It’s Negotiation Time

It doesn’t seem like it’s been four years since the last time Detroit automakers and the United Autoworkers Union negotiated a new contract. You may remember the discussions and agreements that, from the date of that contract, gave the automakers the right to hire many categories of workers and pay them $14 an hour, plus lesser benefits. Of course, the auto companies were facing the same issues as any other major industry in America; the issue squeezing their corporate bottom lines most painfully was the incredible rise in the cost of workers’ health care.

Then many national media outlets were reporting that Detroit was paying their workers more than $73 an hour for their labor. Yet not only did an influx of autoworkers not buy new homes in Westover Hills or Monticello, but that simplistic look at the net cost of factory work ignored more pertinent realities of car production and corporate accounting.

Well worth reading.

Pacific Influence

Gideon Rachman:

When Admiral Timothy Keating, the head of America’s Pacific command, met a senior Chinese admiral in 2008, he heard a surprising offer. Keating reported that his unnamed counterpart had suggested drawing a line down the middle of the Pacific and added: “You guys can have the east part of the Pacific, Hawaii to the States. We’ll take the west part of the Pacific, from Hawaii to China.” It was a weak joke, perhaps, but one that touched on what is likely to be the most sensitive and important topic in international politics over the next 50 years. Will the US continue to be the dominant power in the Pacific and in east Asia – or will it be supplanted by China? And what role will be played by India, the country that many strategists assume will be the third superpower of the 21st century?

The public statements of American, Chinese and Indian political leaders – and even of the academic establishments in all three countries – tend to stress the necessity for great power co-operation in Asia and the Pacific. The economic and political benefits of working together are said to be too great to ignore. The dangers of allowing international rivalries to grow are too enormous to be contemplated.

Beware the guns of August

Gideon Rachman:

By the time this column is published I will be on holiday in France, and the US might finally have stepped back from the abyss of debt default.

Viewed from Europe, the American financial uproar is baffling. It is not just the entirely avoidable nature of the crisis. It is also its timing. The entire European political calendar is constructed around the idea that nothing ever happens – or should be allowed to happen – in August.

The drama that surrounded the emergency eurozone summit in Brussels in late July was partly caused by the threat of financial chaos, if Greece was not lent more money. But an unstated reason for the sense of urgency of the leaders around the conference table was a desperate desire to get a deal wrapped up – before the holiday season began in earnest.

Judged in these limited terms, the summit deal might be counted a success. It surely has not solved the crisis in the eurozone. But the European Union’s leaders might have done enough to ensure that there will probably be no call for further emergency summits until after the rentrée in early September.