been to prevent union participation in the organization and management of industrial production. The idea that the UAW could actually take part in setting the priorities of one of the big three automakers has been unthinkable, and all such earlier efforts by the union have been effectively crushed.

As Harold Meyerson succinctly wrote in the Washington Post last December: ”In its glory days, under the leadership of Walter Reuther, the UAW was the most farsighted institution–not just the most farsighted union–in America.’’ Meyerson continues:

Even before he became UAW president, Reuther and a team of brilliant lieutenants would drive the Big Three’s top executives crazy by producing a steady stream of proposals for management. In the immediate aftermath of Pearl Harbor, Reuther, then head of the union’s General Motors division, came up with a detailed plan for converting auto plants to defense factories more quickly than the industry’s leaders did. At the end of the war, he led a strike at GM with a set of demands that included putting union and public representatives on GM’s board.

“We are the architects of America’s future,” Reuther said at the UAW’s 1947 convention. And it was actually the UAW that first promoted the idea of a small car, exactly 50 years ago. The union’s research department set forth its plan in a 1949 pamphlet entitled “A Small Car Named Desire.’’ As Meyerson writes, the pamphlet "suggested that Detroit not put all its bets on bigness, that a substantial share of American consumers would welcome smaller cars that cost less and burned fuel more efficiently." But because the union had no real role in the management of the auto industry, it got nowhere. And as Meyerson pointed out on the American Prospect, the UAW subsequently became more insular and short-sighted in the face of foreign competition and downsizing, and “stood shoulder to shoulder with management in opposing decades of bills that would have raised fuel-efficiency standards.”

Obama’s announcement yesterday should provide at least some measure of solace and pride to every union member who held on during the Reagan years and beyond. And it might also encourage the UAW to return to the bolder, more progressive approach of the Reuther years. 

For months, right-wingers have accused Obama of being Lenin’s younger brother, while he pursued moderate, Wall Street-friendly policies. Now, the president has actually engineered a deal in which--technically, at least--the workers own the means of production. Reuther’s union has been given not just a seat in management, but a chance to have a leadership role in reforming the auto industry. Let’s hope they use it well.