My initial post here was just my preliminary thoughts on the auto bail-out. I’m still not sure where I stand, but I’ve taken the post down because the more I read and actually focus on the issues involved, the more I can’t stand by what I wrote, and the more I feel that the initial post was doing unnecessary harm to this community. Apologies. Feel free to continue the discussion.
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I am going to flat out disagree with you because the Big 3 aren’t asking for a blank check , they’re asking for a $25 billion dollar loan. Chrysler got the same thing in the 80s, and paid it back with interest. Sold themselves to Daimler AG for a profit in the 90s. Unfortunately management forgot history and let it repeat itself, but that’s no reason to deny them alone when, unlike the financial institutions, there is a track record of such a bailout being paid back.
And yes, this is personal. Every member of my family, including myself, is working for the automakers directly, or indirectly. Why? Because we live in Michigan.
While I’m not from Detroit, I did grow up across from Detroit in Windsor, Ontario. Windsor is also very much an automotive town and it is suffering a great deal already. I’m very torn up by the recent decline in the auto industry because it affects my family and friends directly. Many of them have lost their jobs and the tool and die company my grandfather spent the last 60 years building looks set to go out of business.
That said, I think any debate about the auto industry must take into account how widespread the job losses will be if the US auto industry fails. It’s not just the actual plants that will go under, but all the supply plants like my grandfather’s that employ all together hundreds of thousands of people. Add to this the secondary jobs that these companies support, and this could mean an absurd amount of job losses. It’s going to completely tank a huge portion of the US and Canadian economies.
That said, the US auto companies have not taken responsibility for changing their business plan. GM had an incredible opportunity with their electric car and wasted it (I refer to the EV1 in California). They allowed the asian automotive companies to become leaders in innovation instead. I don’t believe in rewarding stupidity! Given that, I think that GM’s Volt will change the game and I think it’s a smart move.
But I think we should keep in mind that getting the government to pay for health care is not necessarily the answer – something Windsor can attest to. We have a national health care system in Canada and this is not keeping jobs in our city. We are at the forefront of a change in the way of life for those in North America. Globalization is bringing more players to the table, and many of the countries that we are competing with are able to get much cheaper labour. What this means is that we either have to move the workforce away from manufacturing or we need to make manufacturing cheaper.
From the other side of the situation (i.e. non-union), I have seen my father and grandfather struggle to keep a business alive in order to keep their workers from going without jobs. They have lost an incredible amount of money in doing this. They cannot compete with non-unionized or foreign workers. Even unskilled workers make over $50,000/ year in their shop, and this isn’t really sustainable. They have readjusted their profit margins and often quoted work at a level that would just allow them to break even, but even at those quotes, they have often been underbid. The principle cost in all of these quotes is labour. I hate to say it, because I am seriously pro-union, but its being said around Windsor – Union workers are pricing themselves out of jobs.
In Windsor, nobody knows what to do. Shop after shop are going bankrupt or going under. This financial crisis and the current automotive downturn are making things worse, but there were problems before. The question is though, even if we accept that the automotive companies are going to die a sad death, where does that leave the workers? These are often people who have spent their lives in the manufacturing sector – some who have no education to fall back on. What will they do in the new economy without the automotive industry?
This one is such a tough call. My biggest concern, besides those millions of jobs lost which is plenty BIG, is that Chinese companies are laying in wait to snap those companies up. This is our manufacturing base, about all that’s left. This seems like a very bad idea.
I am local and I agree. I’ve been watching family and friends lose their jobs with the big-3 for the past year and longer.
It’s not like there wasn’t warning that the auto industry was in trouble. Part of business is making something that people want to buy. Make something people want or another company will take your place (hint: green technology, fuel efficient, etc).
Except if the big 3 fail several million jobs will be lost.
Not just all the factory workers (of which several relatives are/were), but the suppliers, the dealerships, all the grocery stores and other businesses that relied on money brought in by the big 3′s employees, etc.
The state of Michigan will have literally no jobs; our economy will be gone. Retirees will lose their pensions and health care. The majority of MI families will be without healthcare and many will become homeless.
How many other state’s economies are tied or affected by MI’s? How many families in other states were employed, directly or indirectly, by the big 3?
If the big 3 fail the US economy will majorly suffer and the economies of a number of states will be destroyed.
I have a couple of points to make…
1) Japan does *not* have a good safety net. The Japanese safe like maniacs *because* their health and pension infrastructure sucks. Their version of Social Security has become increasingly insufficient to prevent absolute poverty for many elders. Their health care system is a more dysfunctional version of the NHS in the UK–public system focuses on prevention of problems, and is terrible at tending to the individual. Unlike in Canada or in much of the EU, the use of the private system is a necessity and not primarliy supplementary. So those car companies neither pay for their health care, nor is good health care all that much reflected in their corporate taxes.
Having said all this, while benefits costs do make American cars more expensive, Toyota and Honda and Nissan et al profit mostly because their companies are ultra-efficient and their products most of the time are of mediocre to excellent quality. European car makers like BMW have fairly large benefits structure as well, but they are also able to compete (with the aid of low cost factories in eastern europe, but US motor comps does the same in Mexico) on price just fine. Even though BMW is a luxury car maker, they do offer models that people in distinctly of middle-class means can afford if they want a nice car. American car makers are failing because they are not well managed companies. They’ve survived so far because they had hands in the pockets of the government (like certain notorious tax advantages), but the rent-seeking advantage they’ve had doesn’t go as far as it once had.
The second point is this: We can’t actually *create* industries. Industries can only be grown, and this is a long-term process, one for which green tech should have started early in Bush’s first term. Part of that reason is because people can’t just go from making cars to making solar panels or trains. At a minimum, expensive and heavily subsidized training has to occur (also expensive in time terms as well). That is the nature of the post-industrial knowledge economy that we live in now, and the legacy of George W Bush’s know nothingism is going to haunt us for a long time. So if you’re *really* ready to risk UAW Bonus Army traisping around protesting for lots of cash your government doesn’t have…
You’d better know what you’re doing.
That’s only part of the reason.
When Japanese car manufacturers started to overtake the US car manufacturers from at least the 1970′s onwards, that was barely 30 years after the end of WWII when the aftermath of Japan’s quest for empire effectively meant its economy was reduced to near bottom (Many of its former colonies/occupied nations were in even more dire economic straits).
It was also a result of starting from near economic bottom, a substantial amount of American aid during and some time after the American occupation of Japan, effective union busting/suppression of labor and progressive activist groups with US assistance, and Japan’s ruling elite encouraging the attitude of “Work hard to rebuild Japan’s economy so Japan can once again be a prosperous nation one can be proud of”. The last factor was often cited as a critical factor by many Japan scholars and Japanese classmates in Japan’s “postwar economic miracle” while most of the rest tended to be downplayed and/or ignored.
Ironically, once Japan’s standard of living became comparable to Wealthy industrialized nations and labor costs became too high in the eyes of the Japanese corporate elite, even they started to close domestic factories and practiced outsourcing to other countries. For instance, Toyota and Honda have opened up manufacturing plants in parts of the US with weak/no union presence because labor costs are lower, less worry about labor relations/negotiations, and those regions’ governments provided tax and other incentives.
Japanese corporate elites have also not been shy about opening factories in SE Asia and China….despite the still-present resentment from many in the older generation as a result of WWII.
I think the post hit the nail on the head with the comments about healthcare. No other major car-producing countries have to provide their works with health care. Health care is, undeniably, a huge cost for any employer. Also, while I am not advocating pay cuts or the low wages of foreign workers, I do think that there are plenty of people in this country who are overpaid. Like another poster mentioned, even an unskilled worker is expected to be paid $50,000 a year. Why on earth…? The reason people are losing jobs to immigrants is because they are asking for $15 an hour to pick apples while the immigrants will do it for $5. That’s what the job is worth. Yes, I think that people should be paid enough to survive, but I think in some cases it’s a little extreme. I think one of the unpleasant and ugly truths is that everyone, even assembly line workers, is paid too much in American auto companies. Not everyone belongs in middle America, and as far as I’m concerned, with only a high school diploma, there’s no way anyone should be making more than $30,000 a year. Sound cruel? Then I wonder why other countries are flourishing. People need to be paid to work hard, not because the union says they need to be paid this much or that much.
its being said around Windsor – Union workers are pricing themselves out of jobs.
As one of those unionized Windsor workers, I’m calling “bullshit”. The fact is that when you take inflation into account , our wages have remained pretty close to flat for years now. And for this last contract, we accepted a three-year wage freeze; that’s STILL not enough for some people, I guess.
I’m sorry, but it majorly rots my fucking socks when people blame labour costs for industry woes; anyone who thinks we should lower our wages to Chinese levels shouldn’t be surprised when there’s no more tax revenue nor disposable income circulating throughout the economy.
I also disagree. It is bad for the economy when enormous companies fail — jobs lost, suppliers suffer and fold, local economies tank, property values drop, and local governments take much longer to recover than national and international markets do. It’s especially dangerous to let large companies fail *now* when everything is on the brink already and there’s no infrastructure, physical, economic, or governmental, to take care of the potential losses. The issue is not whether GM or whoever is viable — they can be, if they commit to making changes like the ones Jill mentioned in the post (I could elaborate on some of the *many* changes that ought to be made but I’m tired and cranky from my own shaky, underpaid employment and don’t feel like going there — it’s that the economy overall is NOT viable.
You know, I’ve got family whose livelihood in a huge way depends on the automakers being able to pull out of this. Their property values are dropping, their employment status is a daily question. They may or may not get severance, benefits, pension. This is a big deal, it’s not a hypothetical thing.
Part of the national discussion which so bothers me is that the economic narrative focuses on Wall Street and completely ignores how little Wall Street economics affect the regular working family. If the pundits and decision-makers had been listening to the rumblings of workers decrying inflation rates and stagnant wages, oh, for the last decade, especially the last 2-3 years, something would have been done. But no, the markets were okay. Everything’s okay. C’est la vie.
No shit. It’s a job, not charity.
Nationalize. If they are admitting that they cannot compete without government help, take the industry over. The free market as it exists is an unsustainable sham. Have the government take it over for the time being, put it under the EPA and force them to start working towards vehicles that run on clean, renewable and sustainable energy sources. Once those vehicles are firmly in place, then talk about privatizing again (though I would say don’t). The American people have to realize we do NOT have a right to inefficient and frankly destructive vehicles. Like Jeff states, this should not be a surprise. The automakers should have been pushing alternative fuels since the first gas crisis in the 70s. They dug their own hole and have refused to make the changes anyone could see decades ago would need to be made They cared more about short term profit than long-term sustainability and now is as good a time as any, and probably better than it will be in the future to nationalize.
To clarify, I don’t think we should do nothing. We do have to create some sort of policy that will sustain the economy in Michigan and the surrounding states, at least temporarily, until new economies can take root and grow. What I take issue with is a loan to an industry that has been failing for a good long time, and that doesn’t seem to be committed to making any substantive changes to its business model.
Were the auto industries to commit to some serious strings, and were the bail-out package to come with federal commitments to things like green energy, expanded health care coverage and a wider social safety net, I would support it. But I think the current short-term solution on the table is only going to make things worse in the long run.
I’ll also add that investing in infrastructure and public transportation should be part of the package. Americans have been able to afford to drive huge gas-guzzling vehicles because we pay very little for gas (I know it doesn’t feel like that, but compared to what, say, Europeans pay, we pay seriously depressed prices). And Americans are forced to drive because most people lack functional public transport in their communities. It’s embarrassing that so many major American cities have no public transport to speak of.
It’s true that the warning bells were ringing across the country well before Wall Street to a financial hit; and yeah, the power players in Washington do care a lot more about Wall Street than Main Street, to use an over-used phrase. But Wall Street does have far-reaching impacts, even if they aren’t recognized. If the financial markets crash, that impacts every industry, across the board — including GM, Ford, etc etc. Nearly all of the industries that Main Street Americans work in suffer if the markets tank. I think the Wall Street bail-out had serious flaws, and the lead-up to it was predictable and shameful, but I supported it because there was no better option on the table and we were looking at all-out economic destruction. It wasn’t about saving a few hedge fund managers; it was about maintaining our national economy.
All that said, there are a lot of other countries that have managed to balance private industry with a functional social safety net and economic regulations. We are unfortunately not one of them, and the failure to address that fact is why none of these bail-out programs are sufficient.
The problem is that we really only have one of two options:
1) Spend some large sum of money on helping out the Big Three.
2) Spend some significantly larger (estimates are around 4 to 8 times as much) sum of money on dealing with the fallout of *not* helping the Big Three.
Unfortunately, that’s not the way the debate is being structured, which means that people are going to be more likely to endorse Not-1, even though it’s going to lead to much higher costs down the line, for no real benefit.
I agree with irene, Amanda, and several other folks in this thread who have ties to the auto industry. I especially agree with Anonymous Coward.
I live in Michigan too, and most of my friends and family members make their living from the industry in one way or another. There are huge numbers of parts and raw-material suppliers and support businesses involved. On one other relatively minor point, I have also heard that the collapse of the domestic industry (and I feel sick just typing that) would result in increased demand for foreign cars such that they would become totally unaffordable at the worst possible time. In theory perhaps I should be happy about that–my husband works for Toyota here in Michigan–but it’s all part of what makes this so terrifying.
Unless I am misunderstanding your point, I’m not sure the Japanese safety net issue is that significant. Toyota has tons of workers in the U.S. for which it has to (and does) pay health care. I also don’t think its anti-union status is playing much of a role at the current time. Its assembly plant wages and benefits are commensurate with what UAW workers get at the Big 3, at least for now. It has had to do things that way in order to avoid becoming unionized (which I agree is a problem because the workers are not guaranteed anything, but at least for now, in practice they are paid well). The problem is going to come when it starts having to cover more retiree expenses as the Big 3 have been doing, since it is not as much of a longtime player in the U.S. I assume it has a plan to deal with this, but who knows.
I also still think the financial markets can in theory be differentiated from an industry sector like automotive as you described, but in practice the distinction is not going to matter. The impact on the economy would be just as devastating due to massive job losses. Unless I’m mistaken and you live in Michigan (though of course this affects people everywhere, I think the effect would be most concentrated here), I’m not sure you can understand how huge and unlikely-to-occur an investment would be required to somehow shore up the state’s economy while an alternative to auto industry jobs is found.
And everyone knows a true Joe Sixpack is not in a union, because then he would actually be able to support his family. He works two or more minimum wage jobs and puts everything on a credit card because his wages won’t allow him to pay for food or health care. And the Republicans seem to like that just fine. God bless America.
)
Sorry, I had to close my parentheses.
Or when they’re in unions.
I’m kind of ambivalent about this. My father, rest his soul, was a UAW worker for a long time and got fabulous benefits (my mother still gets a piece of his pension). But there’s always that question Jill raised, about whether this will actually fix anything.
I wrote a bit about the underlying two-faced nature of this whole conversation:
I’ve had mixed feelings the big bailouts of 2008. Not knowing all the details, I’m not sure what should be done with the U.S. automakers in Washington D.C.
But … I’m disgusted at the dismissive, nose-in-the-air attitude toward Detroit and U.S. autoworkers that seems to be contagious these days, passing like the flu among journalists, politicians, “expert commentators” and so on.
It’s particularly evident in contrast to how these same people talked about Wall Street when the banks were begging Washington for money. Any criticism toward the banks came served on a polished platter that presumed the basic worth of these businesses, their industries, their employees, and all the people they affect. When it comes to “Detroit” (used as a synonym for “struggling U.S. automakers”), there’s no such platter. This “let them die, it’s their own damn fault” rhetoric is staggeringly hypocritical, given how these same people spoke about the banks–and the banks, it must be said, committed at least an equal number of grievous mistakes in their respective industry as the auto companies did.
I think it comes down to snobbishness: the white-color industry (associated with Wall Street) is more deserving of respect and, despite its mistakes, “must be saved”; the blue-color industry (associated with the Big Three) is expendable and deserves to suffer, even to risk of death, for not “working harder.”
God damn, but it makes me angry.
@ spacedcowgirl & other michiganians: word, y’all. A few points from my dad this evening: – So if the Japanese cars are “so much cheaper” because they don’t have the “healthcare premium”, why are they all pretty much the same cost (or more!) than a US-made car? Examples: Chevy Cobalt and Honda Civic. Very similar in size, but a Civic already costs about $4k for an automatic package. The US automakers are much more flexible in their manufacturing than the foreign automakers for individual models — the lower two versions of the Civic do not come with an automatic transmission, period, you have to get the “luxe” package buy a car without a stick.
Feminist reason why I don’t want to see the Big 3 fail: The automakers are pretty non-discriminatory as far as I know; there are a number of single moms getting good-paying jobs for the first time in their lives (good paying = fair wage for the backbreaking labor) and able to support their kids, send them to college, etc. Exactly what other jobs would these women take if the companies failed? Be drink girls at the Detroit casinos? Heck – what would any former Big-3 employee do?
By next May the entire state of Michigan will be needing a bailout as the majority of its workers stop paying payroll taxes, then property taxes as they go into foreclosure, no more sales tax from cars or corporate taxes from the companies going out of business, everyone is in line for unemployment, students drop out of college because the universities have to self-fund, aka charge $100k a year for tuition and any person privileged enough to have the ability to cut ties and leave races for the Mason-Dixon line.
[...] News Flash: Detroit is not the same thing as “the big 3.” [...]
You’re right, we shouldn’t bail out the auto industry. We should nationalize it, use it to create MUCH needed jobs and make it a competitive industry again. There’s far more potential in that plan.
Well, sure, and so is this. Remember that manufacturing is the primary industry in the Midwest/Great Lakes states. Automakers go down and so does our local economy. The industry in my area, for example, is based off of transportation-related manufacturing. We have domestic and foreign auto manufacturing here along with big truck and trailer manufacturers. Entire cities revolve around some of these plants. Are we willing to erect thousands of Flint, MIs, around the country?
So . . . if a bailout/loan/whatever is basically pouring money down the drain and delaying the inevitable (not conceding that point here, but for the sake of argument), and industry failure would be at best a nasty dose of job loss and at worst a catastrophic cascade failure running through the economy like electricity through copper wire . . . what is a viable strategy to keep things functional?
Seriously, anybody got any ideas?
If the failure point that people are saying they’ve been heading towards for years has to do with management or with non-viable business strategy or whatever it is that leads certain of you to say it’s their own fault they failed . . . would some kind of significant government-mandated or even government-run restructuring be the answer? If the automakers are really as desperate as they’re letting on, they might, or at least GM might, be willing to make some major control concessions in exchange for that needed money . . . or what? Anybody else got ideas?
I mean, if it is in fact the Big Three’s fault they’re doing poorly, because they made mistakes and did things wrong, there has to have been a way for them to have succeeded if they did things right, and there has to have been a right way for them to have done things—if there isn’t, then there’s no way they could have succeeded in this environment and they deserve assistance to get through it, and if there is, then somebody needs to step up and get it done to keep the whole mess—jobs and parts for already-sold cars and pension benefits and preferably the US-made cars for when demand picks back up—alive and kicking. Say what you want about executives and businesses, but the industry—American jobs and American production and a big, widespread chunk of the American economy—is worth a little life support—and I’d much appreciate it if Congress or SOMEONE would figure out what kind of life support, and what kind of treatment, is necessary, and starts making it happen before we have to deal with the fallout of another significant collapse.
Yeah, that’s a fair point. And I think there is quite a bit of classism in the argument that we should just let Detroit fail. To be clear, I’m not making that argument here. I’m arguing specifically against this current bail-out plant, not against any plan to help create jobs in Michigan and the midwest.
There’s a serious lack of creativity in the current proposals — they basically amount to funding business structures that are proven failures. I know other options are out there, but I am neither smart enough nor creative enough to come up with them.
This whole issue also stems from fundamental cracks in the foundation of our country. So far, we’ve been patching up the holes. Maybe this is another giant hole that needs to be patched; I don’t know (and I’m considering writing an addendum to this post to clarify my views — I think the tone came off as making me sound more sure of this position than I actually am. In reality, I’m kind of just working out these ideas aloud).
Believe me, I’m not saying the auto companies are saintly (and I know this wasn’t what the original post was about, but it always seems to be part of this discussion), but the “their fault, let them rot” rhetoric is infuriating to me. The Big 3 I think have been bureaucratic and slow to react to inevitable increases in gas prices and so on, and have avoided dealing with their other issues in a realistic way. But the banks deliberately and greedily flushed the U.S. economy down the toilet by getting into investments and loans that they knew were unsustainable. First they issued mortgages that they knew people couldn’t afford, then they invested in securities based on those mortgages, the whole time I suppose hoping that the outcome would be their competitors left holding the bag. And now they’re trying to cash in further on the bailout. I just laugh whenever I hear someone express surprise that the banks have been holding onto their payouts rather than lending them out–when the entire problem was that they are greedy, what do we expect?
I know I’m biased here, but I don’t think the Big 3′s culpability can hold a candle to the financial industry’s. So if that is supposed to be the issue (again, not that Jill said it was), I can only conclude that it’s union-bashing and possibly attempting to poison the well for the next administration that is prompting all of this sudden “moral” outrage.
I agree. Hopefully my post didn’t come off like that (and apologies if it did).
This isn’t the fault of labor or unions. It isn’t entirely the fault of the auto industry (although I will say that the power players in that industry have been steadily fucking over a lot of people for a long time). Clearly the financial industry has been far greedier and far less responsible than the auto industry.
But I maintain that this reflects fundamental failings in both our system and the auto industry business model that aren’t going to be solved through a bail-out. If it’s the only possible option, then fine — but I don’t think it is. This isn’t quite as emergent as the Wall Street bail-out. I do think politicians have some time to re-convene and attach some regulatory and social welfare strings to aid offered to Michigan. And that’s exactly what they should do.
The “it’s their fault, let ‘em fail” thing gets me too.
And the cascade failure re: jobs and livelihoods for so many people . . . allowing that to happen should not be an option. Congress needs to either pump in some life support or learn how to build a remote-controlled zombie.
Honestly, outside of all the subtleties of this situation, and arguments for or against the current option before Washington: I just don’t want to see Detroit, where I live, and Michigan hurt anymore. Or get trashed by folks who’ve never been here and don’t love it. I’m sick of “Detroit” used as a synonym for the Big 3 when people have snarky things to say, painting the whole of us in one ugly color: “Detroit isn’t innovative,” “Detroit is stupid,” and so on.
It all just sucks.
Thank you, Jill, for changing the title of this post, to avoid conflating Detroit and the auto companies. Whatever happens with all this, the language we use to talk about it impacts what possibilities we have for the future.
I love how “the economy” is New Yorker code word for “my local economy”.
I also love how people can talk rationally and abstractly about the pros and cons of forcing my neighbors, my family, my friends and me to live in a ghost town surrounded by starvation and homelessness. Or, y’know, more so than normal because 79% of Detroit children already live in poverty. Fuck this shit.
I’m still undecided whether there should be a bail-out or not, BUT I really have a problem with this:
“What he misses is the bigger picture. Japanese car companies aren’t losing money on worker health care benefits because health care in Japan is provided by federal and local governments, and all elderly Japanese citizens are covered through national health insurance. In fact, of the six countries that produce the most automobiles, the U.S. and China are the only two that don’t offer universal health care — meaning that Ford and GM bear the burden of providing health care to their employees, at the expense of their ability to compete internationally. ”
Japanese cars sold in the US are made in the US by US citizens. While they make and sell cars in Japan as well, the sale of cars in the US makes up a much larger percentage of their profits. They ALSO pay health care benefits for thier workers. Comparisons of UAW’s salaries and benefits are being compared to Japanese automotive workers in the USA.
I’m not saying this to be anti-UAW, but this is really a glaring mistake in your post.
Did you all miss the horribly classist comment #8, or are we just agreeing to ignore it?
To commenter number 8: how do you suppose anyone could live off of $5 an hour?
That’s not even addressing your ridiculously elitist comment about a $30k cap on non-college educated workers. That’s just messed up.
Given the logistics of the wall street bail out, I cannot see one reason why we shouldn’t bail out all failing industries. Seems to be what we are doing.
Jill,
Regarding the Japan case, one should also keep in mind that from the Meiji Restoration in 1868 onwards, Japanese conglomerates/corporate businesses and the Japanese state have had a long history of close ties and collaboration to a degree which would rarely be accepted in American corporate culture/society.
This greater degree of close collaboration which first enabled Japan to vault from feudalistic social structures and agrarian conditions to becoming a rising economic and military power within a few decades also played a critical part in Japan’s postwar economic rise and the eventual success of Japanese corporate business….including their auto companies.
One unfortunate byproduct of this, however, was that Japanese labor organizations progressive organizations were effectively muzzled due to Cold War fears of Communist subversion/revolution and the Japanese ruling elite’s utilization of the pre-war inculcated “kokutai” social consciousness to convince everyone that working hard without complaints or “excess” demands on one’s boss, corporation, and state would maximize the capabilities of all Japanese people to work for the optimal benefit of their society.
Another unfortunate byproduct was Japan’s own subsidization of many banks which should have failed if subjected to market conditions, but were saved by infusions of funds from the Japanese government because the corporate and government leadership were not only closely tied as collaborators and friends…..many of the corporate leaders of those banks were former colleagues of their governmental counterparts.
Thus…the “zombie bank” phenomenon came about causing further distrust by an already suspicious Japanese public towards their own banking institutions…..and factored in their placing savings in government postal accounts (Before Koizumi’s “reforms”) and overseas banks/investments.
As for the bailout…..I really wished they tied it to serious sanctioning/total purge of the top corporate leadership responsible for the current mess. Doubt it will happen….but the ones most responsible for the mess need to take some lumps/fired for their role in this mess.
Oh no, jayinchicago, I caught that too…and I wrote a post about it. The Race To The Bottom.
I heard the same crap when I was wiping the tables and cleaning the toilets of those who mercifully are apparently above that $30,000/year line but going to uni didn’t teach them basic manners about how not to throw your hamburger at the employee b/c you have two pickles in your burger, not three.
And as a former “overpaid” assembly worker at minimum wage making car products, you can kiss my ass.
Anyway, the more civil side of me will just be content with asking what exactly is an unskilled worker?
Jill, The Motley Fool is the wrong place to look. They know Wall Street finance and investment, and view economics through that lens. In a situation such as this, that’s a big problem.
If the Big 3 fail it won’t just be the great lakes area that suffers – one in 10 jobs in the country are tied to the automobile industry. And while the manufacturers clearly need to change how they do things – building greener vehicles and integrating parts across models – a huge part of the problem now is the collapse of the credit industry. Dealers can’t get loans to buy inventory, no one is buying cars right now in this uncertain economy and the manufacturers are running out of cash to pay their suppliers. This is an immediate problem because of the failure of the credit industry NOT because of the indubitably poor choices the auto industry has made. There are a huge number of banks sitting on the cash they received in the bailout rather than making the loans that the bailout was intended to assure that they would make.
I live in SE Michigan in a town filled with people who work in the auto industry. I spent hours and hours canvassing over summer and fall (for Obama) and was horrified by the number of foreclosed houses in my community. Whole neighborhoods which had been solidly working/middle class going down with many houses abandoned, not merely handed back to the banks. But that’s nothing compared to what we’ll see all over this country if the auto industry is allowed to fail. Ten+ years ago large swathes of Detroit were filled with abandoned, burned out houses. Today those houses have been torn down and there’s a lot of green space in what was dense city. We’ll see a lot more urban disaster if the government doesn’t step in and both loan the big 3 money but also mandate that they make the necessary changes in how they do business AND mandate that the banks loan suppliers and individuals money to get the industry moving again.
“Oh no, jayinchicago, I caught that too…and I wrote a post about it. The Race To The Bottom.”
Nice post, too.
“This is an immediate problem because of the failure of the credit industry NOT because of the indubitably poor choices the auto industry has made. There are a huge number of banks sitting on the cash they received in the bailout rather than making the loans that the bailout was intended to assure that they would make.”
I can’t even pretend to understand how our economy works, but if this is accurate – and I’ve certainly heard it elsewhere – than it’s rather ironic, isn’t it. We had to bail out the financial industry lest it take our entire economy (and much of the world’s) with it, like a drunken dinner guest pulling the tablecloth after them as they topple to the floor (with much resultant mess and breakage) – but when the actions, past and present of that same failing industry threatens in turn not just the (already unsteady) Big 3, but the entire economy of the Upper Midwest . . .
While this is true, this number overestimates the impact of the failure of the Big Three since it includes a lot of upstream jobs that will probably continue to exist–they’ll just sell to Honda or Toyota instead of GM or Ford. There was another Times article about how CAR updated that analysis. I’ll see if I can track it down.
Also, reading Romney’s editorial yesterday, it made a fair amount of sense to me–why throw money into a pit? Thanks to everyone who commented here and made the situation real rather than abstract. It’s given me a lot to think about.
(And is it just me or does everything come back to privilege? My ability to think that letting the Big 3 fail might be okay? Definitely the privilege of coming from a stable family and having a stable job now.)
There’s always some moron who’s reaction to an economic crisis is to decrease pay for the middle class and stolidly ignore things like over expansion, misuse of credit and enormous executive pay.
So yes, bail out the damn auto industry. Attach some strings for re-tooling to produce less SUVs and more hybrids but bail them out for FSM’s sake.
One thing that burns my ass is that our Government gave the auto companies grant money to find/build better mpg cars for years. They kept saying that they couldn’t, that the technology wasn’t out there yet etc etc. Then Toyota came out with the Hybrid and boom a whole new market went to Toyota and the money WE the people invested is gone. I don’t want to give them ANY money till they can prove that they are going to change the way they do things. Yes, I know they are FINALLY getting their act together but they are going to have to have sparkles coming out of the muffler for most people to forget all the crappy cars they put out for so long.
It’s unfortunate that everybody’s comments seem to have been lost.
Fixed, Anna.
@whatshername: some irate rube in the Detroit News was going on and on about the horrors of a nationalized auto industry and the errible, expensive, poorly perfomring car those “government bureacrats” would create. SOmeone on the Det NEws website responded with: yeah, like Volkswagons. I lol’d.
@Jill: I’m glad you took your post down, not because I substantively disagreed with much of what you were saying about the Big Three, but because you didn’t understand the many other subtexts going on here. It’s a blue state vs. (former) red state thing. It’s a rust belt vs. prosperous coastal communities thing. It’s the pent up anger at all the snobby, heartless apathy that the hipster Left has had towards gutting of our communities.
Nobody likes the Big 3 less than I do; I gave up buying American cars a few years ago because I can’t afford another car that breaks down at 100,000 miles. But this isn’t just about the Big Three anymore. This is about the “two Americas”
@Sarah: Are you shitting me? $30,000 isn’t enough to do shit with if you have a family. Please explain where you get off thinking that only jobs that require a college degree work hard. I gaurantee you construction workers work a hell of a lot harder than say a bank CEO. By your logic, people can’t work up the ladder and make a descent wage to send their children to school and the cycle would continue. If you haven’t noticed higher education in this country is ridiculously expensive. Way to keep the people in their “rightful” class.
Fashionably evil – the problem with your assumption that other manufacturers will order enough products from the third party suppliers to protect all those jobs is that they don’t order enough to keep all those 2nd and 3rd tier suppliers going – it takes an entire industry. There are auto-related jobs all across the country making parts, making the materials which the parts are made of, etc. It’s why the other auto companies are urging the bailout rather than wanting to see their competitors fail.
For a great take on what’s happening with the auto industry (among a lot of other stuff) I can’t recommend Nancy Nall’s blog highly enough. She’s a Detroit area journalist and a terrific writer.
Sarah(response # 8),
It does not sound cruel. It sounds elitist and absurd though. I mean, are you really saying that a person with only a high school diploma should not see reward for their hard work…such as a raise? Only college educated business people are entitled to raises and other rewards for their work?
Have you tried to support a family on $50,000 a year?
…because people who make $30,000 a year don’t work hard. Right.
It’s not a matter of working hard or not working hard. Most people — especially people whose jobs are on the line — work extremely hard. Unions make sure that people are paid fair wages (or at least, wages that are as fair as possible) and that workers are entitled to basics like safety and health care. And maybe I’m crazy, but I think people are entitled to liveable wages, health care, and safe work environments. And a “liveable wage” doesn’t mean “barely enough to survive.”
That’s fair. I wasn’t trying to say that communities should be gutted or that the auto industry workers should be left out in the cold. If a bridge loan is the only option, then fine. I was just trying to point out that a bail-out or a loan or whatever isn’t going to fix the very fundamental problems that have been slowly eating away at communities in the Rust Belt for years. We can give them some money now and sustain the status quo for little while, but these exact same problems are going to spring up again as soon as they burn through that money. I just hope this issue stays on the table so that the Obama administration can demand some fundamental changes.
Shouldn’t Jill have left the post up?
Jesse, I’ve left controversial posts up before, for some of the reasons you explain in your post. But this isn’t a newspaper or a magazine; there’s no editorial staff and a lot of posts are dashed off quickly. I edit posts all the time after hitting “publish” — is that also unethical?
I’m trying to balance a lot of different concerns here. One of those concerns is for this community, and for keeping the posts on Feministe consistent with a progressive, feminist agenda. Sometimes there’s good cause to leave a post up when my opinion has changed; in this case, the post itself was largely uninformed and was doing more harm than good. The comment section is more informative and more productive than the post, which was creating unnecessary division over an issue that I frankly know very little about. Keeping the post up would have contributed absolutely nothing to the conversation, but would have continued to (rightly) irritate people whose lives and livelihoods are on the line here.
So I took it down in order to center the conversation on the people who actually know what they’re talking about. And I’d prefer that we kept the conversation centered on them instead of turning it into a debate over what I should have done with the post.
Fair enough. I get what you’re saying, and I really enjoy your work in general. I still amiably disagree, though. As much as I know slippery slope arguments are troublesome, there really is a slippery slope if bloggers start taking down posts they wish they hadn’t written. There’s a tendency among bloggers (myself absolutely included) to quickly throw up posts without fully thinking them through, and if we can simply retract the posts we should have left in the oven a bit longer, there’s little incentive for us to improve our work.
Oh, and I also edit posts after putting them up. But I do think there’s a difference between fixing grammatical errors — which are absolutely inevitable in blogging or any sort of medium, and which I don’t see the benefit of keeping up — and taking down a whole post, effectively removing its argument from the discourse.
I know this is all a big sidetrack from the issue at hand, but I do think this is a worthwhile, if metaish, discussion.
Sorry, I wasn’t totally clear in my wording. I was responding to the implication that all of the jobs associated with the auto industry would disappear–some would, but others would shift.
Reading through this discussion has been really great for me because the articles I see about the bailout rarely include a lot of input from people who actually live in Michigan and whose lives would be affected. However, I’m still not sure where I stand on this issue.
It seems like the choice being presented here is either we bailout the auto industry, or the workers and the families suffer. Are those really the only two choices we have?
What happens if we do bailout the auto industry? How do we ensure that the business model changes? I read in the nytimes that thousands of imports as well as American made cars in Michigan are just sitting in lots because no one wants to buy them. If we prop up the auto industry, would they be making extra cars that no one wants (or is in a position to buy?)? How would we ensure that the workers are protected?
I’ve been trying to read up on these issues, but I don’t feel like I have a firm grasp. I checked out the blog someone suggested above. Does anyone have more suggestions on where to get information about this?
My thought is–if environmentalism is a key part of the progressive movement, how do you balance that with the desire to see that everyone is financially secure? I’m glad that the auto industry is collapsing if it means fewer cars will be produced, but I’m not glad to think of mass unemployment. What kind of alternative industries are available in Michigan?
Jill – although I disagreed with you, I wasn’t at all upset with what you said. I think we are all trying to figure out what’s best for the auto industry and no one really knows what to do.
I would also like to apologize for suggesting that autoworkers were pricing themselves out of work. I do understand that with inflation, the cost of living and raising a family has increased exponentially. I have no problem with ‘unskilled’ workers (and what I meant by that was the industry term for unskilled worker – which refers to any manufacturing worker who does not have technical training) making $50,000 or more. My concern is that given the current international competitive situation, secondary plants at least cannot compete and are going out of business. As I said, my father and grandfather have struggled to keep their tool and die business alive in order to keep their workers from going without jobs. They have lost an incredible amount of money in doing this. They cannot compete with non-unionized or foreign workers. They have readjusted their profit margins and often quoted work at a level that would just allow them to break even, but even at those quotes, they have often been underbid. The principle cost in all of these quotes is labour.
So, what does this mean? How do we keep these jobs if they are not competitive? I don’t know what can be done. While it’s not fair to have employees take salary cuts, the only other option (or really eventuality) I can see is for these businesses to go out of business if they can’t get work at current labour prices, even when they quote business at a price that provides them with no profit – which is not sustainable. I don’t like this situation. But this is the direction globalization is taking us in. When we’re competing with workforces around the world, North America loses out. This is a huge shift in the economy.
Of course, I would like to find a way where this can all be profitable again and companies can pay their employees well. I just don’t have the answers myself. I want to have them because what I’m currently watching is the slow death of Windsor Ontario and its surrounding regions. There is a vast exodus from the area – and when my family’s business goes under, my father will have to move somewhere really far away to get work (like Mexico or the Barbados). This is devastating. My family is being broken up. Other families are being broken up.
It’s just ugly and nasty and bad for everyone. Regardless of whether the Big 3 survive, in order to be profitable, they will probably continue to offshore their work, whether by building plants in Mexico (as they’ve already done) or by buying their secondary parts from other regions. I’ve reconciled myself with the fact that my family’s business is dead. But its still very sad.
Traditionally this has been accomplished with tariffs. Of course NAFTA etc. removed tariff restrictions, which… I guess is kind of the point of having NAFTA. Preventing governments from protecting their people from business.
I’m glad that environmentalism has finally been brought up in this discussion. I do not understand why it was brought up sooner.
I see the supporters as having a bad case of wanting to have the cake and eat it too, so to speak. How can we justify propping up an industry that has played such a large role in the environmental degradation we are so familiar with and shares such a large burden of responsibility for global warming?
Not all industries are sustainable ergo not all industries should exist (at least, not in the context in which we have known them). In Canada, Europe, and much of Asia, mass public transit is widely available in many areas (not just urban centres) yet how is it that the United States, the wealthiest and most powerful nation the world has ever known in its history, does not have widespread public transit for its own citizens?
I cannot justify giving citizen tax dollars to the employees of the Big Three. Greed should not be rewarded. Bad decisions should not be rewarded. Irresponsible behaviour with our global climate crisis should not be rewarded. I understand the concerns of those in the auto industry. I understand the reticence to engage in change. However, we have bigger issues to contend with and it is clear that the status quo is not an option.
There need to be sacrifices made. No doubt this is and will continue to be an unpopular position, but it is true in any case where such choices like these are laid before us.
I ask you: are the millions of lives that were lost in the Asian tsunami or the Chinese earthquakes or Hurricane Katrina somehow worth less than the jobs of a few million workers in the most privileged and wealthy nation on Earth? Where do we draw the line?
I think mass transit is a part of the multifaceted answer the US is going to have to come up with. If need be, GM and its ilk can turn its focus to building trains, buses, and subway cars and plastering their logos over them. Construction jobs will come about. New jobs for workers will come about. The government should contract them to GM and mandate fuel efficiency as part of the job contract (as it is clear they have been grossly irresponsible in the past and cannot be trusted in the future).
I do not speak from privilege of not being affected. I have several loved ones involved in the auto industry and it is certainly something no one wants to face but even they have the good sense to see this as the proverbial canary in the coal mine and recognize the need for change.
In order to move forward, we ALL need to make major lifestyle changes. I do not think that 10 million or so lost jobs trump the health and preservation of the ecosystem of more than 6 billion people and all of the living organisms on this planet. I just don’t.
We cannot just think nationally anymore. We must think globally if we are to make it alive in the next century.
I am glad the auto industry is failing, even though it is only these three auto makers for the time being. You can call me an “elitist” for supporting this position but I ask you: when one supports the sustaining of the jobs of some of the citizens of the wealthiest nation in the world over the well being of the entire human race hanging in the balance, who exactly is being elitist?
@Medea
Altnerative energy is a huge potential field for Michigan. We have some of the fastest, strongest winds in the US, being the perfect combination of the coastal areas and the praries. In addition, wind turbines are in many ways indentical to drive shafts and axels. It would require basically no changes for the thousands of MI parts suppliers to switch to making turbine parts.
That is why the alternative energy industry is backing this bailout. They are relying on auto parts suppliers to create cheap turbines but if a huge chunk of the parts suppliers go suddenly out of business they are screwed.
(this i also btw why non-US automakers support the bailout. They don’t want ot get stuck with higher prices and unreliable deliveries if a big chunk of their suppliers suddenly fail)
But this is going to require a significant public investment in alternative engergy from the federal level. MI doesn’t have the money to do it alone.
For those GM employees concerned about their retirements don’t fret the Pension Benefit Guaranty Corporation (PBGC) protects the retirement incomes of nearly 44 million American workers including those at GM.
The only problem is that the taxpayer is the Pension Benefit Guaranty Corporation. Keep GM and its employees working or pay for their retirements.
http://nomedals.blogspot.com
But Messenger, why should assembly-line workers and all the other millions of people who work in the auto industry — often the only source of employment in many communities — be punished for the greed and poor decisions of executives who remain wealthy enough to fly to DC on private jets? And we may be one of the wealthiest nations on earth, but that wealth is heavily concentrated in very few hands. I can guarantee that most of the people who will lose their jobs over this are not wealthy.
I am a bit skeptical of this considering how some environmentalists exhibit a high degree of class privilege in their words and actions IME.
Back in college, I was highly perturbed to see classmates from upper/upper-middle class backgrounds in an environmental history course saying in-class they didn’t give a damn about the blue collar workers and blithely saying that somehow they needed to retrain without feeling the need to offer any meaningful/feasible solutions. It was as if those workers didn’t exist in their worldview with the consequent out of view, out of mind mentality.
I’m sorry, but that’s not only not helpful, but also comes across as the oblivious rantings of the socio-economically overprivileged. To add to the irony, I’m betting most of those classmates are working in corporate America….whether on their own merits or through nepotistically working for their well-off parents/family/family friends.
This privileged obliviousness, poster protests notwithstanding, is perfectly outlined by “The Messenger’s” quoted statement below:
Bet s(he)’s not the one who will have to worry about making the same sorts of sacrifices s(he)’s calling on the auto workers and those working in subsidiary industries to make.
Oh please. If it werent for the UAW and their early labor struggles, women would still be in the kitchen baking brownies for Ward Cleaver.
@ exholt
I don’t think that the class privilege and selfishness of your former classmates negates the importance of environmentalism–after all, the people who are suffering the most from global warming are not wealthy American college students. I agree with Messenger that we have to make sacrifices, but the sacrifice needs to be spread around so it doesn’t destroy one community while leaving others almost untouched. I suppose my only suggestion, in this case, is a bailout with strings attached and no compensation for executives combined with massive government investment in wind technology (as annalouise said).
No more bailouts: Nationalize.
Indeed Messenger. And who better to sacrifice than poor and working-class people in the rust belt, who don’t really matter anyway? /sarcasm
You want to push for more and better public transit? So do I. I don’t see how rat-fucking the poor and the working class is going to do it. I’m not exactly filled with sympathy for the execs in these companies, or the Buy American bigots (the execs flew in to their meeting in a private jet, so the whining about factory worker salaries is disingenuous, and it’s not like these companies have been willing to go with the Kyoto protocols as well as make cars that will last). But I don’t see how fucking over the factory workers is going to magically get us the public transport we want. Do you really think we’ll have the money to create more of that when millions lose their jobs and face poverty (and don’t contribute to the tax base anymore)? Do you really think there will be no more cars made, or just cars made in countries with even FEWER worker protection laws and LOWER wages? You know, those folks who are worse off compared to the oh-so-wealthy factory workers here? Those folks who will CONTINUE to be exploited by corporations?
Thanks for demonstrating yet again why I remain so skeptical of the environmental and simplicity movements, even while I agree with many of their goals. Sheesh.
Let me just say that as a current UAW member, son and grandson of UAW members, and as one who grew up in Michigan, I’m heartened by this robust discussion.
There are no easy answers here, but I’m glad to see that even those skeptical of a bridge loan to the Big Three are at least putting some ideas out there.
Not everyone belongs in middle America, and as far as I’m concerned, with only a high school diploma, there’s no way anyone should be making more than $30,000 a year. Sound cruel?
I am 50 years old. I have only a high school diploma. But I have 17 years of experience in the high tech field, and I’m a systems engineer making almost 3 times your $30,000. I’m also not overpaid. I think you’re taking a simplistic view of the situation if you assume that everyone in America who is intelligent enough to do a complex job has had the money/opportunity for advanced formal education. If college degrees grew on trees, or college was part of the free public education system you might have a point here.
I learned what I know on the job. I was fortunate to get that chance back in a time when “Which Ivy League college did you get your computer science degree from?” was not the only question an employer in my field asked a potential employee. But to arbitrarily assume that because I do not have a college education, my work is automatically worth less than someone who was able to attend a university is really a bit much.
Bingo, Broce, and thank you (and others) for addressing this.
My dad’s a retired autoworker with “only” a high school diploma. He certainly made more than $30,000 when he retired (though I don’t know how much his base pay was). He did okay for himself and that was a big boost to me, especially because it enabled me to go to college to get that degree which apparently entitles me to something, but I can’t for the life of me figure out what.
Though he wasn’t college educated, he did a pretty complicated job. He was a die maker, and that’s a skilled trade that requires a four-year apprenticeship. Even so-called unskilled jobs require a lot more than a lot of people think.
He did okay for himself and that was a big boost to me, especially because it enabled me to go to college to get that degree which apparently entitles me to something, but I can’t for the life of me figure out what.
Right. I’m a single parent, and my ex did not contribute. Because I had the chance to learn a complex job (and for the record, many on my team *do* have college degrees, and they are no better and no worse at it than I am), I have earned enough to raise my son alone, and am currently putting him through college on my dime. With luck, he’ll graduate without debt.
I spend 70-80 hours a week doing a job I absolutely detest, and this includes being woken up off and on all night, most nights, to deal with issues which arise. I do it because it pays decently enough for me to do this for my son, who will have a degree, and has been able to CHOOSE what he wants to do with his life. With luck, and some hard work, he’ll be able to carve a life for himself which will not include having to spend most of his time doing something he hates out of economic necessity.
It *is* pretty interesting in a schadenfraude sense to see just how many people just don’t really understand how screwed we are. It’s not surprising, given how far-flung all the parts towards an understanding is, however, people like The Messenger just radiates the ungrounded stupids.
It’s really more like this. People are saying that this deal is a good one. 25 billion dollar loan plan saves 200 billion dollars in social spending. Not enough people are thinking, if that’s so, doesn’t that mean that $25B isn’t really enough? Here’s what will happen. We will loan out the 25 billion bucks, get whatever strings, and then watch the automakers do the same game as AIG–before they fail anyways. After that, 200 billion bucks *doesn’t* get spent on social relief.
In any event, GM and the others are in trouble because they can’t sell cars, and every forcasting indication suggests that they won’t be able to sell cars for about a year, minimum. Idling factories so that we don’t have to have inventory buildup will result in the same job losses throughout their supply chain–they ain’t getting loans, see…
We would have been better off, I think, had there just been a 700 billion dollar tax rebate instead of TARP. That would have saved a bunch of businesses that are dying now (the worst hitting right before Christmas is a killer!). By pushing off Armageddon a bit later, we would have bought real time for Obama to come up with something.
I think…in the end, we are completely fucked, and it’s going to get worse as the ignorant are forced to pay attention to that fact as well.
shah8 has a good point, but let me add the following:
1. The Big 3 are really already being valued by the market as practically bankrupt. Even with a the $25 Billion in loans from the government, there is absolutely no evidence that these companies can and will return to profitability. In fact, given current market demand, it is more likely that this is delaying the inevitable.
2. We can discuss the living wage issue, but the fact is that it is entirely fair to ask employees (including union members) to take a pay or benefit cut. My company recently established pay cuts for many of its employees, and there is no magical reason to exempt union auto workers.
3. Let’s also be honest. The National Labor Relations Act grants semi-monopolistic powers to labor unions, which creates wages above their market value. There are a number of reasons why the Big 3 are in their current predicament, but to treat labor costs as sacrosanct is a matter of faith not economics. Labor costs must be considered, as well as bad management and other inefficiencies.
4. Businesses do not have the right to exist forever. Part of being in the market economy is that businesses fail. It is not pretty, but it is often necessary. Keeping unprofitable corporations in business is a net economic loss in the long run.
5. Some commenters have discussed nationalization of the industry. The pros and cons of central planning have been debated for some time; however, no evidence has been provided that nationalization of the Big 3 will succeed. Usually central planning fails for a variety of reasons, but the burden of proof remains with those promoting nationalization to show that the companies could be run more efficiently with government control of those companies.
This appeal would only be credible to the employees if the management is willing to make deep visible cuts to its own salaries, benefits, and perks.
Considering the Big 3 execs continue to maintain them…..such as riding their corporate jets into Washington DC and maintain their high salaries despite their extremely dismal performance……shouldn’t they be questioned on their lack of initiative in taking a substantial meaningful cut for the sake of their industry….such as a substantial salary cut(i.e. minimum wage, $1/year, or gratis) until they are able to bring the industry back to sustainable prosperity???
I don’t see how ‘do they deserve it?’ applies, except in terms of how closely you watch the CEO you’ve handed the check to.
It seems like there is a market for the skill base that would be lost here. If the loan fills the place of the loans the banks were supposed to provide with their stack of cash, and so gives them a chance to produce something marketable by the time the economy recovers, I say go for it.
Meanwhile, I’m somewhat skeptical of the idea that we can tell the bank bailout worked based on the fact that the world hasn’t ended. Home prices are still well beyond reachable for most people, and loans are still difficult to get and pricey when you can.
At a city and state government level, the banks aren’t being very civic either. I just read how many cities who have invested in public transportation have done so by essentially leasing the trains/buses from a bank…who in some cases are using this crisis as an excuse to hold the trains hostage.
Jill, thanks for the consideration. You didn’t need to take down the post necessarily but I thank you for letting the conversation go on.
Why, yes. Yes, there is. Demonstrated via the last few comments.
I don’t know how we can convince those that see this as a great example to get one’s wonk on to see that this isn’t a hypothetical Choose-UR-Own-Adventure wank but REAL FUCKING LIFE. As a commenter upthread said, this is veering very close to the kind of red state/blue state shit that many of us hoped to leave behind.
Innovation is muy importante — but as a family member in the business pointed out, it’s multi-layered. Innovative technologies take about ten years to get to the market, and because of some cost benefits that other coutries have in their expenditures (universal healthcare is a biggie) they have a head start on *anything* the Big 3 can do. Throw in that credit is for shit, there’s little you can do to get someone like me to take on a new car payment. THEN, whoever runs the show has decided that instead of putting these technologies on the market in a way that will benefit society and industry (and hell, the market) long-term, they put out fucking hybrid Hummers.
One of the country’s only bio-cities is thirty miles north of my own house and they’ve made all kinds of inroads to experiment with the technologies available to be independent of existing energy structures. You know what’s missing? The infrastructure. Oh, and the credit to make it happen.
I saw my first hybrid vehicle, my first water-powered vehicle, my first vegetable oil-powered vehicle, in the Detroit auto show a decade ago. The technology exists and it’s viable. But it’s not just the Big 3 that has to make changes. The government has to provide the infrastructure to replace gasoline-only centers for vehicular power. Big Oil has to make the changes necessary to shift to general Big Power, Other Non-oil-related Power — and the American government has to be behind them — and until they do, the whole thing is fucked.
Lauren: Word. To the max.
Another word to Lauren.
It boggles my mind that the same country that essentially signed over a $700 billion dollar check to poorly-managed banks would be unwilling to LOAN $25 billion to allow millions of Michiganians and other midwesterners to hang onto their jobs. The classism in this discussion is un-fucking-believable (not just this discussion in particular, but the nationwide conversation that’s going on)– the implication that we can just let the big 3 fail, and it will be fine, it’s their own fault anyway, without thinking of the actual people involved. I’m sure this seems like an abstraction to those of you with middle-class incomes sitting out there on the coasts, but we’re talking peoples’ LIVES, here. The difference between having a roof and not. The difference between eating and not. The difference between sending your kid to college and not. Is that so hard to understand?
Oversight is important. There hasn’t been enough oversight on the bank bailout (in my opinion, anyway). There should be oversight for the Big 3– not just to make sure the CEOs aren’t lining their own pockets, but also to make sure they start to develop a more sustainable business plan, so this scenario isn’t repeated in 30 years. The industry has been poorly managed, but that is NOT the fault of the workers or their union, and those are the people who are going to get hit hardest if the industry fails.
This year has highlighted the embedded classism in many liberal circles. Midwesterners, for most of the election, were cariacatured as undereducated rubes who don’t understand the Big Issues, except when we were being trotted out as salt-of-the-earth types on whom our nation rests. Now we’re back to being unimportant, as if foreclosure here is somehow less important than foreclosure in New York, as if we’re too dumb to know what’s good for our own lives and must be rescued by our betters (coughMessengercough), whether the rescue shoves us into poverty or not. Because we clearly can’t see the Big Picture.
On second thought, everybody just go read BFP’s post (linked above).
What the hell? Coming into this post/thread only to be completely lost because Jill yanked the original post is pretty annoying. Jill, please don’t yank posts just because people disagree with them or you feel it’s a bad post. It’s confusing for the people who come in later in the thread. I really wish you had kept the original post up and put edits in parentheses/brackets to add in what you now think (such as incorporating points other people make that refute what what in your original post).
The 21st Century Capitalist Pyramid…
See Also: Can you resist financial globalization?, Income Distribution Animation, A Modest Proposal, Great News!, What Populism Is Not, We shouldn’t bail out the Big Three, and Bailout Fallout.
Technorati Tags: capitalism, capitalist pyramid, mode…
EconBoy@74: Spoken like a fresh-outta-college Ayn Rand fan, with neither a heart, nor a mortgage to pay.
To add to Lauren@77 re: new tech, our plant expects to be turning out electric minivans by 2010. Change is happening slowly, but it IS happening.
Bankruptcy does not mean that these companies will go out of business. Bankruptcy will require that they restructure. They will emerge from a bankruptcy as businesses better able to compete. Throwing money after them only puts off the inevitable. No bailout.
Steve@83: Then you definitely don’t get the ramifications of bankruptcy for corporations of that size and with that many links to the rest of the economy. Econ101 only takes you so far, son.
I’ve been hearing segment after segment on NPR over the past week licking the butt of Tesla Motors–Ira Flatow on Talk of the Nation Science Friday kicked off his segment by saying that “many people” (given his enthusiasm and the fact that I had never heard that proposed before, I think “many people” meant “Ira Flatow”) thought that the $25B should just be given to startups like Tesla to give them a leg up in the market and encourage innovation. My first reaction was outrage–because, yeah, that’s going to help the average American family so much when the domestic industry fails, foreign cars now cost $30,000+ and they can’t afford to replace their current one, but hey, Tesla Motors was able to decrease its price point to $70,000 per car (and they are waiting on their final safety/quality certifications and they only have a production capability of 100,000 per year anyway so you’re on a 10-year waiting list or something) so isn’t that
awesometotally irrelevant for someone who is worried about putting food on the table and being able to get to work? Putting a cool start-up with a potentially great product on the same par as an established multinational, one of the biggest corporations in the world, that has been making cars for 100 years is just absurd.I am all in favor of Tesla. Their product sounds awesome. I would like for them to make it so they can get into the mass production phase and get prices down. But I think if the idea is to make the market safer for green innovation (which I think is one of the things GM/Ford/Chrysler, even Toyota and Honda, have been struggling with–it’s not all willful evilness, it would have been pretty risky in many ways for them to start pushing electric cars or super-fuel-efficient models on a consumers who still had cheap gas, viewed their cars as status symbols, and would have changed loyalties pretty quick if they couldn’t get the high-performance gas-guzzlers they wanted) then hopefully there are other things that can be done than letting GM fail and putting our hope in a series of start-ups, some of whom are bound to have bad business models too and/or experience a safety disaster and/or produce products that consumers don’t want. The idea proposed on the segment of putting a lower-limit cap on gas prices to keep up demand for green vehicles would hurt families. The only thing I can think of is the original idea of granting the $25B for green R&D and production. Does anyone who’s smarter than I am have other ideas for pushing fuel-efficiency and/or getting rid of the internal combustion engine without letting the Big 3 fail?
I swear I’m not a shill for the industry and I am as disgusted as anyone else with some of its practices over the years, but we have the Prius and the various Honda hybrids and the Chevy Volt coming out and so on. The industry has been too slow to change, but some good things are happening.
Steve totally got sonned.
Did you take the time to watch the Senate and Congressional hearings?
So many untruths circulating about UAW wages and benefits, GM, Ford and Chrysler – If people took the time like I did to watch the Senate and Congressional hearings many of these MYTHS were de-bunked. Knowledge and Truth and Doing Your Homework to be informed about the issue would help the American people support OUR Detroit auto makers, dealers and suppliers!
Check out my recent post on today’s developing story on the auto industry bail out:
http://askpatty.typepad.com/ask_patty_/2008/12/good-news-this-morning-dems-agree-to-auto-industry-bailout.html
Jody DeVere
CEO/President – Ask Patty, Inc.
http://www.askpatty.com
http://www.carblabber.com
I got tired of struggling, and I resorted to begging for help online. And got help keeping my lights on and groceries to get us through the month. The goverment doesn’t care about us. How else is we to survive. Begging worked for me and I’m not ashamed. This site im grateful to have found http://www.bailafamilyout.com
Just wanted to say that as someone who lives in Detroit and is seeing the byproduct of all these daily layoffs in the city around me (the main one being a HUGE amount of foreclosures due to people getting laid off and not being able to keep up with their mortgages due to that) that Sarah (post #8) dosen’t know what the hell she’s talking about. I’ve never heard of ANYBODY making $50,000 right out of high school—I don’t know who told her that BS–working for the Big 3, you have to have either a degree or least a good 10 or so years’ exp. in a trade to even start making that kind of money. Apparently she needs to do some research about how people in the plants are according to the amount of years they’re put in and the level of exp. they’re acquired in their given trade.
People in the auto industries are overpaid? Excuse me, but how about these bank executives who got that $160 million bailout at AIG? If that’s not overpaid,I don’t know what the hell is. And just so Sarah knows, a college degree is just a piece of paper that shows that you have acquired enough credits and studied hard enough to graduate from college—it dosen’t make automatically smarter or better than anyone else who dosen’t have one. It also dosen’t mean that you’re automatically going to get a job in the field you studied in,either. Sarah, who are YOU decide who should be making what according to their level of education? That IS elitist as hell. Just so you know Bill Gates dropped out of college, and he’s one of the richest men on the planet today,so that blows holes in what you said big-time. Bottom line—if the big 3 go under,so does the State of Michigan. Also,a hell of a lot of autoworkers have already seen their wages cut by half and have had to give up their benefits throught the past year. The plants are going down because of the Big 3′s unwillingness to be innovative and change with the times,not because health care costs for workers are too high. SO I guess if your job decided to cut your health benefits off completely just to save themselves, you’d be A-okay with it? I don’t think so. And BTW, SOMEBODY had to put together that car you drive—last time I looked ,cars didn’t make themselves–they HAVE to be built by someone–hello!
BTW, I’m with a group called Moratorium Now Coalition here in Detroit–we’re been fighting for a bill to halt all foreclosures and evictions here in the state of Michigan—Detroit, in fact has the seventh largest foreclosure rate in the country, as well as the highest unemployment rate, so we’re been getting hit with a double whammy here. Anyone who’d like to find out more about what we do can go to our site here:
http://www.moratorium-mi.org