February 28th, 2009
Three or four times a week, someone will ask me why They were allowed to do it.
“They,” of course, are the Wall Street bankers who thought slicing and selling mortgages was a terrific idea — until it wasn’t. Or the mortgage lenders who pushed too many people into subprime loans — even buyers who qualified for lower-yield mortgages — then sold the mortgages to eager Wall Street firms. Or the homebuyers who bought more house than they could afford and need taxpayer dollars to climb out of the red.
Now, these people fume, we’re paying for Their greed.
Too true. However, there’s another culprit at work here, one I suspect has contributed to quite a few of our economic troubles these days: the fundamental conflict between our 401(k) plans and Wall Street.
A 401(k) is a retirement plan. It’s a long-term investment strategy.
Wall Street has no such design, operating as though every minute is its last. These days, in fact, it seems to double as the applause-meter for the Obama administration, reacting almost instantaneously to every burp or gurgle emitting from Capitol Hill.
Last week, Ben Bernanke’s optimistic comments about the second half of 2009 drove share prices up, followed almost immediately by a sharp downturn when it occurred to investors that we still seem to be weathering banking and housing crises.
Only in such a setting could the housing bubble have expanded so rapidly and to such an extent — not one company could resist it.
And not one shareholder would have allowed such a thing. If you own shares of XYZ Co., and XYZ’s CEO calls for restraint in an environment as improbable and unpredictable as an asset bubble, you start calling for the CEO’s head.
When everyone else’s 401(k) is making money hand over fist, you want a piece of the action, too.
In that rapid-fire, do-or-die environment, a corporate CEO has little interest in planning for the company’s future. He is too busy planning for his year-end bonus, which requires daily progress, than positioning the company for the future.
In that environment, then, we place our hopes for our future comfort.
Perhaps most peculiarly of all, it works — as long as we don’t concentrate on Wall Street every day.
February 28th, 2009
When I was young, my grandfather would tell stories of a heroic band of freedom fighters who earned a place in history with their message of justice and fair play, with their dedication to the cause of the American worker.
Today, many of their names are lost in the annals of history: Richard Frankensteen, Robert Kanter, Henry Kraus. One of the greatest of those young warriors is largely unknown today.
But while he lived, and for years after his death in the 1970s, Walter Reuther was an icon among American workers, catapulted to greatness in the 1930s as he strove to unionize the auto industry.
My grandfather was one of the workers who helped break GM’s anti-union resolve during the 1937 sit-down strike at the General Motors Corp. plant in Flint, Mich. Reuther’s brother, Roy, helped organize that one.
When I covered the auto industry in Detroit, I came to know many of their contemporaries, men who, like my grandfather, hadn’t led the charge but fought in it all the same.
They took part in the 1932 Hunger March, when thousands of workers — hungry and desperate after being tossed unceremoniously off the job as the Depression tightened its grip — marched to Henry Ford’s massive Rouge complex in Dearborn, Mich.
Five died when the marchers were met by Ford’s personal “Service Department” as well as police and firefighters, who used fists, clubs, tear gas and fire hoses to disperse the crowd.
I still own a copy of the very first agreement between the fledgling UAW and the virulently anti-union Ford, a tiny booklet of few pages written at the end of the 1930s.
The man who gave it to me, the last surviving member of that first negotiating team, told me to remember.
“They were good men,” he said, his voice breaking.
I promised I would. I meant it.
I’m proud of all of those men. I’m proud of my grandfather, who helped fight the contempt and negligence with which companies treated their blue-collar workers.
Sadly, those noble beginnings are all but forgotten, hazy and indistinct after decades of concessions led to fat, insular unions and corporate managers who failed to recognize the value of those workers.
But saddest of all, I think, is the us-against-them mentality that still plagues both sides.
It was necessary once. It isn’t any longer, especially when the company that feeds both sides teeters on the brink.
If a country divided against itself cannot stand, could we really expect a different outcome from a mere corporation?
