Why Rhee Wants To Break the Teacher's Union

CWD comments,

Clearly, Rhee is trying to sell the teachers a pig in a poke. On the other hand, these are the same teachers who have had union president's steal millions from them and who readily admit that they wouldn't want their children to attend the schools where they teach . . . and are surprised that anyone would expect them too . . .

I'm not sure that busting the Union is a necessary step in the process, but blowing the whole system up and starting over has some theoretical merit . . .

I'll admit, Rhee's professed goal - giving teachers a big raise and merit pay - is not the traditional opening gambit of a union buster. I do think it's a "pig in a poke" - that the proposed pay structure is unsustainable. But for now, let's assume otherwise. Obviously the goal here isn't to coerce the union into letting its members be paid more. Nobody's talking about expanding the school year. So what's left... oh, yeah....

Tenure.

Even when they offer wages comparable to other school districts, or above what other districts pay, school districts like D.C. have a hard time attracting quality job applicants for teaching positions. Why? Because teaching in an inner city school is considered to be a miserable experience. Teaching in a school where, despite your best efforts, you wouldn't send your own child? Where your best efforts, applied every single day, will do nothing to improve the status quo? Where your day is consumed with disciplinary problems and you struggle to maintain classroom order? I have admiration for teachers who can work like that, day after day, without burning out or quitting. But there aren't many of them.

So weak administrators hire weak applicants in order to fill positions, aren't diligent enough (or don't care enough) to ferret out those who don't have an adequate skill set before they get tenure, and the district ends up with large numbers of teachers who really aren't equipped to teach. Rhee supposedly will offer remedial programs for these teachers as part of her secret plan, so that they can in theory avoid being fired, but nothing is stopping her from offering remedial training right now. What she clearly wants to do is to break the tenure system so she can clean house.

I can't say that I blame her. I'm sure she can identify a lot of teachers who should never have been hired, and a larger group that may become highly motivated to improve their skills and performance if they can be threatened with termination. I have sympathy for an administrator who inherits a broken system. But let's be blunt: if teacher's unions were the cause of this problem, D.C.'s system should be typical of the nation's schools as opposed to being among the dregs. The roots of the problem lie in incompetent, unmotivated administration crossed with, in much of the system, what many teachers would find to be an unrewarding, often unpleasant, teaching environment.

Rhee was hoping that the offer of big money would be a sufficient enticement to get the union to voluntarily give up tenure, or allow teachers to opt into the merit system (possibly with the longer-term goal of trying to get the teachers who opted for the merit pay system to vote to decertify the union). But it's difficult to see why a union would regard a promise of an apparently unsustainable pay raise for some as grounds to surrender the largest benefit it has historically provided to its members - job security. And even if you're a good teacher, you have to have some concern about whether you would get merit pay, or have the bad luck of having a particularly bad class and be deemed to be underperforming despite strong efforts.

Disdain for Factory Workers

William Kristol, who at times seems to look down on everybody, cautions both parties and the media about looking down at auto workers.

Today, G.M., Ford and Chrysler get no respect. Maybe they don’t deserve much. Detroit has many sins to answer for, and it’s been doing plenty of answering. But — and I say this as someone who grew up in non-car-driving family in New York and who is the furthest thing from an auto aficionado — there is a kind of undeserved disdain, even casual contempt, that seems to characterize the attitude of the political and media elites toward the American auto industry.

Was noblesse oblige a lesson taught at Irving Kristol's dinner table? Today, the wealthiest like to pretend that they were born with no advantage, that no serendipity, inheritance, and nepotism played no role in their success, and that if you are less fortunate it's an indictment of your lack of resolve.

By way of example, has Mitt Romney ever admitted the significance of his father's success and name to his own achievements, let alone acknowledged that he's the millionaire son of a millionaire in no small part due to the efforts of unionized auto workers? When he speaks of his father's blown opportunity to negotiate a new type of labor-management relationship with the UAW, could it be because George shared (perhaps inculcated) Mitt's contemptuousness of unions? Can you imagine candid admissions of how privileged childhoods and powerful parents paved a path to easy prominence from, say, Jonah Goldberg, George W. Bush, David Frum, John Podhoretz, Michael Reagan, Robert and Fred Kagan.... I'm not sure that Kristol has ever candidly acknowledged his own privilege, but this editorial suggests that he is aware of it. Sure, there's a cynical part of me that thinks he's advancing the political reality described by Dick Cheney - that causing the Big Three to fail will turn the Republican Party into the "Party of Hoover," and I'm not endorsing his simplistic analysis of the motivations of either party - but for now I'll give him the benefit of the doubt. Particularly given this:

Now there are other ways to explain the disparate treatment of G.M. and Citigroup. Finance is different from manufacturing, and banks from auto companies. It may be that the case for a huge bank bailout was strong, and that the case for a more modest auto package is not. Still, it seems to me true that the financial big shots haven’t been treated nearly as roughly in Congress or in the media as the auto executives, who have done nothing remotely as irresponsible as their Wall Street counterparts.

As you know, it's worse than that. Companies that would have collapsed in a free market are paying shareholder dividends, gargantuan salaries, and even larger "retention bonuses" (to workers who would otherwise... go where?) with taxpayer money.

Meanwhile, on the right, free-market analysts have explained that our regulatory scheme of fuel-efficiency standards is counterproductive. But despite the fact that the government is partly responsible for the Big Three’s problems, the right hasn’t really been stirred to enthusiastically promote a deregulatory agenda to help the auto companies. What excites it is mobilizing to oppose bailouts for unionized workers.

I have to take issue with that. Kristol's point might be stronger but for the fact that every major car company that is not failing is headquartered in a nation that imposes greater regulation, and in which tax policies have long created high gas prices. Congress has been complicit in preventing the regulations it passes from having teeth, such that the domestic auto makes were able to build huge gas guzzling fleets outside of the limits set by CAFE, but it now appears that had those regulations been more comprehensive, the Big Three would not have experienced their huge drop off in sales the second gas hit $4/gallon. If a regulatory lesson is to be learned, it's that Congress could have better shaped the product line of domestic manufacturers by raising gas taxes than through a body of complex, loophole ridden regulations.

Last week, Senate Republicans picked a fight with the U.A.W. on union pay scales — despite the fact that it’s the legacy benefits for retirees, not pay for current workers, that’s really hurting Detroit, and despite the additional fact that, in any case, labor amounts to only about 10 percent of the cost of a car. But the Republicans were fighting Big Labor! They were standing firm against bailouts! Some of the same conservatives who (correctly, in my view) made the case for $700 billion for Wall Street pitched a fit over $14 billion in loans for the automakers.

Whoah - Kristol's actually bringing facts into the debate. Is that allowed?

I personally don't think the case was made for the $700 billion financial industry bailout, save in the sense that "we don't know what will happen if we don't try to bail out the banks". Sure, you can get my support to build a $700 billion wall between myself and a freight train if I can't otherwise avoid being hit, but that leaves no time for serious reflection or evaluation of how that money is best spent. I'm not convinced at this point that we should continue to bail out financial institutions - they have not been responsible with the money that's been given to them, they're not using the injected liquidity to increase lending, and there does not appear to be any good reason why the government can't tell them, "You have time to put together Chapter 11 plans, so do that. If you're failing, come to us and we'll try to arrange for you to be taken over by a stable institution, or perhaps help ease you into that Chapter 11 reorganization."

The real issue is, should it be the role of government to bail out businesses? Should we (supposedly) champion free markets then declare, "That company is 'too big to fail'" the moment managerial incompetence threatens the viability of a large company, stepping in with a multi-billion dollar bailout? Kristol is right to question why self-professed conservatives are pitching a fit over a $14 billion bailout after signing on to a $700 billion bailout. But he errs in suggesting that it's the size that matters - that if you support the large, it follows that you should support the small. The fundamental question, if you actually believe in free markets, is whether you should bail out any companies at all. Had the managers of these financial giants seriously believed that Uncle Sam would tell them to go to bankruptcy court, at least some of them would probably have made better decisions. And it would be harder to feel sorry for those who didn't. (Assuming it's possible to feel sorry for them.) But back to Kristol's larger point:

Whichever party can liberate itself from its well-worn rut to propose policies that help both American businesses and workers has a great opportunity. That party’s leaders could begin by offering management and labor at the Big Three a little more sympathy, and heaping upon them a little less calumny.

Oh, I'm not sure how much sympathy they deserve, and I somehow doubt that Kristol is the hugging type. But some understanding?

No Union Busting Here, Folks....

In an unsigned editorial, the Washington Post prevaricates,

Ms. Rhee has been accused of trying to break the union when, in truth, she rejected a plan to bring in a firm adept at union-busting in favor of working one-on-one with local labor officials whom she believed shared her philosophy that children come first.

A more realistic interpretation is that she was told by the union busting firm, "It's not going to work here."

It tells you something about Rhee that, before opening negotiations, she even considered hiring a "firm adept at union-busting" to attack the teacher's union. It tells you something else about Rhee (and the Washington Post) that the dream plan she has for teachers - the plan the Post gushes over every week or two - is a highly classified secret, and isn't available anywhere for people, be they curious outsiders like me or teachers who are told how wonderful it is, to read. Rhee's not interested in union busting? Perhaps Fred Hiatt and his editorial writers should, you know, read their own paper.

Mayor Adrian M. Fenty and Schools Chancellor Michelle A. Rhee are discussing a dramatic expansion of their effort to remove ineffective teachers by restoring the District's power to create nonunionized charter schools and seeking federal legislation declaring the school system in a "state of emergency," a move that would eliminate the need to bargain with the Washington Teachers' Union.

Nope... not even a slight interest in union busting there....

I'm prepared to believe that Rhee's proposal is the best thing since sliced bread. But if it truly is such a wonderful plan, and is sustainable, why isn't she focusing her energies on publicizing the plan rather than keeping it under wraps?

I Wonder If We'll Ever Learn....

A few months back, I suggested that Mitt Romney's campaign song should be Everclear's "Everything to Everyone".

A song about a habitual appeaser for a man who will say anything to get elected, even if he said something completely different fifteen seconds earlier. The song is about how appeasement leads to failure, and I suspect that it will prove to be on the mark.

You remember Mitt Romney - the guy who got rich as a corporate raider, trading in no small part on his daddy's name and connections, became governor in Massachusetts, despite being a Republican professed a wide range of beliefs better associated with liberalism, passed a bunch of expensive legislation, and skipped town to run for President before his popularity might be tarnished by its cost. Oh, you can find more flattering biographies, even hagiographies, I'm sure... But from what I saw of the man running for President, I can't see how they're deserved. Oh, I know, his defenders say he never got a chance to "introduce himself", but... why are we still waiting for this mythic figure to step forward and fill the shoes of the doppleganger we have met?

Oh yeah, you do what they tell you to do,
You say what you say,
You try to be everything to everyone...

Not quite a year ago, when campaigning in Michigan, Mitt had this to say:

“If we are going to be the world’s greatest economic power, we must invest in our future. It’s time to be bold.” He continued, “First, I will make a five-fold increase – from $4 billion dollars to $20 billion dollars – in our national investment in energy research, fuel technology, materials science, and automotive technology.”

He said Washington has to invest in Michigan and not just bemoan the high unemployment rate and failing economy:

“Look how industries in other states have thrived from the spin out of technologies from our investment in these areas. So if we can invest in health care, in defense, and in space, why not also invest in energy and fuel technology here in Michigan?”

In a veiled attack on his rival here, he said that Washington is pessimistic about jobs coming back to Michigan, something John McCain has said previously, but has backed away from in the days before the primary:

“Washington politicians look at Michigan and see a rust belt. But the real rust is in Washington.” The former Massachusetts governor continued, “The pessimist will point to an empty factory and a laid off worker and say they have no future. Instead, I see a vital infrastructure, a skilled workforce, and an innovative spirit all worthy of an optimistic vision and deserving of a leader who will work tirelessly to deliver the power and potential of Michigan and the American people.”

In addition to offering to throw as much as $20 billion at the auto industry, Romney took a decidedly anti-environmentalist, anti-conservationist stance, but seemed to stand squarely behind the CEO's of the Big Three with no doubt about their ability to lead the transformation of the auto industry:

He criticized Mr. McCain for backing a bill that would have pushed to cap and trade greenhouse gas emissions, which Mr. Romney called a "job killer." And he promised to bring representatives from the automotive industry, unions, Congress, and the state of Michigan together in his first 100 to come up with a plan to "rebuild America's automotive leadership."

He unabashedly courted the union vote:

"I'm committed to fighting for every good job in this country and Michigan and across the country, and that connection I have to the state is just enough to help bring people who are normally thinking to vote toward the Democratic side to vote for me," he said.

When John McCain offered some genuine straight talk, that there had been a significant loss of manufacturing jobs in Michigan and "some of those jobs aren't coming back", Romney jumped down his throat:

Mr. Romney seized on Mr. McCain's "straight talk" as an example of Washington's pessimism and indifference to Detroit.
"A lot of Washington politicians are aware of Michigan's pain, but they haven't done anything about it," Mr. Romney said. "There are some people who don't think there's a future for the domestic automobile industry. They think the industry and its jobs are gone forever. They are wrong."

But remember, that wasn't the real Mitt Romney - we hadn't been introduced to him at that point.

You know all the right people,
You play all the right games,
You always try to be everything to everyone...

Now, unbelievably, it appears that Mitt Romney is trying to position himself as the heir to the Republican Party. This puts him in a rarefied league presently otherwise composed of Sarah Palin and, yes, Newt Gingrich. So what does Mr. Appeaser do when confronted with a crisis in the auto industry, and finds the leadership of his party suggesting that good manufacturing jobs are gone forever, don't have any concern for Michigan's pain, and have even less desire to do something about it? People he says are "wrong"? Did he hold true to his promise to bring the auto executives together to forge a new path for the industry? You guessed it - he's arguing that we should Let Detroit Go Bankrupt....

First, their huge disadvantage in costs relative to foreign brands must be eliminated. That means new labor agreements to align pay and benefits to match those of workers at competitors like BMW, Honda, Nissan and Toyota. Furthermore, retiree benefits must be reduced so that the total burden per auto for domestic makers is not higher than that of foreign producers.

* * *

Second, management as is must go. New faces should be recruited from unrelated industries — from companies widely respected for excellence in marketing, innovation, creativity and labor relations.

Break the union and fire the management teams for the Big Three? He's not making a policy statement - he's pandering to a faction of the Republican Party that sees little value in maintaining an American industrial base, and sees union busting as a leading civic virtue. As Motor Trend puts it,

"The financial straits that the Big Three find themselves in is not the product of our current economic downturn," harrumphed Senator Richard Shelby, senior Republican on the Banking Committee in a written statement, "but instead is the legacy of its manufacturing and labor force."

Well, yes, GM and Ford Motor Company haven't posted profits for years. And Chrysler, shielded first by Daimler and now Cerberus, is in worse shape. Cerberus has finally dropped the ruse that it's in the car business for the long-term.

Most of us would love just a portion of the UAW's health care benefits. But Shelby is typical of so many of our leaders who don't care about manufacturing, let alone automobile manufacturing. He's senior Republican of the Senate Banking Committee, after all.

Please excuse the following redundancy, but I can't emphasize it enough: making cars and trucks takes loads of time and money.

If you work for, or with, the banking or finance industries, you might someday come to realize this (as Cerberus has), but you won't like it. Wall Street, and much of Capitol Hill, likes "industry" to make "financial products," computer software and websites, things that can be made out of thin air or by college grads who don't ask for health benefits. Ask New York Times Pulitzer winner Thomas Friedman, who apparently believes Steve Jobs could have a Chevy iCar on the road in a year if the Apple chief took over GM.

We knew all along that Mitt was most at home in the banking and finance industries; he's apparently now out to prove that, with all of his claims of inherited wisdom about autos, he's not just another anti-manufacturing, anti-union Republican, he's ready to be their leader.

I think you like to be their simple toy,
I think you like to be their clown....

As Motor Trend notes, even those most sympathetic to the auto industry are anticipating significant structural changes, plant closures and union concessions, in all likelihood including the resignation of GM's CEO.

But while many Republicans see the fall of Detroit as just reward for the UAW, Democrats in Congress are ready to impose sacrifice on the UAW as well as automakers, in exchange for loan guarantees. Congressman [Elijah] Cummings [(D-MD)]... told MSNBC he supports bailing out GM, Ford and Chrysler, but that the automakers "may have to change union contracts."

The problem here isn't that Romney has pulled yet another of his flip-flops - his abdications of everything he once supposedly stood for in the name of advancing himself politically. If you've watched Romney at all, you know that the man (again, doppleganger Romney, as we haven't yet met the real one) will say and do anything to advance himself, even if it means repudiating what he professed only minutes before to be his deepest and most heart-felt beliefs. The problem isn't that he's calling for serious reforms by the beneficiaries of federal aid before it's granted (not that he's in favor of granting it... today). It's not that he's stupid. Perhaps it's the opposite. The man has an above-average mind, yet he spews nonsense that betrays either that he's fundamentally ignorant of his area of supposed expertise, or that he's lying.

Let's take a look at his two main criticisms of the auto industry. First, they're supposedly being broken by labor costs, and apparently nothing has been done to address this problem:

First, their huge disadvantage in costs relative to foreign brands must be eliminated. That means new labor agreements to align pay and benefits to match those of workers at competitors like BMW, Honda, Nissan and Toyota. Furthermore, retiree benefits must be reduced so that the total burden per auto for domestic makers is not higher than that of foreign producers.

Oh, you mean like, to a substantial degree, what they've already done? If I assumed Romney to be an idiot, his ignorance might be excusable, but he's not an idiot. Also, just because the process of shifting responsibility for retiree benefits and pensions from the Big Three onto the unions isn't yet complete doesn't mean it's not well underway. Does he truly not know this, or is he lying?

That extra burden is estimated to be more than $2,000 per car. Think what that means: Ford, for example, needs to cut $2,000 worth of features and quality out of its Taurus to compete with Toyota’s Avalon. Of course the Avalon feels like a better product — it has $2,000 more put into it. Considering this disadvantage, Detroit has done a remarkable job of designing and engineering its cars. But if this cost penalty persists, any bailout will only delay the inevitable.

This man has been in business? Truly? If we accept his figure, he believes that costs are fixed per vehicle, such that you should assign the same labor cost to a subcompact sedan as you would assign to a luxury SUV? With no consideration of actual cost or plant efficiency? He doesn't understand that the Big Three aren't building vehicles using $2,000 less in materials per car - they don't build cars for less, which is why on a per vehicle basis they lose money on those sales. As somebody who supposedly knows about business, if he truly believes that the Big Three are producing competitive products with better paid labor for $2,000 less per vehicle, why isn't he championing their management (like he used to) instead of calling for a decapitation?

Second, management as is must go. New faces should be recruited from unrelated industries - from companies widely respected for excellence in marketing, innovation, creativity and labor relations.

That's great idea! Ford should bring in a CEO from a company like Boeing! Oh... They did that? Then Chrysler should get taken over by a covey of Romney-style corporate raiders who can take it private, clean house and... Oh... They did that? Beyond that, did Romney fail to notice, growing up, that his Daddy rose to be CEO of AMC by virtue of his years of experience within the auto industry? Is his present contempt for industry experience, if not feigned, some sort of Oedipal thing? Really, assuming that it's dead wrong to use executives who are experienced with an industry to run or revive that industry, whence Romney's "magic men" from the outside who will achieve a 21st century transformation? According to Romney, after all, Cerberus couldn't find one, and their financial wizards are paying tens of millions in bonuses to hang on to the "failed" team they have in place.

The new management must work with labor leaders to see that the enmity between labor and management comes to an end. This division is a holdover from the early years of the last century, when unions brought workers job security and better wages and benefits. But as Walter Reuther, the former head of the United Automobile Workers, said to my father, “Getting more and more pay for less and less work is a dead-end street.”

Wait a minute... so forty or fifty years ago his father, either on his way to being or already installed as CEO of AMC, discussed these crucial issues with the head of the UAW, the UAW guy described them as being on an unsustainable path and... daddy squandered the opportunity? Seriously, what am I supposed to make of this anecdote?

I love this part, not because it's not a valid point, but because it's industry-specific:

Get rid of the planes, the executive dining rooms - all the symbols that breed resentment among the hundreds of thousands who will also be sacrificing to keep the companies afloat.

Where's Romney's similar call for sacrifice by the financial industry? No more executive dining rooms, corporate jets and the like, until the economy's back on track? There's unquestionably a culture of overcompensation among this nation's executive class, but it's silly to use the issue to attack the auto industry or to pretend that it is somehow unique. Assuming that it truly has ended its post-collapse luxury junkets, has AIG shuttered its executive dining room and grounded its corporate jets? Where's Romney's lament? Scheduling conflicts excluded, has Mitt himself ever declined a ride on a corporate jet or a free dinner in an executive dining room?

As a practical matter, the "fixes" Romney proposes can't go through unless the Big Three go through bankruptcy or something like it. And (assuming he doesn't flip-flop again tomorrow, or hasn't flip-flopped while I was writing this), if we don't put form over substance, I'm on the same page as him in terms of their being a need for some serious changes. But Romney's eager pandering to anti-union factions of the Republican Party, in breach of both word and supposed bond with the state he sort of claims as his own, is pretty revolting. I'm not willing to pretend that his flip-flops and misrepresentations are anything but posturing and positioning, in the hope of advancing himself politically - even if it harms the country.

The Infuriating U.S. Auto Industry

Living in a state that seems to be in a permanent recession, and where it sometimes appears that the state government's leading solution to decades of economic decline is, "Wait until the auto industry rebounds," it's frustrating to see how short-sighted the domestic auto industry is. The auto industry's decline has been actively abetted by Congress which, rather than pressing for fuel economy standards that make sense in the context of the world's oil supply and demand, has time and time again favored consumption over conservation.

Right now the auto industry is hoping to get its hands on $25 billion in loans, already approved by the Bush Administration, to build more fuel efficient vehicles. How fuel efficient? So that they can meet a 35 mpg CAFE standard by 2020. You know, like the Civic Hybrid's 42 mpg combined average, or the 46 mpg achieved by the Toyota Prius. Oh, let's give the domestic auto industry its due - Ford's compact hybrid SUV's combined average is 34 mpg - they're almost there. Too bad it will take another twelve years and $25 billion to get that extra 1 mpg.

If you approach gas mileage honestly, you already know you don't need hybrid technology to achieve 35 mpg. In 1989, 20 years ago, Honda introduced its CRX HF, which achieved a 45 mpg combined average. The Geo Metro achieved similar fuel efficiency. In fairness, the method for calculating fuel efficiency has changed, and these cars would probably get about 38 mpg combined averages by today's standards, probably a bit less for the Metro, although by the same token we could presently build even more fuel efficient versions of those same cars. What those cars do is demonstrate that if you put a small, fuel efficient motor in a small, light car, you can achieve high fuel efficiency - something that, surprisingly, still needs to be said. This is a context where I'll be the first to admit, the CRX and Metro weren't and aren't the cars for everyone. But let's not pretend it's about technology, as opposed to wanting a large set of features and amenities that increase vehicle weight and decrease fuel efficiency. A huge part of the investment in fuel efficiency is about how to squeeze V8 power out of a V6 engine, or how to reduce vehicle weight without reducing size, performance, or amenities.

Criticisms of the auto industry almost always include a potshot at organized labor, if not an outright call to bust the unions. The history of generous union contracts plays a role in the current plight of the automakers, but not in the way that is typically depicted on the Wall Street Journal's editorial page. The Big Three have actually done a respectable job of paring down their labor costs and raising plant efficiency, to the point where the cost of labor provides only a marginal advantage to foreign auto manufacturers. They are weighed down by their huge obligations to retirees - health and pension benefits. A big part of GM's present cash flow problem comes from its obligation to pay billions of dollars to the UAW, to as part of a deal to transfer pension and retiree health care obligations from its books and onto the union.

But unions do remain a part of the problem, in that their lobbying efforts have largely followed those of the Big Three. When the Big Three were making a lot of money selling inefficient, high margin vehicles, the UAW had their back. Big profits mean profit sharing checks, and a possibility to negotiate higher wages during the next round of contract negotiations. I don't find that insidious, so much as short-sighted. It's their job to try to get more money for their members. But while the auto manufacturers themselves bear responsibility for lobbying (and obtaining) fuel efficiency standards and exceptions that let them "build the cars people want" (when gas is less than $4/gallon), and let them avoid investing in the technologies that might allow them to build comparable cars with much greater efficiency, I think that a union has an obligation to look at the long-term as well. Unions are often very willing to ignore the long-term financial picture for an employer or industry, and to sell out new members in favor of obtaining preferential treatment or benefits for their existing members. A union has an obligation to negotiate for the benefit of its members, but UAW-type negotiations seem to focus on existing membership (often at the literal expense of future members, and sometimes also of retirees) over the short term, without regard for the long-term effects on the employer or even themselves.

Is it needless to say? The UAW has joined GM in its quest for a federal bailout. Getting billions in federal money lets everybody avoid making tough decisions, while avoiding the consequences of decades of selfishness, short-sightedness and incompetence. Many opponents of the bailout suggest that it will simply enable "business as usual", and there's little reason to doubt that's what GM and the UAW most desire.

Fred Wilson, a venture capitalist focusing on technology companies, suggests that we should break up the Big Three instead of bailing them out. Unfortunately, it's not that easy. There's no clean way to divide any of the auto makers by product line, let alone to maintain supply contracts and product distribution by product line. I think that forcing the auto manufacturers to become smaller, more nimble, and able to quickly develop and manufacture new products is a good goal; I just don't see that it can be done by breaking them into smaller manufacturers. (If it were feasible to divide a major auto manufacturer and there were buyers willing to purchase individual car brands, I suspect Cerberus would already be taking bids for the various Chrysler brands.)

Thomas Friedman endorses a WSJ-style solution - and I mean that quite literally. He endorses a proposal by Paul Ingrassia, former Detroit bureau chief for the WSJ, as published in the WSJ (and as linked above).

In return for any direct government aid, the board and the management should go. Shareholders should lose their paltry remaining equity. And a government-appointed receiver - someone hard-nosed and nonpolitical - should have broad power to revamp GM with a viable business plan and return it to a private operation as soon as possible.

That will mean tearing up existing contracts with unions, dealers and suppliers, closing some operations and selling others, and downsizing the company. After all that, the company can float new shares, with taxpayers getting some of the benefits. The same basic rules should apply to Ford and Chrysler.

To me, that proposal seems silly. I am not aware of the magic wand you can wave over a major corporation to replace its upper management with "better people" and instantly transform the company into something lean and competitive. If Ingrassia were honest about it, he would be admitting that's what the Cerberus acquisition of Chrysler was supposed to be about - brilliant financial wizards take the company private, install new management, streamline operations, and transform it into a dazzling success. Yet Cerberus has failed in that effort, and Chrysler stands alongside GM and Ford in seeking a multi-billion dollar handout. It also seems absurd to me that a supposedly conservative, pro-business paper would be suggesting yet another socialization of major American companies, with government-appointed management being the cure-all for the failures of the market. The contempt for contracts is also a curious phenomenon - why are WSJ-brand conservatives so quick to call for the shredding of contracts, when the entire business world revolves around reliance on contractual relationships?

Ingrassia should also be aware that the problem with the Big Three's contracts with suppliers is not that they're overpaying. It's that they've always focused on price, and the squeezing of price concessions out of their suppliers, as a first line approach to cost savings. While a company like Toyota works closely with its parts suppliers to increase efficiency and quality - to save money while maintaining or improving quality - the Big Three have had little regard for anything but the bottom line. Even assuming that the suppliers are able to stay in business after a WSJ-style shredding of their contracts, where's the evidence that turning contracts into confetti will translate into even a penny in cost savings? Similarly, given that the largest burden imposed by union contracts has already been incurred and the cost of labor is no longer much higher for the Big Three than for their non-unionized (or largely non-unionized) competitors, how much will the shredding union contracts actually help? And, as with shredding contracts with suppliers, what of the risk that it will disrupt their ability to make cars? Finally, if the shredding of their contracts is of such import, why not refer them to a bankruptcy court where they can do that through a Chapter 11 filing?

Friedman also has some demands of his own:

Any car company that gets taxpayer money must demonstrate a plan for transforming every vehicle in its fleet to a hybrid-electric engine with flex-fuel capability, so its entire fleet can also run on next generation cellulosic ethanol.

I'm not sure what that means. Is Friedman proposing that all new vehicles incorporate those technologies? That they have the capacity to be "upgraded" to hybrid/flex-fuel vehicles? If he wants those technologies built into every new car, does he believe that the path to prosperity involves increasing the cost of every vehicle by a couple of thousand dollars, while we operate on the assumption that ethanol production will become more green (and be less subsidized) in the future? Seriously, I applaud efforts to increase fuel efficiency, achieve energy independence, make cars cleaner and greener, etc., but I don't see much point in creating a context where the government has to grant a multi-thousand dollar subsidy for pretty much every domestically manufactured vehicle in order for it to be price competitive with imports.

Lastly, somebody ought to call Steve Jobs, who doesn’t need to be bribed to do innovation, and ask him if he’d like to do national service and run a car company for a year. I’d bet it wouldn’t take him much longer than that to come up with the G.M. iCar.

This is cute, but it's a bit like a simplified version of Ingrassia's receiver who will magically replace the upper management of the Big Three with people who know how to run car companies. (People from other industries?) Friedman believes that a culture of innovation (let alone a culture of quality) can be instilled in a company simply by switching it's CEO, but how often does that actually happen? History suggests that the opposite is more likely - an ill-suited CEO will damage or crush a culture of innovation (see, e.g., Hewlett-Packard, Yahoo!, Apple during the non-Jobs years, etc.) Also, sometimes those creative, brilliant leaders bring quirks to their companies that can be as problematic as having boring, conservative, rule-by-committee CEO's. (Remember the period when Apple wouldn't build a desktop PC that required an internal fan?).

Although something of an aside, whatever criticism may be fairly directed at GM's leadership, or to idiotic statements on global warming, this assertion by Friedman seems like a cheap shot:

Nothing typified this more than statements like those of Bob Lutz, G.M.’s vice chairman. He has been quoted as saying that hybrids like the Toyota Prius “make no economic sense.”

Lutz is more fully quoted as saying that Prius-style hybrids make no economic sense because their price will never come down. As I interpret his comments, he was simultaneously talking up GM's plug-in hybrid technology (i.e., the Chevy Volt), talking down a competing product (the Prius) and noting what is pretty obvious: current hybrid technology comes at a premium price and, if you can't eliminate that premium, you're unlikely to get the type of market penetration that people like Friedman supposedly want. Further, he made the comments several years ago, and related them specifically to the price of gas at that time.

It just doesn't make environmental or economic sense to try to put an expensive dual-powertrain system into less expensive cars which already get good mileage, Lutz said at the North American International Auto Show.

* * *

"Hybrids are an interesting curiosity and we will do some," he said. "But do they make sense at $1.50 a gallon? No, they do not."

It seems unlikely that Lutz was arguing that there's no place for current hybrid technology in the GM line-up, as it's offered in a number of models and he was suggesting at the time that it would be added to GM trucks. It may turn out that Lutz is incorrect, and the current hybrid technologies come down in price, but it's also possible that he's correct and the best and cheapest way to bring hybrid technology to the mass market is through plug-in hybrids. But it is clear that in the four years (actually, almost five years) since he made the statement, current hybrid technologies have not come down in price and you continue to pay a significant premium for hybrid cars. That's why, even with record gas prices driving record sales, hybrids make up only about 3% of the U.S. car market.

What do I want to see for the domestic auto industry? I want to see private capital deliver on its promises, rather than "yet another display" of the supposedly brilliant financiers behind companies like Cerberus getting a public handout when they screw up an investment or prove that they're even less capable than the former managers of the companies they're supposedly rescuing. I would like to see GM find a way to get private money to finance its way through this crisis, even if that means making some unpleasant concessions. I would like the auto manufacturers and their workers to internalize the lesson that you can't make up for deficits in quality by creating a context where new car buyers reliably trade in their cars every two years, passing along the defects to the next guy, while your competitors make cars that are remarkably reliable for people who prefer long-term ownership. Yeah, right.

Finally, the one thing I don't want to hear is anybody who supported the financial industry bailout oppose an auto industry bailout on the basis that the domestic auto industry has collapsed due to incompetent management, greed, poor planning, badly designed products, or overpaid employees - that's a distinction without a difference.

Using Student Test Scores to Evaluate Teachers

For many years, perhaps too many, schools have relied heavily on standardized tests to evaluate students - their performance, improvement, and needs. Teachers dutifully park their students at desks and have them spend countless hours filling in little ovals with number 2 pencils. But there are other potential uses for that data.

For quite some time there has been a showdown in New York, with the state's Department of Education trying to use the test data to evaluate teachers, and the teacher's union objecting to the proposal. Now there's a compromise that, in my estimation, should have been reached a long time ago. Why did it take so long? The state's legislature imposed a two year moratorium on the use of test data for teacher pay and tenure decisions and, with that off the table, the Department of Education and teacher's union quickly reached a compromise. To me, that was the Department of Education biting its own nose off to spite its face. Now it can illustrate the utility of the data for purposes of educational improvement, and can start building the case for expanding its use to teacher pay and tenure. Right now, there's good reason to believe that school administrators don't even know how to apply this data in a meaningful manner.

This data should help school administrators target classrooms in need of assistance, but should also enable them to identify teachers whose classroom performance is consistently good to excellent. (Although if that turns out to involve a lot of "teaching to the test", this whole venture would have to be reconsidered.) Data can be used to gauge improvement by class, ethnicity, gender, and perhaps even on an individual level. By making the initial focus corrective, teachers have the opportunity to improve their performance, and both teachers and administrators have the opportunity to identity classroom management and teaching techniques that could help everybody. And all sides will get a sense of how fair or useful this information is, prior to its being used for purposes of promotion, discipline or tenure.

Michelle Rhee's Secret Plan for Teacher Pay

The Washington Post is again pushing Michelle Rhee's plan for eliminating tenure at for new hires and any teachers who join the new program, and increasing teacher pay for those teachers:

The bold plan of D.C. Schools Chancellor Michelle A. Rhee is two-tiered: Salaries as high as $130,000 would be available to teachers who forgo tenure and tie their pay to student performance, while those retaining tenure would still receive generous raises. No teacher with tenure would be forced to give it up under the voluntary plan.

I remain puzzled by this, for reasons also raised by this editorial:

Montgomery County teachers have been told that they'll probably have to forgo the 5.3 percent pay raise they had been promised for next year because of a worsening economy. Fairfax County, which this year could afford only 2 percent cost-of-living raises for its teachers, has no idea what it will be able to provide with revenue shrinking.

In other words, funds for increased teacher pay are unlikely to come from taxpayers - and given the state of the economy, school budget woes can reasonably be expected to get worse before they get better.

Still, union leaders have balked, thus jeopardizing the $200 million that Ms. Rhee says she has raised from national foundations willing to fund the contract -- but only if the District revamps how teachers are compensated.

Finally a hint at how D.C. will pay for the plan - at least initially - but more details are needed. That $200 million will last how many years? Followed by what? Massive reductions in salary? Teacher layoffs? Seriously - what's the plan to sustain this level of expenditure?

The Post complains about a critic of the plan:

Randi Weingarten, president of the American Federation of Teachers, criticized the plan in a letter to the editor of the New York Times even though, as she admitted to us, she hasn't seen the plan.

So the Post believes you can't comment on this plan unless you've seen it? Even though they have yet to print the plan, post it on their website, or point people to a place where they can read the plan?

I can't really argue with that, as I want to see the plan and its details so I can evaluate it for myself. I would like to know the specifics. Weingarten may be encountering the same problem I am having - the details of the plan appear to be a closely guarded secret, so to comment on the plan you have to rely on inferences and second-hand accounts.

But wait a second:

The union's refusal to put the proposal to a vote before its general membership is telling. Much misinformation about the proposal has been floated. Contrary to what has been said about the plan, there is apparently an appeals process for teachers who are terminated, as well as programs to aid in teacher development.

Apparently? So the Post hasn't seen the plan either, and the authors of this unsigned editorial are relying upon second-hand descriptions that they don't even know to be true. I guess it's okay to support a plan you haven't read, just not to oppose it.

Michelle Rhee's Proposed Reforms

In terms of this,

[Chancellor of D.C. public schools Michelle] Rhee proposes offering teachers the choice of staying in the seniority system or giving up their seniority and tenure rights in exchange for the opportunity to earn as much as $131,000 a year for raising student performance.

Does anybody have any details on the specifics of this proposal, or how it would work in practice? Is this going to be a typical "transformational" union contract deal whereby new teachers are pressed into the "bonus-based, non-tenured" positions while teachers already in the union get similar rewards without accepting similar risks? Given that the D.C. schools don't have the funds to double teacher salaries, how many (or should I say, how few) teachers will actually get the types of bonuses and merit pay Lieberman describes?

One of the advantages of tenure is that it insulates teachers from parental complaints. What incentive will school administrators have to stand behind teachers whose demands and classroom discipline trigger complaints from students and parents, particularly in schools where large numbers of students are disinterested and their parents unsupportive of education? How will student performance be measured? Simply by administration of standardized tests, thus overtly rewarding "teaching to the test" even if other teaching techniques are more inspirational or provide a better framework for learning?