It has been a little more than a year since General Motors emerged from bankruptcy and the $1.3 billion in second-quarter profits the automaker recently recorded has elicited jubilation from the mainstream media of the “return of Detroit.”
With GM preparing its Initial Public Offering (IPO) of stock this fall, it is worth reflecting on what has occurred.
The past year has shown that the forced bankruptcy of GM at the hands of the Obama Administration marked only the opening shots in a new offensive against the living standards of American workers.
After destroying some 50,000 auto jobs, closing dozens of plants, unloading health care obligations and “legacy costs,” and most importantly, halving the starting wages of new hires from $28 to $14 an hour, the automaker’s profits are based directly on the increased exploitation of its workforce.
Working hand-in-glove with the administration throughout the assault was the United Auto Workers union, which has served the role as policemen for the dictates of the government and Wall Street.
Having taken a significant share in both GM and Chrysler, the income and privileges of the union bureaucracy are now directly tied to the level of exploitation they can enforce on the workers they “represent.”
The return to profitability of GM is representative of the economic “recovery” as a whole. Private-sector wages in the US fell by 6 percent in 2009 according the Commerce Department.
And while there was a 0.9 percent decline in productivity in the second quarter of this year, it was the first such decline since the recession began in 2008 and comes after a 3.9 percent rise in the first quarter.
Moreover, official unemployment continues to hover around 10 percent – a rate increasingly referred to as the “new norm.”
In other words, there is no recovery for the working class.
The profits being registered on Wall Street are the product of layoffs, wage and benefit cuts, and speed-ups. This is the method by which the Obama Administration plans on achieving its goal of doubling US exports in five years.
Indeed, a recent Financial Times article entitled “US Matches Indian Call Centre Costs” details the shifting of operations from India to the US to take advantage of the new cheap labor force available here due to high unemployment levels.
The upcoming IPO – anticipated to be one of the largest in history – is expected to produce a fortune for Wall Street and their lackeys in the union bureaucracy.
In particular, JPMorgan Chase and Morgan Stanley, having been handpicked by the US Treasury to handle the sale, are positioned to reap billions for their services.
Such an assault cannot continue indefinitely as the ruling class would like. A recent Gallup Poll reveals that among those earning less than $50,000 a year, Obama’s approval rating has declined 24 percent between March 2009 and July 2010.
Over the same period, his approval has dropped only 4 percent among those earning more than $150,000. The ramifications are clear. The Obama Administration is on a dangerous collision course with the American working class.