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Americans are Not Helpless

One of the more revealing responses to my article on bankruptcy was the following comment from Paul Hooson:

"Congress seldom has any problem spending billions for war or bombs, but when the lives of 3 million American jobs are in the balance, then the foot dragging really starts for a mere $25 billion which isn't a great deal of money."

This is almost the quintessential liberal response to a difficult question. It ignores the topic and pursues a non-seqitur, it presents a false premise, and it assumes that people are helpless to take care of themselves. It also presents the absurd concept of "lives of 3 million American jobs". Jobs do not have lives, people have lives and people have jobs, and while a person cannot lose their life and just go on, just about everyone will lose a job or two or five in their lifetime, and they will move and survive, most of them will do just fine even if they lose a great job. If we start trying to protect folks from common life events simply because they are unpleasant, this will merely waste resources in yet another unrealistic adventure in government blundering.

The possibility that the three largest auto manufacturers in the United States may go out of business is troubling, but no more troubling than the failure of American steel, textile, electronics, and other manufacturing centers. The notion that the 'Big 3' deserve special treatment is laughable on its face, not least because the owners and management at these companies have clearly refused to take the necessary steps to make their businesses more viable. And what about the claim that the end of Ford, GM, and/or Chrysler would mean "dire" consequences for the nation? It would be difficult for many, but just as happened in so many places before, most of those workers would find new employment, and few would end up worse off in the long run. Especially since the demand for cars remains strong, and with ready-to-go factories in place and a supply infrastructure as well, it's only a matter of fortitude and working out the math for a new super-company to emerge. Don't think so? Hey, when I was growing up, the only choice you had for a phone was a wall-mounted landline by Bell. When I first went to college, computers were terminals physically connected to a mainframe IBM. So thinking that the top American car has to come from a company created in the early 20th Century can prove to be just as obsolete.


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Comments (29)

What makes you think that a... (Below threshold)
hyperbolist:

What makes you think that a new super-company will emerge, rather than Japanese, European, and Korean manufacturers gobbling up the available market share?

Think it through, Hyperboli... (Below threshold)
DJ Drummond:

Think it through, Hyperbolist. The foreign companies prefer to build their own plants (look at Honda and Toyota, for example), and it's difficult to see the UAW negotiating in good faith with a foreign company. Since any plan would have to be approved by both the trustee and the examiner, only a group very familiar with US bankruptcy law and with a primary interest in keeping the company US-based is likely to get the requisite approval.

Why can't they just circumv... (Below threshold)
hyperbolist:

Why can't they just circumvent the UAW and hire people through other channels? Toyota has done that in Canada with the Canadian Auto Workers, who (similar to their American counterparts) have priced themselves out of work.

And while it's expensive to re-tool an entire plant, the most important feature of inland manufacturing--a rail transportation network--would already be in place.

Why would some American entity want to compete with Asian and European automakers? And why would an oversight committee (if I understand the latter part of your comment correctly) care one way or another if a manufacturing plant is owned by an American or Japanese corporation so long as good jobs are created for those that need them?

A exec at GM told me almost... (Below threshold)

A exec at GM told me almost $1800 of every car sold goes to pay retiree health benefits. Think about that! The UAW socked it to the automakers.

Did that GM exec whisper it... (Below threshold)
hyperbolist:

Did that GM exec whisper it in your ear? Or did you hear it when it was mentioned in the news for the eight millionth time?

Like any business, your pla... (Below threshold)
WildWillie:

Like any business, your plan has to be in place, followed, tweaked, followed on and on. The automakers just rode the gravy train know they were crashing. ww

Hyperbolist, even a federal... (Below threshold)
DJ Drummond:

Hyperbolist, even a federal judge will be a Michigan resident in this case. So it's just a fact of life, that the UAW will be a big player in how the case shakes out.

Having worked at GM for a c... (Below threshold)

Having worked at GM for a couple of years, and at a pretty fair fraction of the Fortune 500, I have never seen a company that deserves bankruptcy as much as GM. Sure, the unions are a non-productive and expensive drag on the company. Sure, the retirees (including my father) are a non-productive and expensive drag on the company. Sure, the government set up the rules that essentially forced the auto companies to knuckle under to creating these expensive drags, in much the same way government-created rules run the Social Security ponzi scheme and set up the Fannie/Freddie ponzi scheme. But in the end, even if none of these existed, GM's management is the most inept, corrupt, incompetent and self-serving I've ever seen, and that's saying something. There is simply no way that GM can become profitable for the long term without completely rejiggering its management, corporate culture, and blue-collar staff. And since doing any one of those, never mind all three, is difficult or impossible for even a well-managed company, the proper solution is bankruptcy, and reuse of the assets (including the workers) to more productive ends.

Why throw bad money after g... (Below threshold)
GianiD:

Why throw bad money after good? A lot of other businesses arent going to get baiout bucks, why should they?

I sure as hell dont want any bailout being sent on to the UAW pension fund, and I sure as hell dont want a quarterly procession to DC to beg for more money, by a bunch of companies who just arent able to effectively compete in the marketplace.

Make better products, price em properly, and sales will increase. Their high priced products arent as good, thus, fewer and fewer buy them.

Handy dandy buildings and a... (Below threshold)
OLDPUPPYMAX:

Handy dandy buildings and auto manufacturing infrastructure in Michigan are very nice, but carry with them the priciple reason for the demise of the Big 3...the UAW. Add to that the anti-business climate of a typical democrat run state, especially now that national politics will also be in the hands of the free enterprise hating left and very few will be interested in "taking advantage" of the available opportunity.

This should not be looked a... (Below threshold)
hermie:

This should not be looked at as the death of the American auto industry, but as an opportunity to become a more modern, less stodgy and bureaucratic auto industry.

People still need cars and trucks, and not even the foreign companies will be able to absorb all that business. A group of forward-thinking and risk-taking individuals can bring one or even two companies back.

...or Tata or Fiat could bu... (Below threshold)
hyperbolist:

...or Tata or Fiat could buy Ford's truck division and associated manufacturing employees and offer work to former UAW people at $20/hour plus benefits with constraints on overtime, pension, etc..

Hooson, et al, at WizbangBl... (Below threshold)
Codekeyguy Author Profile Page:

Hooson, et al, at WizbangBlue are apologists for the socialist/leftist wing of the blogosphere. They are anti-war, anti-everything productive, and actually believe that "Government" (read BIG Government) will fix everything that is wrong with the world. Their Messiah may prove to not be the savior they want.

Ahem... associated manufact... (Below threshold)
hyperbolist:

Ahem... associated manufacturing facilities is what I meant.

im against any kind of bail... (Below threshold)
peabody3000:

im against any kind of bailout in any case EXCEPT if the american auto industy will die without it, and could have been saved with it. thats a determination that very few in the entire country would be qualified to accurately make. if the industry goes down it will be a gaping wound of immense proportion

hoosen makes a good point that 3 million lives will be affected, and there could be hundreds of thousands more that would be substantially indirectly affected. that is quite a different matter than people changing jobs in more typical turns of events

Equating military spending ... (Below threshold)
Baron Von Ottomatic:

Equating military spending and bailout money for failing industries is ludicrous. The US government is obligated to defend the nation and its interests. And, like it or not, the US is the world's police. We're the only nation on Earth that can reliably and quickly get boots on the ground anywhere on the planet.

If the UN voted to send 200,000 peace keepers to Darfur tomorrow the US would be called upon to get them there and keep them supplied. Nobody else could even come close to doing it - not even the combined logistics of every nation in continental Europe.

I'm not happy about us carrying the world's water, but the situation is what it is.

Yet the defense industry has had to endure closures, consolidations, and foreign competition. They are stronger for having done so. Why shouldn't US automakers be subject to the same market realities as the defense industry?

Bankruptcy is the best option. Eventually someone will buy the assets, install new management, create a new business model, and continue making cars.

They made their bed, now they can lay in it.

If there was any reason to ... (Below threshold)
Synova:

If there was any reason to think that this was a temporary problem with the auto industry I think that opinion would be different, or at least not as adamantly against a bail-out.

How about the UAW just *buy* the companies?

Let them declare bankruptcy and auction them off.

Then the UAW can see if it can live with it's own demands, and build cars, and fight with all of the various "green" laws about mandatory mileage and all of that stuff.

baron - hooson isnt equatin... (Below threshold)
peabody3000:

baron - hooson isnt equating military spending with bailout money. he is making a fairly minor point about how endless iraq war funding can be rammed through with little debate, while an issue that arguably more directly impacts our nations health is being fought against hard with just as little debate

Was not the purpose of kill... (Below threshold)
syn:

Was not the purpose of killing the American Auto Industry based on the desire to end the evil fossil-fuel age in order to save the Earth from evil SUVs killing birds and trees and all living things?

so now I am to believe we must save 3000 workers who produce the evil fossil-fuel SUV which is destroying the Earth because Congress spent billions defending 300,000,000 people from another attack brought by an enemy who declared War when they killed 3000 Americans on 9/11/2001?

Some absolutely fantastic logic.

So... why not take from som... (Below threshold)
SCSIwuzzy:

So... why not take from some other endless money pit that isn't showing success to fund this debacle? HUD, Dept of Ed and the NEA leap to mind. Unlike the military, none of these are mentioned in the Constitution and amendments.
Somehow, I bet Hooson wouldn't consider these sacred cows ready for slaughter.

I'm with SCSI. And I could... (Below threshold)

I'm with SCSI. And I could name a few more Departments and Agencies.

I can't help but sympathize with the guy who asks, "Why should part of my $18 an hour go to save the job of the $75 an hour guy (who, by the way, is no more skilled than I) or his CEO?"

Hell, what am I saying? I'm one of those people too.

My understanding is these a... (Below threshold)
Steve Crickmore:

My understanding is these aren`t new monies that Congress would have to approve- 25 billion- but only part of the already approved 700 billion for Wall Street. This is a mere one twenty eighth, in proportion to the total bail-out package and the Big Three would have to 'give us a plan", a move surely would be more effective for our economy per dollar, than what Wall Street investment banks will respond per dollar with other 27/28ths of the the billions they have been granted.

The Wall Street investment banks had so few strings attached with their govenment rescue bailout, since they were charter members of THE UNDESERVING RICH and probably no one in D.C understood the magnitude of the staggering losses Wall Street had created, largely by their unenforced errors and betting 'fantasy football type wagers' with derivatives.

I'm afraid Congress is now being scrooge, 'penny wise' (if they completely turn down Detroit, at least they were actually making something)and 'pound foolish' after granting Wall Street such an extravagant and early Christmas present.

I'm afraid Congress i... (Below threshold)

I'm afraid Congress is now being scrooge, 'penny wise' (if they completely turn down Detroit, at least they were actually making something)and 'pound foolish' after granting Wall Street such an extravagant and early Christmas present.

No, Steve, the Democrat Congress is reading its mail. The American people are not stupid. They understand the difference between a bank failure and a union bailout.

The Democrat Congress understands the difference between failure of the financial system we enjoy and customer choices of,say, Honda, Toyota and Ford and GM.

But the issue that you, a liberal, need to focus on is this: the Democrat controlled Congress is pushing back against a major political constituent....unions. Go to opensecrets.org and learn how much the unions give the Democratic Party.

Ask yourself, Steve, why would Congress push back against such a large financial sponsor?

The amounts, authority, and... (Below threshold)
Jim Addison:

The amounts, authority, and priorities of the financial system bailout "plan" were askew, much to our detriment. This does not justify in any way yet another waste of taxpayer money.

Giving $25 billion, or $50 or $100 bil, to the Big Three makes no sense. They are bleeding cash. It would be like treating a slashed femoral artery by offering blood via IV.

It is somewhat encouraging that even Democrats on Capitol Hill are now saying they want to see a business plan for solvency before buying the bailout (although Democrats' main concern will be saving the UAW contracts, which are the biggest part of the problem in the first place). None can be offered up - none which make any sense, in any case.

There is no way to survive with a business model where the Big Three pay $71 - $76 bucks an hour for labor and benefits while their competing US manufacturers (Toyota, Honda, etc.) pay $41 - $48 per hour, and the average manufacturing worker earns under $32 per hour. GM loses over $1000 for every car they sell. Ford loses almost $2000 on each. Chrysler is estimated to be between the two. Other manufacturers' profit margins have been depressed over the last few years, too, but they at least make a profit.

In the end, bankruptcy is not only the best solution for the Big Three, but probably the only one with any chance of at least two of them surviving. A bankruptcy judge can void the existing contracts and allow a restructuring which might succeed.

pea[brain]3000 - "he is... (Below threshold)
Marc:

pea[brain]3000 - "he is making a fairly minor point about how endless iraq war funding can be rammed through with little debate"

And what friggin' planet have you been inhabiting?

Every G-Damn military appropriations bill in the last 7 years has been debated endlessly in both houses of Congress.

Clueless much?

America is incredibly wealt... (Below threshold)

America is incredibly wealthy and Americans have every reason to be completely self-sufficient. I'm tired of the liberal tripe. It's nonsense.
http://rightklik.blogspot.com/

dear GM: do we really need ... (Below threshold)
priemoflife321:

dear GM: do we really need 4 different versions of the same vehicle?

Hugh you call the financial... (Below threshold)
Steve Crickmore:

Hugh you call the financial crisis affecting Wall Street a bank failure. It is much more than that ..the small banks are actually in the main in acceptable shape.. but the investment banks, well they are hardly even investment banks, since they were trading more than investing and as to to subprime mortgage failure well that was the catalyst but these investment banker/traders, in the end were not content even to limit themselves to the too few people who had morgtages.

In fact, (in many of the packaged 'securities')there was no mortgage at all. (This article is worth reading)

They weren't satisfied getting lots of unqualified borrowers to borrow money to buy a house they couldn't afford," Eisman says. "They were creating them out of whole cloth. One hundred times over! That's why the losses are so much greater than the loans. But that's when I realized they needed us to keep the machine running. I was like, This is allowed?"

What did George Bush say about capitalism on Wall Street last week, where he had blocked SEC oversight. in the last several years. BUSH: "the crisis was not a failure of the free market system. And the answer is not to try to reinvent that system."..I SHOULD SAY IT IS!

and who was it who created "credit default swaps "the former co-chairman of the McCain campaign, former Senator Phil Gramm, the man McCain called "an economice genuis"

and these are the GOP party leaders who are still in denial about why and what happened that Hugh you have wanted in power forever.

Why doesn t the big three c... (Below threshold)
Stan25:

Why doesn t the big three call the parasitic UAW s bluff and just fire everyone that belongs to the union and declare all of the past retirees benefits null and void? Sure it would be a hardship on the workers, but they can find other work. That is what other major corporations have done in the past. There is nothing in the Constitution that says that businesses has to cave into a worker's demand for higher wages and benefits. In fact, that has been brought to this country by people who came from Europe that were socialists to start with.




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