Gladwell strikes out:
A letter to the new yorker
© by Mark Reutter
Posted 8/24/06
Below is my response (very brief by necessity of space restrictions) to an August 28 article in The New Yorker, “The Risk Pool,” which cites Making Steel prominently and at length to describe the back-story of Sparrows Point in the 1950s and its subsequent decline.
The article by Malcolm Gladwell appears to be a “neoliberal” call for national health care, with references to the deceased Walter Reuther and other progressive icons. While offering some useful observations, the article makes a mishmash of Sparrows Point history in the course of presenting a guide to the problem of retiree pensions and health care.
The article argues that employer-based pensions are financially burdensome to corporate America because the employment pool is too small, and hence a drag on our national economic health. While sympathizing with Bethlehem Steel and General Motors for having to shoulder so many dead-weight retirees (a typical line: “They got in trouble because they innovated and became more efficient in their use of labor”), the article sweeps merrily along without even a passing nod to the human fallout of pensioners stripped of benefits that were promised, it should be remembered, in lieu of cash wages when they were production-line workers.
This is odd, to say the least, because the final chapter of Making Steel lays bare the corrupt scenario of pension stripping via bankruptcy court that is spreading to airlines, coal mining, and auto parts in the wake of the Bethlehem debacle.
Instead, the final page of the article is handed over to Wilbur Ross. There is much portentous scene setting about this ex-Rothschild banker (“a Yale- and Harvard-educated patrician with small rectangular glasses and impeccable manners”) designed to buff him into the glowing visage of a latter-day Franklin Delano Roosevelt – that is, a rich guy who looks out for the poor and unfortunate.
According to Gladwell (the same journalist who penned The Tipping Point and now rubs shoulders with Jack and Suzy Welch at global management conferences), Ross occupies a “sparse” midtown Manhattan office except for “a large sculpture of a bull, papered over from head to hoof with stock tables.”
So now the image becomes clear: A benign Moses taking us out of Egypt to the promised land of free-market capitalism mixed with universal health care. (Ross supports both, making him a true neoliberal global capitalist hero.)
Never mind that this impeccably mannered and modestly housed titan was scarcely in loincloth when he purchased Sparrows Point for a few pieces of silver, or that his dedication to rescuing the steel industry has sowed impoverishment for 95,000 formerly middle-class pensioners while he and his buddies reaped a billion-dollar-plus reward in a quick sell-off.
So here we have a prestigious magazine publishing a thinly reported article by a celebrity journalist whose latest book, Blink: The Power of Thinking Without Thinking, posits that anyone can understand the essence of something in the first two seconds of viewing. In other words, Gladwell preaches that superficiality equals profundity. It figures.
Text of letter to THE NEW YORKER
E-mailed on August 24, 2006
Malcolm Gladwell ends “The Risk Pool” where a good reporter would begin. Namely, what has happened since 2003 when New York-based investor Wilbur Ross purchased bankrupt Bethlehem Steel and its once premier steel plant at Sparrows Point, Md.
Rather than investing in new machinery or seeking new markets for steel, Mr. Ross flipped the properties to London-based industrialist Lakshmi Mittal in April 2005, gaining a personal profit of $267 million. Together with stock earnings from the initial public offering of his company, International Steel Group (ISG), and related trades, Mr. Ross and his Wall Street allies pocketed $1.185 billion. This sum is almost identical to the $1.1 billion that steel retirees lost over the same period in health-care benefits from the sale to Ross and the sum absorbed by the federal government’s Pension Benefit Guaranty Corporation.
Rather than “saving” the steel industry by ending unsustainable retiree benefits, Mr. Ross ingeniously diverted the cash flow from the working class to the investment class.
Mark Reutter
Urbana, Ill.
REACTION: Roderick blog