Al Gore’s Quixotic Quest

Al Gore’s quixotic quest

If Al Gore wants to do something about global warming he should quit talking about it.  I am not saying that global warming is fiction — it’s real enough and deadly serious — but the remedy appears to be worse than the problem in many people’s minds.  Their natural reaction, as Thomas Friedman has observed in “Hot, Flat, and Crowded,” is denial.

The shorthand that has evolved, according to Friedman, is that when the crisis hits, IBG/YBG or “I’ll be gone and you’ll be gone” — so let someone else worry about it.  That’s not terribly comforting especially when you consider that the people we leave this problem to will be responsible for our care in old age.  But no matter, that’s the prevailing crowd logic.

Averting global warming’s worst effects is a Herculean task that’s guaranteed to cost trillions.  The anti-carbon crowd’s big stick in all this is some form of carbon tax, a fine imposed for using carbon-based fuels to run our lives.  It doesn’t matter that the logic of the tax is to make alternatives cost competitive with subsidized carbon fuels so that our civilization can wean itself away from polluting.  The approach feels punitive.

Gore and the global warming crowd would be smart to abandon the frontal assault that a carbon tax represents.  It’s not a question of whether of not they are right, it’s a question of implementation.  As long as weather patterns hold up reasonably well — and deniers can conflate weather with climate — the two sides are at a standstill.

A better approach might be to extol the profitability of changing our energy paradigm.  But the optimal approach would be to combine profit with the notion that the earth’s endowment of fossil fuels, while large, is running out.

It’s called Peak Oil and simply stated it means that our ability to extract ever-larger quantities to meet growing demand is waning.  Experts say there are about one trillion barrels of crude oil left in the ground and at current use rates it’s enough to last another thirty years.  And it’s not just oil that should concern us.  There are peak coal, peak natural gas and even peak uranium issues to deal with.

Of course, current use rates can be misleading.  The emerging world contains billions of people who want a middle class lifestyle replete with cars, appliances and better diets.  Without much trouble increasing demand for fossil fuels that are in short supply will drive up prices.  Four dollars per gallon will look cheap by 2015 when China will be putting fifteen million cars on its roads annually.  No one seems to be taking the problem of peak oil seriously but maybe we should.

All of this and much more is what ought to drive the debate about seeking alternatives to carbon-based energy.  Peak oil is the obverse of global warming but it is the side of the coin where the profit is and this is all the incentive anyone needs to develop a carbon-free energy paradigm.

An entire carbon-free energy infrastructure must be built.  More than 200 million cars on America’s roads today must be replaced with electric versions along with charging stations for their batteries.  High speed rail spanning the continent and light rail uniting cities and suburbs have to be built and much more.  Buildings must be made more efficient.  There is not that much time left before we begin to feel the effects of inaction in the form of ever-higher fuel prices.

Unlike global warming, peak oil cannot be ignored or explained away and its effects are already upon us.  Mr. Gore should use his bully pulpit to educate us about the dangers peak oil poses for our civilization; an educated and activated marketplace will do the rest.  Averting a peak oil catastrophe is not as noble as cleaning up the environment because it’s the right thing to do.  But it will achieve the desired results and the benefits will be enormous.

Investing in cleantech

Yesterday there was an interesting blog post by Matt Bowman about a San Francisco based professor and entrepreneur Jon Fisher in which Fisher was quoted saying that social media companies were using up all the available venture capital and making it more difficult for companies involved in clean tech to get funding.  He said:

“I think these Web 2.0 guys are poised to suck the oxygen out of the liquidity markets and hurt the cleantech guys…. We must have a Tesla we must have these battery companies, we must have desalination companies…. I think it’s a zero-sum game as far as the money available to companies these days. So I would like for the Web 2.0 guys to sell their companies successfully and I think they missed their window.” The ballooning amount of capital tied up in Web 2.0 is leaving precious little for critical innovations.

While that’s an interesting take, I am not sure I agree with it.  The logic is off because it implies that if Web 2.0 was not around all the money would naturally flow to cleantech.  Now, I am a big fan of cleantech and I also happen to think that Web 2.0 technologies are, in many instances, over-hyped.  Nonetheless this statement shows a fundamental misunderstanding of economics.

Money flows to where it is treated best, the old Wall Street saying goes meaning it is invested where the investor believe it will gather the best return.  That’s capitalism.  If Web 2.0 was not around there is nothing to guarantee that cleantech would be the beneficiary for the simple reason that the economic drivers are not in place to make cleantech a money destination, at least not in any large measure.  That’s disappointing but true.

The reason cleantech is not better funded can be found in society’s attitude toward conventional fuels.  We like them — a lot.  Fossil fuels might be damaging the environment but they are relatively cheap and there is a many trillion-dollar infrastructure to process and use them.  That infrastructure and favorable tax laws that make coal and petroleum artificially cheap are the real reason that cleantech is not doing better.

Also, with projections of disastrous climate change still pegged at mid century the middle-aged people who make the investment decisions have adopted an attitude of IBG/YBG or I’ll be gone/You’ll be gone.  It’s scary but there it is.

At the heart of not treating money well enough in cleantech is the inconsistency of market pricing.  When gasoline was four dollars per gallon, people started driving less and looking for alternatives.  Americans drove 122 billion miles less from November 2007 to November 2008 (U.S. DOT) when gas prices spiked and we looked for efficient cars too.  But we quickly reverted to type when prices receded.

That makes investing in cleantech extremely dicey.  If an investor wants to get involved in solar energy or wind that investor needs to know that there is a reasonable probability of making a return on the investment.  But people are fickle, we won’t buy wind-based electricity at seven cents per kilowatt hour even though we know it’s better for the environment than nickel a kilowatt coal based power.

What’s needed is a level playing field, something we don’t have right now because in the U.S. we subsidize coal and petroleum based power and we externalize the environmental costs.  By that I mean the cost to the environment of strip mining coal and putting its carbon into the air is not accounted for.  Yet, the entire cost of all wind generating equipment must me accounted for in the price of its power because there are no subsidies for it.

Putting cleantech on the same footing as dirty carbon would not be hard to do.  If we put a four dollar tax on a gallon of gas, for example, it would make electric cars competitive.  Internalizing the cost of carbon fuels would make electric power more expensive too and make alternative forms of power generation cost competitive.

Economists call this a market signal and Thomas Friedman writes eloquently about it in his latest book “Hot, Flat, and Crowed”.  Once investors know that the cost of all power will be competitive then they can have the confidence to invest in developing it.  That’s the benefit we need and the reason cleantech isn’t doing better.

Finally, if you think that a four dollar tax is the height of irresponsibility consider this.  As imported liquid fuels become more expensive, the price we pay at the pump will go out of the country enriching the treasuries of oil producers enabling some of them to finance fundamentalism and worse.  It would be better if that money flowed into our treasury and we used it to green the economy (Friedman, again).  But that takes political will, something as elusive as funding for cleantech.

Packing an airplane

Desperate to make a buck airlines have commercialized the boarding process with disastrous results. Boarding an airplane is now a mad scramble to grab seats and store bags that resembles a college basketball game with both teams playing tenacious defense. Last year there were reports of near fistfights over storage space.

Changing from row by row boarding to zone seating was supposed to remedy all kinds of ills from cutting time on the ground to making the boarding process less of a hassle. Results of the experiment are mixed.

The idea is simple and logical—allow passengers sitting in window seats to board first, then call the middle seats and finally the aisles. Add to this a back to front bias and—Bingo—a plane will fill faster because fewer passengers will be in each other’s way. It even has a name, WILMA, (window, middle, aisle).

Wilma works like a champ when there are no other considerations and that’s where things get sticky. Airlines give special treatment to their best customers—blackberry-clicking, cell-phone-chattering, get-me-to-my-next-meeting business people. With enough frequent flyer miles to take a vacation on the moon, they board first—often earlier than their ticketed seat positions might permit.

Too many frequent fliers means too many people qualify for early boarding. So despite what your boarding pass says, there are only two boarding zones—early and late cattle call. Let’s just call this Wilma-plus (or minus). It brings back the old problem of gridlock in the aisles and introduces a new problem, the land rush for bin space.

Early cattle call passengers have their pick of the overhead bins, which rewards frequent fliers at the expense of others. Later boarding passengers may find that the bins over their seats are already occupied causing them to search for space and promoting log jams.

Airlines are getting better at reminding people of their carry-on limits—and charging for checked bags.  But extra privileges for frequent fliers means that occasional travelers bear more of the burden of checking a bag—and the risk of losing it.

According to the FAA the number of mishandled baggage complaints has risen every year since 2004 when many airlines introduced zone seating. There were 2.82 million complaints in 2004 rising to 4.42 million in 2007, a 64 percent increase in four years. No wonder there is fighting for bin space.

The overhead bins are common area. Anyone on the plane has equal access to them but giving some passengers preferential access to the bins through early boarding is unfair. Economists and sociologists refer to this unfairness as “the tragedy of the commons” and it happens whenever a common area reserved for the public good is privatized.

The only winner in such a tragedy is the party that usurps the commons for private gain. In this case, airlines have grabbed control of the bins to solve the nagging problem of lost baggage for their best customers while avoiding investment in upgrading baggage-handling systems that would benefit all customers.  The losers are a new class of customer who pays the same rates but receives fewer benefits—automatically.

Commercializing zone seating is a telltale sign of a crumbling infrastructure and the airlines have conveniently punted the problem to the customers who have no voice. Doing nothing risks real fistfights and delays. But the flying public is not likely to give up the security of carrying-on until the airlines and airports deal effectively with the problem of ensuring that bags are delivered to passengers promptly after a flight.

Rather than simply selling cheap seats (at a loss), airlines need to consider the total cost of providing a quality service and then charge accordingly.  That includes the cost of investments in baggage handling infrastructure that benefit all passengers. Higher ticket prices could result but realistic pricing might also lead to airlines actually making money. What a concept. 

Geothermal can replace coal for electric power

Coal has become the energy source we love to hate.  None of us want to live with its global warming pollution and we can’t practically live without the electric power it generates.  

In the latest round of the love-hate match, the Obama administration’s EPA, agreed to reconsider a decision made in the waning days of the Bush administration.   The issue is whether federal officials reviewing utilities’ applications to build new coal-fired power plants can consider greenhouse gas output. 

The review and ultimate decision will impact the construction of nearly 100 coal-fired power plants.  But it is doubtful Jackson’s decision will be much more than a Solomon-like offer to cut the baby in half given the nation’s need for electricity. 

Like too many other issues in the national discourse, the energy generation discussion is locked in a box of our own construction that resembles a bad low calorie beer commercial.  One side is decidedly in favor (Tastes great!), the other fervently against (Less filling!) and neither has the creativity to look outside of the box for a solution.

The coal industry champions its cause despite the environmental cost of strip mines, land slides caused by out of control slag heaps and, of course, greenhouse gas.  The green movement points to solar and wind power as the future but provides only sketchy details about provisioning reliable electricity when the sun does not shine or the wind calms.

The question is not whether to regulate greenhouse gas emissions—we should.  But focus on that issue simply delays constructive discussion about meeting increasing power demands with clean and sustainable alternatives. 

The paradigm of burning fossil fuel to generate electricity is falling apart because of environmental concerns and supply realities.  Extending the paradigm with so-called clean coal technology is a cruel hoax given the finite and rapidly exhausting supply of coal in the ground.  The central question under debate should be how to provide uninterrupted power generation in a world that is increasingly turning to electricity to meet transportation needs.  Plug-in electric cars and greater reliance on light rail are realistic future transportation modes that will demand more electric power as this century progresses. 

A 2007 report from MIT shows that enhanced geothermal power (EGS) is the way out of our box.  The study, underwritten by the U.S. Department of Energy, states that there is a sufficiently large reservoir of heat energy in the earth’s crust to drive the world’s electric generators for thousands of years.  Unlike other alternative energy sources, heat from enhanced geothermal sources can be as constant as a coal fire in a furnace—without the pollution.

The MIT report notes that geothermal electric generation has been used in other parts of the world for over a century and projects that high capacity commercial generation through enhanced techniques is achievable.  According to the report there are seven companies in Australia engaged in EGS projects and two projects under way in Europe.  The report also identifies locations in the US where geothermal energy is particularly accessible and estimates that reaching commercially viable power generation will require a relatively modest investment of $300 to $400 million over 15 years. 

Geothermal power has its potential drawbacks.  It is possible that without proper management any location used to draw heat out of the ground could cool over time making it less efficient.  And, though the report states that EGS is scalable, it has never been tried as a major component of a national energy policy.  More fundamentally, the coal industry will be eclipsed by EGS causing job loss and dislocation for the people who work in the mines and transport coal.

Still, the potential benefits far outrun the risks.  A network of EGS power plants on a modern energy grid, like the one proposed by the administration, could provide the scalability and redundancy needed to generate baseload electric power without greenhouse gasses.

We have been burning coal on an industrial scale for more than 250 years, we are running out of it and it is slowly killing us.  Time to try something else.  The discussion about reinventing power generation should not be exclusively about greenhouse gas, a topic that only extends the decaying paradigm involving fossil fuel.  We should also consider providing realistic, inexpensive and pollution free supply beyond the time when coal runs out.

Laissez-Faire Capitalism Should Be as Dead as Soviet Communism

Yes! This is the message that’s been missing. Capitalist fundamentalism is the ailment and we are at the very beginning of a solution. We still need a little more fortitude to utter the words “Milton Friedman” when itemizing what went wrong. For two days in a row, first with Robert Kuttner and now Ariana, we’ve started rolling a snowball downhill. Now, everyone go out and read Naiomi Kline’s “The Shock Doctrine.”
More on Regulation
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Whip-sawed in the news cycle

 Somebody tell me we’re not going to do this again. 

The Obama administration has not even taken office yet and the nitpickers are swarming.  In just the last month talking heads have over analyzed the number of Hispanics not in the new administration, the non-involvement Obama had with Illinois governor Rod-show-me-the-money Blagojevich and even Obama’s selection of Rick Warren to give the invocation at the inaugural next month.

On the surface this just looks like typical politics—second-guessing every move a leader makes—but this over steering has a corrosive analog in economics.  It is called whip-sawing and in the stock market, for example, it refers to a behavior that over reacts to every move the market makes.  If the market goes up you buy, when it inevitably goes down, sell.  The cumulative effect is that you consistently miss real opportunities because, rather than anticipating the future you are reacting to what has already happened.  In financial circles, it is the reality that backs up the old joke, “How do you make a small fortune on Wall Street?  Start with a bigger one.”

The news story about Hispanics in the new administration illustrates the point.  About half way through the process of staffing the cabinet there was only one Hispanic nominated for a senior post, Gov. Bill Richardson of New Mexico for Commerce Secretary.  Tongues wagged at that point saying that one Hispanic was not enough and where were the others going to come from or go? 

As the Obama team finally jelled, there were a total of three Hispanics with nominations to high positions.  In addition to Richardson, Colorado Democratic Senator, Ken Salazar was nominated to lead the Interior Department and Rep. Hilda L. Solis, D-CA, was nominated for Labor Secretary.  Not a bad haul for a population that represents about 14.7% of the US population.

I will leave Blagojevich-gate for another time because as I write this, the Obama camp has not released its findings on communications between itself and the seedy governor.  That brings us to Rick Warren and the invocation. 

Gays and Lesbians are understandably upset with Warren for his stand in support of California’s Proposition 8, which rescinded the right of Gay people to marry in California and they object to Warren’s participation in the inauguration for that and related reasons.

Seriously, though, what preacher/cleric/holy person would be acceptable to deliver the invocation if judged only by the standard of a position on gay marriage?  The Pope?  Nope.  The Arch Bishop of Canterbury?  Not bloody likely.  The Dali Lama?  Might it upset China?

Being gay in this society is an uphill battle.  Everyday it seems you have to fight for what ought to be yours simply because you walk upright and breathe the air in this country and often that just isn’t so.  But it is doubtful that simply changing the laws on the books will achieve the change many of us seek.

Like it or not, a great deal of dialog still needs to happen between parties that are right now simply talking past each other.  Gays want the right to civil marriage with all of its legal protections for the partnership and the far right will only discuss marriage in the context of procreation.

The tantalizing question for all people who think dialog is necessary or would be helpful is this:  What would an opening of the dialog actually look like?

The current administration in Washington has a policy of not entering discussion with any party with whom it has substantial disagreements.  Thus it famously conditioned the idea of talking with countries like North Korea and Iran about their nuclear ambitions as being possible only once the parties renounced their interest in the very activities the administration sought dialog on.  This is circular reasoning and it points out why the Bush administration has been such a failure in foreign relations.

So the question comes back to whip-sawing and what a real opening between the left and the right, represented by the discussion on gay rights in this case, would look like.  In his relationship with Warren, President-elect Obama has teed up such an opening and in, sad to say, impeccable Bushian style, the gay and lesbian community has furiously hit the shot into the water.

For gays and lesbians, it might not be the best analogy to talk about turning the other cheek, that’s been tried before after all and most of us only have two cheeks.  But another metaphor seems to fit pretty well here.  You don’t preach to the choir nor do you spend a lot of effort saving the converted.  In the effort to have serious dialog on the issue of civil vs. religious marriage, what would an opening look like?  Hmmm?

 

Clint and Cheney: a Tale of Two Dicks

This is really just a diversion. Talking about the Bush Cheney administration as if they were just a bunch of venal, petty, corrupt incompetents misses the point. Bush-Cheney was hatched long ago at the University of Chicago by the Friedmanites and perpetrated on the American people as the culmination of a forty year attempt to dismantle the New Deal and worse. Naomi Klein does yeoman’s service in her book “The Shock Doctrine” to expose the CIA led conservative counterrevolution inspired by the whiz kids in Chicago. It ought to be our job to expose all of it and hold the new administration’s feet to the fire to keep the last eight years from ever happening again. The Huffington Post ought to be able to lead the effort.
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Good-bye, Chicago

Sorry, but I don’t think I agree with the premise that we should not bail out the car guys.  Well, to be honest, I don’t like the idea of a bailout either and do not support one per se.  However, we’re talking about a loan, not a gift and there are significant strings attached such as eliminating Detroit’s opposition to laws against pollution and for increased mileage standards.

My reluctance concerns method.  It’s one thing to talk about capitalism and socialism and letting foolish car memes hit evolutionary dead ends and all that.  It is right and proper to extinguish those bad ideas and behaviors but letting these giants fail is like self-immolation.  Do we really need to destroy the village to save it?

Part of the problem I see is that we are applying rules for individuals and small businesses to these companies.  Individuals have a great deal of responsibility to themselves to stay solvent and healthy and if they fail, under most circumstances the consequences are appropriate.

What is the right stance on the car companies?  Well, I think first we need to give up the fiction that there is anything close to raw, naked capitalism or socialism for that matter.  When you get to be as big as a car company, you become your own environment which makes you quasi socialist.  That is the essence of Charles “Engine Charlie” Wilson’s 1956 comment to congress that “…for years I thought what was good for the country was good for General Motors and vice versa” which was later misconstrued as, “What’s good for America is good for General Motors.”

Democratic capitalism lets the winners continue playing their hands until they run out of luck and for years the car companies designed, produced, advertised and sold cars that appealed to the vanity of the American motorist from the ‘burbs until long after that vanity should have expired.  Detroit still builds big, sleek, shiny, fuel guzzling road locomotives, living rooms on wheels.  One ad I saw in a magazine this week for an SUV boasted a refrigerator and a DVD player.  The Conestoga wagon of the twenty-first century all dressed up and tweaked out with nowhere to go.

Detroit has fallen.  Hard.  The paradigm has changed and no one wants to buy its products anymore even with gas comfortably below $2 per gallon.  Yes, they should have seen it all coming—Peak Oil, economic crash, global warming and all the rest were evident for anyone to see.  I bet all the execs in Detroit can quote you a great deal about all of those subjects to the point where you’d think they were advocates.  But they did nothing because their job descriptions said maximize shareholder value, not save the planet or anything more idealistic. 

Detroit’s problems were really imported from Chicago, specifically the Chicago school of economics associated with guru Milton Friedman and the University of Chicago.  The meltdown we are seeing is actually the wheels falling off the Friedman express, a simplistic belief in the power of markets, unfettered by regulation–a Darwinian swamp. 

The ascendancy of Friedman style economics made it impossible for Detroit, or Wall Street for that matter, to openly collaborate with government and its regulators to achieve anything close to sustainability.  Such collaboration became an epithet—socialism in business, liberalism in all other branches of human endeavor. 

So now the socialist chickens come home to roost and what was not paid forward by all parties into the common endeavor we call America, is now being paid backward by the unborn.  But it is never that simple.  Letting Detroit go bust means millions of jobs, of course, but more fundamentally, Detroit represents a big chunk of our ability to make things that we might need in an emergency. 

Fighter jets and ships are built elsewhere but what about tanks, trucks and all the other wheeled war machines?  Who builds them if Detroit goes down?  Do we gen up a separate wholly owned government ground fighting transport industry?  Caution here, the F22 fighter jet has a price tag of $300 million per.  I suppose there’s always outsourcing, or is there?  Please don’t lecture me about the virtues of outsourcing. War fighting is the one thing a people has to do itself or the enterprise is kaput.  Look at Rome.  Look at Kellogg, Brown and Root (KBR)!  Look at Blackwater!

We might need fewer cars and more mass transit but we also need Detroit.  Not the Detroit of the last fifty years, though, run by a bunch of financial wizards, but the Detroit of the first part of the twentieth century, run by car guys.  Car guys build cars for reasons that make sense, cars that are fun to drive, cars that accomplish transportation related goals.  Financial guys build cars as an adjunct to their effort to make money.  They make what they have to in order to achieve a quarterly revenue goal.

So let’s rescue Detroit–save the companies but kill the business model and make Milton Friedman that curious footnote he deserves to be.  The rescue will cost much more than the $15 billion or so that congress in its infinite spinelessness has negotiated with a very unpopular president.  It will be enough to get the car companies through the holidays and to a new and pragmatic administration.  Meanwhile let’s all write on the chalk board 100 times, “I will not be seduced by the siren song of unbridled free markets again.” 

At least till the next time.

Senate plays games with Detroit

 

Southern Republican senators effectively blocked passage of a bridge loan to the Detroit automakers on Thursday.  The official rhetoric was about Detroit’s viability and the sustainability of the plan but the politics appeared to be about union busting.  In the process, the U.S. Senate became the accidental and improbable setting for an addition to William Faulkner’s classic Snopes Trilogy, which includes the novels “The Hamlet”, “The Town” and “The Mansion”.  I propose the fourth novel be called—What else?–“The Senate”.

Faulkner died in 1962 after a long and colorful career in letters that included many novels and short stories as well as work in Hollywood.  He received the Nobel Prize for Literature in 1949 and many academics praised his vision and ability to see into people’s hearts and minds, which he used to populate a large fictional multi-generational community—Yoknapatawpha County.  http://en.wikipedia.org/wiki/Yoknapatawpha_County

The Snopes family is one of Faulkner’s greatest inventions.  A large and colorful clan that spans generations, it includes characters like Flem Snopes, who used his business cunning playing a version of hardball business in his largely poor rural community to climb over his contemporaries to climb an economic ladder that took him from sharecropper to local bank president in the course of his lifetime.

So aside from the South what’s the connection between fictional Faulkner and the senate?  To understand, it helps to think like an economist.

To understand the logic of various economic situations and to be able to predict what people might do, economists have leaned heavily on a branch of social science known as “game theory”.  In game theory simple realities are set up with well-defined rules and economists let real people, or increasingly, computers, run many iterations of the game to look for patterns.  By altering the rules of these games much can be inferred about the ways that economies work.

A case is point is the cooperation game, which was played by GOP senators led by Sen. Tom Corker (R-Tennessee) and the UAW led by Ron Gettlefinger.  A typical round of the cooperation game might go like this:  Two people are brought together to play.  The rules state that a sum of money, let’s say $100, is offered as a prize if the parties can agree on how to split it.  The game is complicated by these instructions:  One person has the ability to propose the split which the other person can accept or reject and the gotcha problem is that the game will only go for one round. 

If the offering party makes an offer that is too low the receiver can nix the whole deal so the offer and acceptance need to be in a range where both parties feel they have been treated fairly.  Both parties know that they have some power in the situation but that their power is limited.  The offering party has the power to set the split and wants to turn that power into reward but the receiving party has opposite power and an equal incentive to maximize reward.

Furthermore, there is the logical argument that any split would leave both parties enriched by the experience despite the fact that one party could possibly benefit more than the other.  Still, lurking in the shadows of each person’s mind is understanding that both parties together have only one chance and failure is a distinct possibility.

When economists run this game with real people, they discover that fairness becomes a big part of the decision-making.  While any deal might logically leave the parties enriched, an offer that is deemed too low is often rejected and the parties leave with nothing.  Logically, this shouldn’t happen but it frequently does.

Thursday night’s high wire act in the Senate was an elaborate playing out of a cooperation game.  There were actually two different games played out.  First a straight loan, with conditions, was talked down by Senate minority leader, Mitch McConnell (R-Kentucky) in what could have been a gambit to soften up the parties.  Then, in an apparent effort to save the situation Sen. Crocker made a deal breaking offer to the UAW. 

The union and the automakers had previously and laboriously negotiated a decrease in labor costs to take effect in the current labor agreement set to run into 2011.  But Senator Crocker now wanted to accelerate the implementation and he wanted a “date certain” within 2009—two years ahead of the negotiated agreement.

One might argue that all parties had to give something in the negotiations to get the deal done, if only to show seriousness.  But the deal on offer gave the manufacturers three months to come up with elaborate plans for downsizing their operations and for bringing to market vehicles more in tune with the times.  If the car companies could get three months to plan their realignment why did the union not have the same opportunity?  In point of fact, the manufacturers would need to consult and negotiate with the union to come up with their plan so what was the hurry?

That the senators chose to play a version of the cooperation game with the UAW says much about the seriousness of the negotiations and the motivations of the Snopes senators in the GOP.  It is an open secret that the GOP strives for low wages as a bedrock economic principle.  Many of the senators deeply involved in the negotiations come from states where non-union foreign automakers have set up factories with lower wages than union factories.  The combination of philosophy and representation provided opportunity and motive for the senators to play the cooperation game.  Rarely since the Civil War has the south worked so obviously for its regional interests and against the national interest.

Under the circumstances, Gettlefinger played the hand he was given—a lousy hand, but he played it well.  To have done anything else would have been for the union to give up part of its seat at the table, a seat that generations of union members had worked and sometimes bled for. 

The Republican tactic worked temporarily but the White House has already made statements about securing financing by other channels.  In the end Detroit will get the bridge loan it needs and the Republican Party has a new self-inflicted wound it could have done without.  It has reinforced its position as a regional party.  Big deal.