Tag Archives: Hostess closing

Hostess and the Private Welfare State

From the online magazine Jacobin, Peter Frause makes a very good case for the closing of the Hostess plant.  The hype around the closing, as can be expected in an anti-union, anti-worker environment, has been trumpeted by the shareholders and top brass of the company and willingly repeated by the mainstream media, as a boondoggle created by a greedy, selfish union, but the facts tell a different story:

Hostess Brands, maker of the Twinkie, announced its liquidation today. This provoked a wave of now-more-than-everism, as both liberals and conservatives rushed to use the company’s failure as a testament to their longstanding hobbyhorses.

To the Right, of course, the end of Hostess is just another great opportunity to bash unions. Although perhaps it’s a sign of progress that even Fox News decided to soft-pedal this line, talking up the conciliatory position of the Teamsters while blaming the recalcitrance of the Bakery, Confectionary, Tobacco Workers and Grain Millers union for the closure. The idea that this is all about greedy unions is idiotic beyond belief, but sadly something we apparently still have to talk about. So if you don’t believe me you can go read Sarah Jaffe or Diana Reese.

A line I’m seeing from liberals, meanwhile, is that this is another case of private equity vulture capitalism ruining the American dream. Hostess Brands was under the control of a couple of hedge funds, as is the style these days. And so one line of argument is that Hostess could have been a perfectly sustainable company with good paying jobs, if only those short-sighted PE guys hadn’t showed up to loot it. A typical example of the genre is this from Laura Clawson at Daily Kos. Mark Price puts it more pithily on Twitter: “Private equity runs up debt, takes out fees and investment in capital goods declines leading to cost disadvantages.”
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