Saturday, December 10, 2016

The Twinkie Revival

Interesting story in the Times about the quick return of Twinkies and other iconic Hostess brands, which briefly disappeared from shelves after Hostess went bankrupt in 2012.

In short form, what happened is that all of Hostess's well-paid, unionized workers lost their jobs and the private equity firms that bought those brands brought them back using a much smaller work force making half as much. The private equity firms involved say they "saved" hundreds of jobs, and people do work for the new firm. But the new owners have zero commitment to the workers and have already closed one of the factories they re-opened to great fanfare when Twinkies were brought back to the market.
In 2012, Hostess had about 8,000 employees and eight bakeries dedicated exclusively to snack cakes. Six other plants produced at least some desserts. Today, the new Hostess has only three plants and 1,200 workers.
It's an instructive story. One of the lessons is that the new economy is an amoral machine that chews up and spits out workers, paying them as little as possible along the way, while generating fortunes for the financial manipulators behind these deals. With the help of big subsidies from state and local governments. But the other lesson, we shouldn't forget, is that as a large, unionized company, Hostess failed, leaving behind massive debts. Nobody seems to think that Twinkies could have been brought back by a big company using the old methods.

Today, the manufacturing companies that pay decent wages are all high-tech operations with lots of machines and not many workers. Companies with lots of semi-skilled workers pay crap, and transfer those jobs at the drop of a hat, and say quite openly that they can't afford to do business any other way – except maybe by moving to Mexico.

It's a hard problem.

One piece of it, though, is the absolute shamelessness of our business class, men who pay themselves hundreds of millions a year and feel zero responsibility to anyone. And one of the problems with turning to Trump as a change agent is that as the most shameless man in America his rise will only further entrench such attitudes in our elite.

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