POLI 423 Podcast

This podcast discusses the growth of neoliberalism and its impact on the auto industry in North America. Neoliberalism emphasizes market mechanisms and deregulation, leading to mergers and acquisitions. The election of Ronald Reagan and Brian Mulroney marked a shift towards neoliberalism in politics and economics. Japanese auto manufacturers, particularly Toyota, became dominant, leading to changes in production methods. Neoliberalism also brought a focus on individual freedom and limited government intervention. The transition to fuel injection and diesel engines was influenced by regulations and fuel costs. Neoliberalism and deregulation played a role in the development of these technologies. Welcome to Naturally Aspirated Displacement, a podcast on neoliberalism and the auto industry. Here we're going to cover the growth of neoliberalism as a political, economic, and social project, and its effect on North American producers, policy, and people. Political economy is going to be our guiding light to explore the effects of the neoliberal project. But post-structural criticism is going to be useful in questioning how these changes are rationalized and naturalized. Using a variety of course authors and select editions, this podcast is going to explore neoliberalism as a project of class maintenance, its tenets of deregulation leading to mergers and acquisitions, and the accompanying changes to production and management. Neoliberalism emerged as our dominant political program in the 1980s following years of work by the Mont Pelerin Society. The program is steadfast in its assertion that market mechanisms are the only reasonable transmission of knowledge. Prices, also referred to as market signals, are means for the market to regulate supply and demand, a task the government cannot possibly possess enough information to undertake. In his Constitution of Liberty, first published in 1960, Hayek does reference the austerity his strict monetarism could effectively create, but presents it as a necessary component of combating government coercion in the form of economic intervention. Friedman would take a different path, arguing in favor of the general prosperity created by neoliberalism, usually around the talking points or anecdote of, a rising tide lifts all boats. The election of Ronald Reagan proved a historic turn for neoliberalism as a legitimate form of political, economic, and discursive governance. The disappointing years of Jimmy Carter, along with Nixon's shock tactics, dropping the gold standard and floating exchange rates, had done little to combat stagflation. In Canada, the election of Brian Mulroney initiated a wave of privatization, starting with the contentious sale of Petro-Canada, along with a reinvigorated Canada-U.S. trade deal. Reagan and Mulroney were entering the political arena in a period when no one, labor or commerce, was happy with the interventionist role the state played in Fordism or Keynesianism, least of all auto producers. The situation was so poor, it's been compared to the Roughriders' offensive coordination. How about them apples, Justin? Like Pinochet's Chilean administration, Reagan implemented the most extensive tax cuts in American history. Over the first six years of his presidency, Reagan cut the top marginal tax bracket from 70% to 28%. The supply-side revolution had only just begun, as Reagan continued to lift the remaining regulations from Nixon's age and roll back income tax on oil and auto producers. Manufacturers, producers, and general commerce all argued in favor of the cuts, stating they freed up capital for producers to raise wages and invest in development. Neoliberalism also emerged with a new sense of individual political and economic freedom. Freedom, in this context, refers to Milton Friedman's casino anecdote, where individuals willingly participate in a competitive system with winners and losers. Neoliberalism emphasizes government intervention only to establish a basic market and monetary policy. In this example, government could intervene perhaps to build the casino, but no more. Any intervention to even the playing field after the fact only infringes on the rights of the winners and spoils the whole experience. In class, we've discussed two methods of exploring neoliberal growth, political economy and post-structuralism. Post-structuralism, conceptualized through the work of Rosenmiller, considers government a series of techniques, methods, and strategies relating to governance and being governed. The field is remarkably fluid, studying a variety of rationalities, discourses, and governmental programs. For this podcast, post-structuralism is remarkably useful in considering the popular appeal and spread of neoliberalism as a dominant ideology. For instance, Alan Walks, an author we'll explore later in this podcast, explores how neoliberalism influences a discursive change in how we consider what is good for the country. Under neoliberalism, it can be said with a straight face that what is good for the country is good for General Motors, and vice versa. However, political economy will be the guiding light of this podcast, and its conceptualization under David Harvey and Alan Walks, both using it to demonstrate a meaningful and objective shift in the political governance and economic policies of neoliberal transformation. In Lean on Everything, lean management's awkward place in neoliberalism, Justin Lee Aso, the big dog himself, notes the problematization of Japanese growth specifically in auto manufacturing during the 1970s. Despite its small geography and limited population, Japan grew rapidly following the post-war period, rising to 10% of the global market by 1976. North American producers were puzzled, searching for the secret to the rising dominance of this island nation. Farm bills were raised when Japanese capital began purchasing North American assets, which were criticized for not having evolved since Fordism. Sales began slumping to Japanese manufacturers, and the position of our domestic top producers was quickly deteriorating, not unlike the Rough Riders' offense against the Blue Bombers. That's 2-0 Grant. Cross-platform studies and business trips were launched by Ford, General Motors, and Chrysler, all to update their manufacturing models. The Toyota production system emerged as the pinnacle Western auto manufacturers sought to emulate. The small geography of Japan presented size restrictions that producers in Detroit or Philadelphia didn't have to worry about. Lean management and lean production did away with the large stockpiles of on-site parts that could potentially be needed during shortages or during delivery delays so that production could be kept running. Fordism also encouraged large pools of labor to be kept on payroll just in case mass call-ins. Neoliberalism would revolutionize the production of vehicles, doing away with these bloated aspects of Fordism. The casting and fitting process for steel and aluminum manufactured parts was also improved and modified. This new method, along with new just-in-time delivery systems, allowed make- and model-specific equipment to be swapped in a matter of hours and available at any factory across Japan. Around this same time, OPEC issued an embargo of nations supporting Israel following the Yom Kippur War. Western nations experienced a major jump in the price of oil and gas after being cut off from markets such as Saudi Arabia. Sign-ups outside of gas stations and restrictions on who could fill up when became the uncomfortable new normal. In 1975, producers were now mandated to add carburetors to all new manufactured vehicles. Carburetors work by pre-mixing fuel and water prior to entry into the combustion chamber. The method allows a controlled amount of fuel to be combusted providing higher fuel economy, usually at the expense of power. So the old system of Keynesian management and Fordist production was falling down, and new regulations surrounding carburetors and exhaust emissions were troublesome for gasoline engines, let alone large displacement ones. Beginning in the early 80s, experiments with fuel injection resolved some of these issues in smaller, compact vehicles. For larger vehicles and heavy-duty trucks, P.S. Myers records a different transition towards diesel fuel. Diesel engines, regardless of whether equipped with direct or indirect fuel injection sites, are incredibly fuel-efficient, meaning manufacturers can afford to make larger displacement engines regardless of the high fuel costs. Myers notes the frenzy of private-sector investment in diesel engine alternatives during the 1980s. For a single decade, diesel engine output increased by over 300 horsepower. Initially, the reinvigorated diesels of the 1980s would struggle to produce enough torque given the thicker burn, but once again, the private sector seemed to have an answer. A turbo – that's right, the snail from the DreamWorks movie – works by recycling exhaust air through a compressor wheel and back into the cylinders, aiding in the combustion process, and effectively resolving the torque problem on diesel trucks allowing for continental application. As mentioned, the 1970s marked a disappointing decade for engine displacement. The oil embargoes and stagflation, along with new carburetor restrictions, meant that the fabled days of the 1960s and large-displacement powerhouse engines were no longer feasible. For North American producers like Ford, the days of the famous 400 big block, a 6.6-liter eight-cylinder, seemed to be left in the 60s. Starting in 1970, Ford Motors released the 335 Cleveland, a compact 4.9-liter V-8, which suffered severely for its lack of displacement and power. Starting in 1973, its successor, the Ford Motors 351 Windsor, had little more success at only 5.8 liters of displacement. But by the early 80s, neoliberalism had emerged in tandem with a dramatic shift in pickup engine manufacturing. In 1983, Ford Motors released its 6.9-liter Navistar diesel. A year later, Ford would follow this up with the 7.3-liter Navistar diesel and 7.3 turbo, arguably the best-received Ford pickup truck of all time. Increased research and development, as well as joint venture production, was stimulating rapid technological growth. Direct injection, along with the growth of diesel engines, provided a new avenue for manufacturers to point to as the success of the deregulation and cuts. Alan Wachs, in Neoliberalism, Fordism, and the Politics of Automobility, notes the rise of deregulation in labor, finance, and production. Wachs emphasizes automobility as a trend away from Fordism, where lean management, just-in-time delivery, and small-batch manufacturing became industry standard. Wachs uses the term to describe the process by which top producers have maintained their position in our domestic market, as well as to describe the individualization of transportation as its private responsibility. As evidence, Wachs notes the massive lobbying campaigns of the 1980s and 90s aimed at pushing deregulations for top producers and against public transportation. Wachs notes that while these practices emerge with new and exciting technologies, they often do so at the expense of workers' ability to own them. Keynesian interventions bolstered the demand of slumping steel, coal, and rubber production, all central to achieving low unemployment. But this transition to flexible accumulation, just-in-time delivery, and lean management was not directly aimed at increasing profitability. Rather, this was a method, as David Harvey says, of system maintenance aimed to reinvigorate the competitiveness of North American producers against the rise of European, and more importantly, Japanese competitors. The CBC chronicles mass mergers and acquisitions emerging in tandem with neoliberal deregulation. The deregulation of finance and manufacturing seems to have allowed large North American producers to swallow up smaller regional producers along with foreign specialty manufacturers without penalty or state intervention. The increased flow of cash from cuts to marginal income tax, as well as the lowering of sales tax and import tariffs on critical resources, seems to free further capital for investment speculation and company acquisition. In 1980, Ford Motors purchased a controlling stake in Mazda. In 1987, Ford purchased the British luxury line Aston Martin. Later that year, Chrysler purchased the American Motors Group, and in 1989, General Motors was in Sweden to purchase Saab. In 1990, Ford returned to Britain to purchase Jaguar, and in 1999, they were back in Sweden buying Volvo. In 2000, General Motors purchased Isuzu as well as a minority stake in Fiat, and later that year, Ford was back in Europe to purchase Land Rover from BMW. These mergers and acquisitions were an important tool in re-solidifying North America's top producers in the face of challenging economic times during the 1970s, as well as the problematic growth of Japanese competitors. The deregulation of finance and mergers, as well as the increased cash flow from new monetary policies, were critical tools of class maintenance and re-solidification. However, the trickle-down effect promised earlier was not felt by all. Samuel Gindin, in GM Layoffs and the Logics of Neoliberalism, covers the mass layoffs of 2005, eliminating roughly one-fifth of General Motors' Canadian workforce. The mass layoffs affected two Oshawa plants, formerly the first and second highest-producing vehicle plants in Canada, halving the capacity of one and entirely closing the second. So how does a program full of negative repercussions for the workers of ministries and manufacturers become so dominant? Like Jesse Pinkman said, they can't keep getting away with it. As we've discussed, neoliberalism encompasses a host of deregulations, tax cuts, and lack of intervention. This change to regulatory practice occurred at the same time as a flood in automotive mergers and acquisitions, but also occurred at the same time as a return to a perceived golden age of displacement engines, arguably an even better age for truck engines. The popular appeal of these products, along with the naturalization of automobility and a new set of government frameworks and policies, created a rich environment for neoliberalism to function as a system of class maintenance in the North American automarket.