From the Arab oil embargo to the auto
workers strike, one month more than 40 years ago changed this nation
forever
by Edward McClelland
Early
in 1974, Don Cooper, an autoworker at an Oldsmobile plant in Lansing,
Michigan, was demoted from his coveted job in the crankshaft department
to the final assembly line, where he had started out as a rookie nine
years earlier. Cooper hadn’t done anything wrong. Rather, he was a
victim of events 6,000 miles away.
The
previous October, Egypt had invaded Israel. When the United States
provided military aid to the Jewish state, Saudi Arabia retaliated by
cutting off oil exports to Western nations. The Arab Oil Embargo raised
the price of gasoline from 36 to 53 cents a gallon — when drivers could
get it. To prevent hours-long lines, filling stations sold to cars with
odd-numbered license plates on Mondays, Wednesdays and Fridays, even
plates on Tuesdays, Thursdays and Saturdays.
Oldsmobile,
known for burly, dynamic cars powered by its eight-cylinder Rocket
engine, was offering its usual stable of bad-ass American iron: a
Cutlass with a 270-horsepower engine; a 98 that measured 19 feet 4
inches from
chrome bumper to chrome bumper.
But suddenly, customers weren’t buying those gas guzzlers. And when
cars weren’t selling, Oldsmobile didn’t need as many crankshafts. So
thanks to the latest Arab-Israeli War, Cooper was back on the line.
“That
was a rude awakening to go back to final assembly,” Cooper recalled. “I
was back on the frame line. I had to ground a radio strap to a
firewall, and tighten a brass nut on an air conditioning unit. It was
torture to go back.”
October 1973 was a
rude awakening for the entire United States. It was a watershed month
for the American middle class. The Arab Oil Embargo would lead to the
downfall of the American auto industry, whose generous wages and
benefits set the standard for the entire economy. It was also the month
of the Saturday Night Massacre, which made inevitable the downfall of
Richard Nixon. The Watergate scandal resulted in changes to the American
political system that put more power into the hands of lobbyists,
political action committees and wealthy, self-funded candidates. Cooper
didn’t know it at the time — nobody knew it — but the moment he started
grounding those radio straps and tightening those nuts was the moment
the upward fortunes of the American worker hit a wall. From the 1947 to
1973, the golden postwar quarter-century, hourly earnings grew at an
average of 2.2 percent a year. Since 1973, they’ve been stagnant, barely
keeping up with inflation, even as productivity has boomed.
For
the first generation after World War II, American life was defined by
one word: “more.” Not just bigger cars and bigger houses, but two cars
and two houses. The nation’s standard of living increased dramatically —
on a pace to double every 33 years — with much of it generated by the
auto industry. In 1949, America’s automobile fleet stood at 45 million.
By 1972, it was 116 million — more cars than we could fill up from our
own wells. The alpine graph of American prosperity had reached a
plateau, and cutting off our supply of foreign oil was all it took to
push it downhill.
As the auto industry
was a bellwether for the American economy, autoworkers were a bellwether
for American labor. In 1970, Cooper, had taken part in the United Auto
Workers’
last great nationwide strike. More
than 400,000 workers walked out and stayed out for 67 days, until GM
gave them everything they wanted: a 19.5 percent wage hike over three
years, plus a one-cent an hour raise for every 0.3 percent increase in
the consumer price index, and the right to retire after 30 years, at age
58, with a full pension. As he walked the picket line, Cooper was
jeered by passing drivers, but as he saw it, he was striking for every
worker.
“We used to get stoned in the
newspapers every time we’d get something in our contract,” said Cooper,
whose father was vice president of his UAW local. “‘Well, the
autoworkers drove the price up because they got a raise.’ But then
everybody else started getting raises, too.”
In
1973, after a brief strike against Chrysler, the UAW won even more
generous perks: a dental plan, a longer holiday break between Christmas
and New Year’s and the opportunity to retire on a full pension after 30
years of service at any age. Cooper, who had hired in three months after
his high school graduation, as General Motors was ramping up for its
bounty of Vietnam War contracts, could now retire at 48.
The
day that strike was settled — Sept. 23, 1973 — was the day the American
middle class peaked. Cooper knew even then that the labor movement had
finally achieved all its goals.
“The
union got to a point where we ran out of things to negotiate for,” he
said. “What more could we ask for? We had a good wage, we had good
health care, we had good pension. Everything was there.”
Less
than two weeks later, it all began to unravel. On Oct. 6, the Jewish
holiday of Yom Kippur, Egypt and Syria attacked Israel in an attempt to
regain territory lost in the Six-Day War of 1967. As Israeli forces
retreated, Golda Meir begged the United States for help. Reluctantly,
Nixon sent ammunition, helping Israel repel the Arab attack — and
inspiring King Faisal to declare a retaliatory embargo.
The
effect on the American economy was twofold: First, the embargo
contributed to a recession in which the gross national product fell 2.1
percent, unemployment reached 10 percent, and inflation hit 12 percent.
Not even the UAW contract could keep up with those prices. Second, as
Don Cooper was learning during his tortuous return to the assembly line,
Americans stopped buying American cars. The percentage of disposable
income spent on new cars dropped from 4.8 percent to 3.8 percent — the
lowest since the Korean War — and a lot of the purchases were
fuel-efficient Fiats, Hondas and VW Beetles, which were less expensive
to fill up than those street yachts the Lincoln Continental and the
Chrysler New Yorker. The Big Three found themselves in a bind, which
they soon figured out how to make worse. GM, Ford and Chrysler didn’t
want to build small cars, because only ginormous cars provided the
profits necessary to pay the wages and benefits they had just lavished
on their workers.
“We don’t believe the
market is large enough for our own subcompact,” soon-to-be retired
Chrysler chairman Lynn Townsend said in 1974. “The Valiant and Dart are
the cars people want to buy.”
Forced
into the subcompact business by the marketplace, and by the first
Corporate Average Fuel Economy standards, which mandated a fleet-wide
average of 27.5 miles per gallon by 1975, Detroit engineers
passive-aggressively designed some of the crappiest cars ever to explode
or crack a head gasket on an American roadway: the Plymouth Horizon,
the
AMC Pacer,
the Chevy Chevette, the Ford Escort. These epically damaged the
American automakers’ reputations because they were starter cars,
purchased for young people by parents who weren’t over World War II
enough to buy Japanese. The classic pattern was for drivers to climb the
Chevy-Pontiac-Oldsmobile-Buick-Cadillac brand ladder as they became
older and more prosperous. But after the floors of their Chevettes
rusted out, Baby Boomers bought Corollas with their own money. In 1970,
GM produced 45 percent of all vehicles sold in the U.S., while foreign
manufacturers produced 7 percent. Now, foreign auto companies produce
half, while GM makes a fifth.
The
collapse of the domestic auto industry had serious political
consequences for the labor movement — and serious economic consequences
for the middle class. Harry Truman, Adlai Stevenson, John F. Kennedy and
Lyndon Johnson all kicked off their presidential campaigns at Detroit’s
Labor Day Parade, in recognition of the UAW’s status as labor’s
flagship union. By 2012, the UAW was so depeopled it could not prevent
the Michigan legislature from passing a right-to-work law. Republicans
candidly admitted the bill would have stood no chance when the UAW had
1.5 million members — three times its current strength. Factory closings
cost unions their political clout, giving Republicans an opportunity to
finish them off.
October 1973’s second
blow to the middle class occurred on the 20th, when President Nixon
refused Watergate Special Prosecutor Archibald Cox’s demand for the Oval
Office tapes. When Cox wouldn’t back down, Nixon ordered Attorney
General Elliot Richardson to fire him. Richardson resigned. So did
Deputy Attorney General William Ruckelshaus, leaving Solicitor General
Robert Bork to fire Cox. The so-called Saturday Night Massacre was an
act of presidential lawlessness that marked the beginning of the end of
Nixon’s presidency.
“Until last night,”
the Washington Post reported on Oct. 21, “Congress had appeared
extremely reluctant to even consider the impeachment step seriously.”
After
that night, even Republicans began calling for Nixon’s removal from
office. “The House of Representatives should consider to begin
impeachment proceedings,” said Sen. Edward Brooke of Massachusetts. The
next week, Rep. Jerome Waldie, a California Democrat, introduced a
resolution calling Nixon’s “obstruction of justice” grounds for
impeachment.
A politician who called his
ideal voter a 47-year-old machinist’s wife outside Dayton, Nixon was a
working man’s president. According to Herbert Stein, a member of his
Council of Economic Advisers, Nixon was “
allergic to unemployment.”
In announcing his 1971 budget, he called himself a Keynesian. The
following year, he proved it, ordering his Cabinet to increase spending
to reduce unemployment. Nixon’s solution to inflation was wage and price
controls — “a radical departure from conservative, free market
philosophy” — not the job-killing interest rate hikes later imposed by
Jimmy Carter and Ronald Reagan. Part of it was a political strategy, to
lure white working-class voters away from the Democrats, but part of it
was his own hardscrabble upbringing on a California lemon ranch.
But
the changes Watergate wrought on the American political system have
been more enduring than the dismissal of a labor-friendly president with
only two-and-a-half years left in office. The Watergate Babies — young
Democrats elected to the House in the wake of Nixon’s resignation — took
advantage of their numbers and of popular revulsion against The Way
Things Are Done in Washington to break the power of long-serving
committee chairmen who had controlled the flow of congressional
legislation. The House became more democratic, but the nation didn’t.
Money replaced seniority as the most important factor in moving a bill.
Lobbyists and political action committees began showing up in greater
numbers to make sure members cast the correct votes, rewarding those who
did, punishing those who didn’t. The cost of campaigns increased.
“From
an institution dominated by 20 or so powerful leaders, Congress has
evolved into a collection of 535 independent political entrepreneurs
with their individual interests uppermost — i.e., to get re-elected,”
wrote Fareed Zakaria in his book “
The Future of Freedom.”
“Among the most consequential reforms of the 1970s was the move toward
open committee meetings and recorded votes. Committee chairs used to run
meetings at which legislation was ‘marked up’ behind closed doors. Only
members and a handful of senior staff were present. By 1973 not only
were the meetings open to anyone, but every vote was formally recorded.
Before this, in voting on amendments members would walk down aisles for
the ayes and nays. The final count would be recorded but not the stand
of each individual member. Now each member has to vote publicly on every
amendment. The purpose of these changes was to make Congress more open
and responsive. And so it has become — to money, lobbyists and special
interests.”
“Most Americans have neither
the time, the interest, nor the inclination to monitor Congress on a
day-to-day basis. But lobbyists and activists do, and they use the
information and access to ensure that the groups they represent are well
taken care of in the federal budget and the legal code.”
Since
1976, the first election following the Watergate Babies’ arrival, the
price of getting elected to Congress has quadrupled, to $1.4 million. In
such an environment, wealthy candidates have a huge advantage.
Chicago
Mayor Richard J. Daley was the cartoonists’ model of the pot-bellied,
streetwise, inarticulate back-room ward boss overthrown by the telegenic
young New Politicians of the 1970s. But he believed his Machine was a
vehicle for upward mobility: “The party permits ordinary people to get
ahead,” he once said. “Without the party, I couldn’t be mayor. The rich
guys can get elected on their money, but somebody like me, an ordinary
person, needs the party.”
In telling the story of a Pennsylvania steel mill foreman elected to Congress in 1974, the Washington Post
wrote,
“it wasn’t nearly so unusual for a person with few assets besides a
home to win and serve in Congress. But from 1984 to 2009, the median net
worth of a House member increased from $280,000 to $725,000, in
inflation-adjusted dollars,” while the median net worth of the average
citizen remained stuck at around $20,000.
Politicians
so far removed from the financial struggles of the middle class are
less likely to govern with its interests in mind. The current holder of
Richard J. Daley’s job is Rahm Emanuel, who earned $18 million as an
investment banker. (In 2011, I dubbed him
Mayor 1%,
an epithet since adopted by his enemies.) The newly inaugurated
governor of Illinois is Bruce Rauner, a venture capitalist who is trying
to prevent public-sector unions from collecting dues, and has proposed
cutting pensions for state employees. This is the cynical end game of
economic libertarians’ war on labor: After reducing private sector
unions to a fraction of their old membership, they direct the resentment
of the newly impoverished working class at public-sector employees
getting a “sweet deal” at the expense of struggling taxpayers no longer
earning that kind of money.
by Earl Ofari Hutchinson 
