On the bailout of the US auto makers

Damn, they sure do sound noble, don’t they? “We can’t bail out the auto makers unless they gave us a plan.” Lovely. “They shouldn’t ask the tax payers to pay for their mistakes.” Uh huh. “Look at those executives flying to meet with us in private jets.” Ducky.

Am I missing something? Didn’t they just give a bunch of Wall Street tycoons a trillion bucks? With no plan for how they were to spend it? With no oversight over what happens to it? With nothing to discourage the bankers who caused the problems from keeping–or even raising–their own saleries, with this money coming from taxpayers?

So, what’s the difference (aside from the obvious: Wall Street got a whole lot more than the auto companies are asking for).

OHHHH! I get it. It’s CODE! They’re telling the automakers, and especially the UAW: Get back everything from those damned workers that might give them the illusion they can have a reasonable living standard. They have the nerve to be earning a living wage! Some of them have a form of health care (poor, if you examine it, but still something). And, you know, there are even a few of them whose homes still aren’t in foreclosure, in spite of the best efforts of Wall Street and their own union.

So, yeah, everything Wall Street wants, but if big auto wants help, it damned well better shove those auto workers back down to the level they were at before they were unionized!

I feel all warm and fuzzy about President-elect Obama. Yeah. Right.


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0 thoughts on “On the bailout of the US auto makers”

  1. You know that when lending freezes up, it affects everybody down to the farmer wanting to borrow against his harvest. I’m not sure how this will play out, but I really don’t see what choice they had but to rescue the banks somehow; our entire economic system will fall to bits if public confidence completely fails; maybe that would be a good thing, but it would sure kill most of us.

  2. Re: Mia –

    The point isn’t whether or not to rescue the banks, it’s whether or not to use rescue the auto-companies and, in doing so, how to protect the workers who actually have living wages and good benefits.

  3. I wouldn’t say we disagree about the financial bailout. Any lending institution that wanted a handout should have been taken over by the government. Credit default swaps were a horrible idea, and the executives at those institutions should not get a parachute. That’s the other side of the whole responsibility coin. You get paid the big bucks, but you take the big falls.

    There is no really good solution for this. If the government takes over the business it sends the message that the government can, and will, any time it wants to. That’s not good for inspiring innovation or hard work. I don’t know if the government running the business would straighten any thing out either. There’s just too many problems with the system right now, and most of them have to do with wealth being concentrated into very few places. I’ve heard the stock market described as a place only the very rich can win, much a like a poker table where some of the players have huge stacks of chips and others have very few. There’s no way for the low stacks to win, the big chip holders dictate the stakes. That makes the stock market too easy to manipulate, and quite open to collusion.

    The automakers though: I find that to be an entirely different can of worms. Domestic automakers have not made good decisions for the past 20 years. Unions have not helped, which I know you’ll disagree with, but that’s fine. We just disagree on the essential goodness of unions, and agree on the lack of essential goodness in government. There has come to be a fundamental belief that everyone should be able to put in the same amount of effort and receive the exact same results for that effort. That everyone should be able to work 40 hours a week and save up plenty of money to retire.

    Has anyone thought how out of proportion retirement has become? People expect to spend the first 16-18 years of their life as social parasites, which is accepted practice for us in this society. Most children contribute nothing tangible to their household. Which is not to say they are worthless, but they are whole and away consumers and not producers. People spend maybe 20-30 years working, at the end of which they expect to retire and live another 15-20 years at the least. How has it come to be a social norm for 20-30 years of work to balance out 31-38 years of not working? That is our essential problem. People don’t understand that retirement has gotten out of hand. You either have to live well beneath what you make for the working portion of your life to then live that same way once you retire, or you have to make extreme amounts of money. Enough that you would find it hard to spend it all. Investments are gambles, and you don’t have the most chips on the table.

    This turned into a longer comment than I wanted, but…I had a lot to say. Really enjoy your blogs, and your books.

  4. I work in the automotive industry and I don’t get the bailout. If people don’t buy cars because they can’t get a loan then the Big 3 won’t make as many cars. If they don’t make as many cars they are going to idle plants or lay off workers. And they won’t buy as many parts so their suppliers (who are also hemorrhaging cash) will go through the same thing. I don’t see how giving the industry cash/grants/loans will make that better if people aren’t buying cars.

    As for the “code”, you are correct that there is a more subtle message, but it is not “screw the workers”. The automotive industry was on track to hybrid cars and greater fuel efficiency a decade ago. Then Bush and the Republicans took over and the Big 3 abandoned everything and geared up SUVs, letting Toyota take a huge lead in hybrid tech so that now US companies are licensing it from them because they are so far behind. The code is that they need to do what is right instead of making themselves rich.

    Leaving them alone will screw the workers. The companies will declare bankruptcy and the very first thing that happens then is that the retirees stop getting health care and pensions immediately until they get the court to reinstate the amount due to them, and even then it is unlikely that it will be as much as it was before. The company I work for did exactly that a few years ago.

  5. David @ 3: Yes, and even more, about the incredible hypocrisy displayed by making a huge deal about how “tough” they’re being on the auto companies without mentioning the breakfast-in-bed treatment Wall Street is getting.

    Anthony Mayes @ 4: “We just disagree on the essential goodness of unions” That’s fair. So, did you enjoy your last weekend?

    Thanks for the kind words, by the way.

  6. I know that the OP was exaggerated for effect, but even so, I think you go a bit too far with the theatrics.

    It’s not code. There is no conspiracy. They really don’t hate the workers. They don’t give much of a damn about them, but it’s not like they are rubbing their hands together thinking of the bankruptcies and foreclosures.

    All this recent activity is based on ineptness and greed. This is of course the usual formula in both the upper corporate ranks as well as the upper ranks of government, but in unpredictable and chaotic circumstances, ineptness and greed combined to yield confused and random-seeming shifts back and forth.

    The back-and-forth on bailouts is mostly just political ass-covering. As a group, the current lot in Congress were flip-flopping between no and yes on the first bailout, because it’s easy to vote no on something stupid and look good later on. Hence the original no vote. But however the members didn’t anticipate how badly the stock market would react to an ass-covering no, so they instantly flipped to throwing money at Paulson.

    You may recall that early on, support for GM was falling out on party lines, with the exception of auto-manufacturing state politicians. Since the democrats were pro, and would eventually get the thing passed, it was convenient for republicans to be con. But the Big Three CEOs displayed such an appalling combination of arrogance, greed, ineptness, and stupidity (possibly not seen since Heliogabalus), that they were sent home in disgrace. But now if they come back with an appropriately chastened demeanor, rejecting salaries for a year and promising better and more efficient cars, they will get their cash as promised.

    You just have to understand that what they care about, all they care about, is propping up the stock market in the near term. From that point of view, if destroying the banks and automotives would have a positive effect, they would certainly have done that instead of throwing money at them.

    But it won’t be because someone thinks that car workers get too much health care and the best way to screw them out of it was to sabotage the industry, or because some banker is twirling a Legree moustache while trying to imagine new ways to foreclose on people.

    The sad thing is that might well be the effect in the end, but it will be through incompetence, not malice.

  7. Anthony Mayes @ 4
    Has anyone thought how out of proportion retirement has become?
    You ignorant fuck. How do you live with yourself defining a person exclusively by how much they produce for “society” (read – the people who are better off anyway)? You call someone a social parasite for simply being a child? Tell me, honestly, can you not see what’s wrong with that?

  8. I’m not going to name call, but Anthony, not getting a golden parachute is not an actual risk for senior executives. Any of those people could get cut off without a dime, pay a fine, and still land on their feet.

    A retired auto worker who was promised a pension for fair labor, finished his contract, and then gets screwed out of it is the one who really gets hurt. Not the idiot exec who juggled default credit swaps and erased billions of dollars in investments that weren’t even his to begin with.

    Auto worker = not taking a risk with other people’s money + getting hurt the worst.

    Banking exec = Ruining the economy for people other than himself + getting hurt the least.

    I hope you understand that, because it sound like you actually sound like you don’t. The idea that “That’s the other side of the whole responsibility coin. You get paid the big bucks, but you take the big falls.” is not actually true. None of those jerks took a big fall.

  9. Miramon: No one but you has brought up conspiracies. Yes, it is code, just as “urban youth” is code for “young black man.” When the auto manufacturers hear, “You must have a plan to become profitable,” it very much means, layoffs, slashes in wages and benefits, and probably burying the UAW (which admittedly is pretty much a corpse). Just watch what happens over the next few months, and be grateful you don’t live in Detroit or Flint.

    But you still haven’t addressed my main point, which is the utter hypocrisy displayed in the tone they are taking with the auto manufacturers, compared with their treatment of Wall Street.

    Akakakak : Keep it civil. An apology from you is in order.

  10. There is another way to view this.
    There’s the view that says the people in Washington are more than just a pack of ignorant apes who have gotten to the top of the power game and want to keep their position.

    In that view, they want to do the ‘correct’ thing but there is no agreement about what that could be, and no common basis for discussion because they have different underlying assumptions about how things work.

    Metaphorically this is like having a pair of horses pulling a carriage with you and your family in it, and because you convinced yourself that the horses know the way home through the swamp, you just dozed off, and now one of the horses is stuck in a sinkhole, and you’re surrounded by a swamp.

    So, after realizing that the panicky beast will just thrash itself further into the mire if you don’t entice it as well as dragging it, you try to entice the horse with its favorite food so it will calm down and back up three feet onto the solid ground. But because you don’t know what you’re doing (having let the horse do its own thing for so long) you just empty the bushel of apples from the back of the cart into the muck in front of the stuck horse.

    In the past, when other people had this problem (Sweden, Japan, Denmark), they unhitched the stuck horse from the cart and backed it out, then used a rope and a pulley and maybe the help of the other horse to drag the stuck horse out.
    It meant preventing the horse from doing whatever the hell it wanted to, which might go against your lassaize-faire horse-driving philosophy, but the horse is clearly stuck.

    To emerge from the metaphor: they failed to put any kind of PLAN around the process of getting the investment banks back into operation. They did not place any requirements or controls on the banks, because they trusted them to Do the Right Thing. So they just threw money at them, much like feeding the horse which is stuck, without requiring it to stop doing the stupid things which got it stuck.

    As the shrewish wife in the cart started whipping the stupid husband with the cart whip for wasting the food, just so the people started chewing out their representatives for wasting so much money, and as a result, the representatives realized “we cannot just be throwing away what’s left …”

    So when the second horse gets stuck in the mire because they didn’t uncouple the first one (i.e. the lack of float-lending directly dried up the money supply resulting in a massive and near-instant recession) and the second horse reaches its head over and starts trying to eat some of those apples… at that point you realize, you need a plan or your wife is going to just keep whipping. You go out there and start pulling those apples back away from the second horse.

    Hence, telling the auto-makers, come up with a plan that shows what you intend to do with the money.

    While we know that the economic stupid says that you reduce costs (which is bullshit when the problem is not costs, but rather, lack of income) there is no requirement that they construct a plan to screw their workers, and in fact, for the economy it’s better if they come up with something that will NOT screw their workers. Whether they’re capable of realizing this, I have my doubts. They have heavily invested in stupid, oil-guzzling, ridiculous lumps of truck-iron with sumptuous luxury-car cabooses stuck on top, and sold them at filthy-high prices, instead of tooling up for fuel and resource efficient vehicles that provide some kind of scalable functionality. They haven’t innovated for decades. And the result is that the few who DO innovate have trashed their bottom lines.

    The plan that *I* would like to see from them is a re-tooling and re-training and re-purposing of their existing structures, greatly reducing the number of land-barges and replacing them with smaller, safer, and preferably better-fuel-designed vehicles.

    Do I see hypocrisy? Not especially, no more than usual. Don’t forget that Wall Street and the auto manufacturers cannot be reasonably disconnected. GM is in some trouble because GM created its own investment banking system, the GMAC, and they allowed some of the Stupid of the mortgage bubble to creep into their system.

  11. For the two years I worked in retail, I ended each day next to a GM manager who came to help close up the shop in order to support and spend time with his daughter, who was also the daughter of the shop owner. He managed to convince me that in many ways, in recent years, unions have been really bad for the Michigan Auto Industry.

    One problem is, in order to be elected a union rep. you have to promise something – some kind of change or improvement. Now, auto unions achieved a pretty decent deal for their workers years ago. Since then they’ve been locking it in place and making it stronger, to the point where it’s impossible for a good worker who doesn’t want to join the union (and pay substantial union fees) to get hired and do so, and it’s hard for the automotive plants to fire people for non-performance (we have similar problems with the teacher’s unions). And then the other problem is pensions.

    I have to guess that the pension plan system, as it was originally conceived, simply did not anticipate how long people were going to start living. And, honestly, I see no reason why people who earned over 80,000 a year should be supported at such levels into their late retirement, which is an age at which they should (if all has gone well) have no dependents except perhaps a spouse, and should have paid off their house, at least if they were that well supported by their company through age 60 or 65.

    In any case, pension systems are a huge drain on any institution, and our own government is no exception. To quote from senate.gov, Members of Congress are eligible for a pension at age 62 if they have completed at least five years of service. They are eligible for a pension at age 50 if they have completed 20 years of service, or at any age after completing 25 years of service. The amount of the pension depends on years of service and the average of the highest three years of salary. By law, the starting amount of a member’s retirement annuity may not exceed 80 percent of his or her final salary. As of October 1, 2000, the average annual pension for members of Congress who have retired under CSRS is $52,464, and $46,932 for retirees under FERS-only or both FERS/CSRS.

    According to the report attached to that page, the US government spent around $22 million on pensions just for former members of congress in 2006. Congressional Members have been eligible to enroll in CSRS since 1946. I expect the amount of money we’re paying out in pensions for congress only to go up in the near future. I suppose that’s a fairly small amount of the federal budget, overall, but it’s still a lot of money.

    Congressional members at leasy make contributions to their own retirement plans. The hourly pension plan that has been in place since 1950 at GM has no employee contribution. As of Dec. 31, 2006, almost 357,000 hourly retirees and surviving spouses were receiving pension benefits totaling nearly $4.7 billion paid
    during 2006
    . Any company spending that much money on people who aren’t working anymore would have problems.

  12. SKZB@10: Yes, I exaggerated your post slightly in suggesting “conspiracy”, as I think your post was a hair away from suggesting that “class war” is deliberately motivated by malice, if that wasn’t in fact the main idea.

    I don’t think there is any need for code in suggesting that GM is losing money partly because of poor negotiations with the unions. This has been in every WSJ editorial on the subject for years now.

    I happen not to agree* that the fundamental problem with Detroit is the unions, but what I’m trying to say here is that there is almost a pundit consensus that unions are in fact the problem, so there is no need to read a subtext into the deliberations of Congress.

    I do agree that the bailout of Detroit for much less money than AIG and Citigroup and friends seems to be receiving much more oversight, but that’s at least partially due to the public imbecility of the Detroit executives. It’s also due to the urgency of the financial situation as compared to the industrial situation, the serious belief among some analysts that it would be better for the Big Three to fail, the political chaos I noted in my original post, and the inexperience of the people crafting the bailout measures the first time around. I must say that if I were in charge, though, I would have the AIG executives in prison right now.


    *It’s obviously the unions’ duty and responsibility in a capitalist system to seek as much money and benefits as possible, so even if their benefits were “too high” by some competitive standard, (it’s quite arguable that the nonunion plants are just not giving good enough benefits to their workers) you certainly couldn’t blame the unions for having them — you can only blame management.

  13. Miramon: Just one point. If I gave the impression that the attitude of “take it out of the hide of workers” was because of personal malice, or some sort of dislike of them, I apologize; that was not my intention nor is it my belief. The have the attitude because, for the most part, they think that is the right thing to do. Some of them probably even feel sad about it. And I’ll go even further: it IS the right thing to do–if property rights are more important than human rights.

  14. Has anyone here ever listened to the band “Crass”? They were a 1970’s punk band from the UK that were actively trying to bring about reform of thier government through anarchy. Notably, most of them have admited to being drunks with a voice @ the time, but what they were angry about then, still has some resonance now. Their message was pretty simple; “The crap you have to go through is the crap you chose to take.”
    I used to be a mason and chose to not join the union because I never saw what good they were doing in the state I live in (Ohio). The majority of the unionized workers were laid off while I and other co-workers were still working. In the long run I made more money outside of the union than what I would’ve made inside. As far as being treated fairly, well, there really was no discernable difference.

  15. It’s really funny how people in the US continue to blame overpaid workers.
    Automakers in Europe, notably in Germany, have a workforce that on average gets paid A LOT more than the American one. They still persist.

    The problem isn’t “overpaid” workers (as if such a thing exists in blue-collar America), it’s the incredibly fucked-up management over the last 2 decades.
    If you build bad cars that have low MPG for years and years and think the solution to that is building cars that are even bigger, you shouldn’t be managing anything. Probably not even yourself.

  16. Not to speak for anyone else, but every now and then people of good will on both ends of the political spectrum arrive at the same location. The earth is mostly round, after all.

    These famous bailouts, which will be going on for some time now, are all a bad idea. They benefit companies who should fail (financial institution, auto company, whomever) due to corruption, incompetence and bad management. These bailouts will now lead to the government deciding which companies succeed and fail (a complaint I first heard voiced by Dennis Kucinich).

    In a perfect world the company that meets peoples needs would generate appropriate revenue to maintain profitability. In a world out-of-whack there is a requirement for an economic “correction” to take place in order for it go back into whack.

    The government is stepping in and preventing that “correction” to take place. An intelligent eight-year old can see this cannot lead to anything good.

    You can’t fix a wobble in the wheel by increasing the speed.

  17. ant @ 15: That’s the lovely thing about unions (when they work, I mean, which these days they don’t): The threat they pose can give benefits to those who are not members. Even scabs can benefits from the very union they were working to destroy; all it takes is not caring about anyone else. Sweet deal.

    dvcastle: It’s the word “should” that I’m having trouble understanding. In what sense “should” a company fail? And it almost seems as if you are arguing for less regulation, unless I’m missing your point; but it was exactly less regulation that led to this mess; and for good reason. A corporation MUST concentrate on short-term, immediate interests even at the expense of its own long-term interests; anything else puts it in a terrible competitive position, and may even be actionable by stockholders (there are exceptions to this, of course).

  18. By “should”, I mean in the romantic sense. A company should fail if it is a failure.

    Your explanation of actionability by the stockholder unless the businessman remain myopic and ruthless reminds me of the Shell CEO, when asked how he could charge so much when their profits were so high, explained that it was his job to act in the best interest of the company shareholders.

    I interpreted that to mean he felt his job was to provide the least amount of value to the customer for the highest possible price.

    I realize this thread is meant to underscore that a stunt is being pulled on autoworkers with a double standard regarding the finance sector. I believe that your point is inarguable. I see a much larger and more insidious consequence to all this bailout nonsense.

    Were I to give you a dollar every second from the time of Christ to the present, and then repeat that 32 times, I would have given you a trillion dollars. Double that amount and this is what is immediately scheduled to be added to the taxes of 5% of our population. This is the same 5% that sets the prices of most everything we buy.

    Inflation is as inevitable as will be our lack of ability to afford it.

    I believe our economy is going to create its own version of an autoimmune disease. Where it begins feasting on any healthy element until nothing healthy remains.

  19. dvcastle: I see your point. I believe the problem is systemic, not individual. I suspect we agree on that.

  20. There is something weird about the labor situation in Detroit I don’t really understand.

    Supposedly Detroit just had to submit to the evil unions’ will. That implies a very strong union lock on the labor force.

    But then why is it that the Japanese plants were so easily able to use non-union staff without pensions and with fewer benefits? Why didn’t the unions crush this foreign effrontery? I mean, it’s bad enough if a domestic manufacturer tries to use non-union staff, but the Japanese? I guess in fact the unions had no real power at all, but then how is it everyone agrees that the unions are the cause of Detroit’s problems?

    That may sound rhetorical, but I really don’t get it — I have no idea. I will note, just as an aside, the second-hand factoid that all of Honda senior management and officers combined get less bonus than the GM CEO.

  21. The UAW is a pathetic skeleton run by people concerned with keeping their own positions, and with nothing else. Whether anything can be salvaged from it I have no idea.

  22. From a brush-over observation, I have never seen America have a strong, poplular and active labour movement – be it in politics or unions.

    In comparisons to other western countries, its rather passive.

  23. The golden rule (those who have the gold, rule) always gives the advantage to the robber-barons.

  24. OK, to start, NOT an auto industry expert.
    But, it seems to me one of the big differences in GM and Toyota, aside from the success rate is unions. GM cannot get rid of unions to compete fairly with Toyota. One attempt to even the playing field is to tax the crap out of what Toyota imports to us. This only has the effect of raising prices all around.
    So, let’s not tariff them, let’s put a union fee on what they import, and give that money to the members of the UAW to offset the costs to the GM manufacturing plants. The idea is to actually LOWER the costs of the GM product. This is pretty simplistic, but hopefully, someone smarter than me can see where I’m going, and come up with a plan that make the most sense.

  25. Steve, you missed my… um.. well.. no the point was…

    Shit, you’ve got me.

    That will teach to make an arguement on America’s social history when I know squat on it.

    Thanks for the articles. I’ll have a read of these when I have a less than mad moment and get back to you (serious).

  26. At least the executives are making a huge sacrifice. The news tonight reported on the decision by Ford’s CEO to only take $1 as his salary next year, which will hardly be enough to allow him to live decently. Once he has depleted the millions he has invested, taken advantage of all the tax breaks and credits to which he’s entitled, and used all his available health benefits, if he then has to sell his stock, cars and mansion trying to survive the recession, that dollar won’t even buy him a loaf of bread. Surely we ask too much of our managerial professionals.

  27. Steve, I love your writing and greatly respect your knowledge and opinions, but I have to disagree with you on this one … The auto factory workers are making $73 an hour if you factor in benefits. I have a Bachelor’s degree and don’t make half that. I’m for equality, but this is beyond equality. It seems there should be some (reasonable) reward for achievement. I’m not saying I should earn $100 million for a one-time brainstorm while others work just as hard and make $6.01 an hour making the device I created (this is hypothetical), but, jeez … unskilled labor making $73 an hour? And me, working a skilled, trained job, making half that?

  28. Dave: I beg to differ on several levels. That $73 an hour is one of those numbers that can be twisted around until meaningless. They do NOT make anything like that in hourly, and whoever made that determination of what the benefits were worth had an agenda. And not one on the side of the auto workers. Spend some time in Detroit, or Flint, and actually talk to a few of them. See how they live. Tell me if its high on the hog.

    All of which is beside the point. If you are going to talk about who “should” be earning a certain amount of money, compare what those auto workers do to what the executives do. Then take into account how well each of them does his job. It reminds me of people getting upset at athelets earning X millions of dollars to “just play football,” forgetting the owers are making 10X millions to NOT play football. Let’s get some perspective here.

    Oh, and as a side note, that is not “unskilled labor” in either the technical or the moral sense. Depending on the job, it is occasionally skilled, more often semi-skilled (with a tiny minority of exceptions in terms of cleaners &c).

  29. Steve @ 30?

    Ok, I’ve had a bit of a read. It appears that most of the violent events happened in the first part of last century with the articles referring to the last significant incident occupying in the 70’s (Harlan County War).

    IWW still has examples of strong activity but with a membership of only 2,000 or so its not significant on the American national scale.

    These articles have shown me that America in some parts of society did have a strong labor movement. But not now.

    Based on that analysis, what happened?

    Does the “put the frog in some water and slowly heat it up” analogy fit?

    Is it the “power corrupts” analogy when it comes to today’s union hierarchy as you alluded to in post-24? I imagine the UAW’s position is not unique.

    But my other half of the argument still stands. I did do some googling and wikipedia-ing and I couldn’t find any example where the labor movement has had true representation on the mainstream political arena.

    This as been in the case in a lot of other western countries where they are one of the mainstream parties to the point they form government on multiple occasions. Granted that many of the “Labor” parties now have policies towards the white collar part of town these days but in the past they have contributed to significant social policies where their legacies are still felt. An example of this is health care.

    This is not the case in America. If I’m wrong on this part of the discussion I would like to be shown. If I’m right I would be interested in to case to why the above is so.

    From where I stand America is a paradox. Mainstream society functions by way of dollar worship under the thin guise of “freedom and democracy” but its also a melting pot of some of richest social intellect.

  30. schmwarf @ 35: I think, generally, you’re right. It is hard to give just one reason, or even one primary reason, why there has never been a labor party in the US, and for what is essentially the destruction of the union movement. The betrayals of the Communist Party had a lot to do with it (look at the history of Minnesota’s Farmer-Labor Party for an example), and Government attacks such as the Smith Act.

    It’s a very long, deep, and involved subject and I can’t claim more than a surface understanding of it. So I’ll just say again that, yeah, I think you’re generally right.

  31. Can’t remember who said it, but raising tariffs on toyota imports does no good as toyota has plants here in the U.S. now. Therefore, they are not imports anymore.

    Most foreign-owned auto companies have domestic manufacturing plants nowadays.

    The big question for me is not the why’s and how’s of a bailout for the Detroit 3, but rather, why is it that only the Detroit 3 need a bailout?

    I have not heard any news that toyota, Honda, volkswagon, saab, Kia, Hyundai or any other companies are about to go in the tank.

    When that question is answered, then we can start looking at a plan to help out the Big 3.

  32. Saab is owned by GM, so they actually do need a bailout.

    Hyundia and Kia are supported by the Korean government, they exploit their workers, and they’re not stupid.

    Toyota isn’t stupid. Honda is even smart.

    Volkswagen not only isn’t stupid, but due to Porsche’s wacky investment strategy and insane stock market behavior (the opposite of a supposedly rational market), for a short while just recently they were actually the most capitalized company in the world, bizarrely enough.

    But GM, Ford, Chrysler? They’re stupid. Arrogant, greedy, and shortsighted, yes, but essentially, they’re stupid. Consider just GM for example. They vote to allow a board which doesn’t represent any stockholders, and then the board rubberstamps all officer decisions. They run 8 brand lines that compete against one another. They build huge inefficient cars to sell next quarter even when they can see that next year no one will buy them. They pay their executives more when things go badly. And most tellingly, they never ever admit a mistake or concede that they might have to change direction until it’s too late. That’s GM in a nutshell. Strangely reminiscent of the recent administration in many ways, eh?

    The sad thing about the current bailout is that these morons will not be held accountable, and they will continue to hold their high positions and mismanage their companies indefinitely. One of the terms of any bailout should be the immediate removal of board and officers, but that will never happen.

  33. @35,36

    There may not be one comprehensive reason for the failure of a Labor party to establish itself in the US, but there is one thing that, if kept in mind, helps to understand a lot of labor’s history, and that’s the US myth of class mobility. In most nations, people recognized there were peasants, tradesmen, capitalists, aristocracy etc., and that movement between the strata was uncommon to impossible, depending on the nation. That in turn lead people to identify with their particular economic class. In the US, it has always been preached that anyone could improve his lot in life with hard work and move to a new economic class, which was synonymous with a better social class. One result is that looking at the big picture, the majority of people have not identified with any economic class except the very highest, since being rich was clearly the most desirable goal. The acceptance of this idea contributes to people blaming malcontents in unions rather than any employer or government for violence during strikes, and it keeps today’s white collar office workers from seeing themselves as having anything in common with workers in a poultry plant.

  34. in the same vein…


    300 workers at Republic Windows and Doors in Chicago are fighting back. The company suddenly announced it was shutting down with only a few days notice – and without paying the workers what is due them. Chanting Si Se Puede, the workers have taken a vote and decided not to leave the plant until they get their pay.

    “More than 300 people are working here, and what are we going to do now?” employee Vicente Rangel said. “We don’t get any single benefit. They even telling us they are not guarantee our payment for the week we just worked.”

    “We aren’t animals,” says Apolinar Cabrera, a 17-year employee of Republic Windows. He is also a husband and father of two with another baby on the way. “We’re human beings and we deserve to be treated like human beings.”

    Many of the workers have been with the company for decades and were paid $14 an hour plus some benefits but overnight, the company is tossing them out:

    “It’s really, really hard for everybody and not just because we’re losing our jobs. It’s because we’re losing our insurance, too. They told us that we’re going to be covered until December 15. And now they come and told us that last night, the insurance were down. So nobody has insurance right now,” said Raul Flores, a laid off worker.

    Congressman Luis Gutierrez met with the workers and made it clear that they are owed 75 days of pay and benefits plus any back pay or vacation time they have coming to them – and he’s questioned whether the owners are “simply recapitalizing and reorganizing their production in another state.” Along with their union, United Electrical Workers, he’s called meetings with both the owners and their bank – Bank of America but the owners did not show up at this afternoon’s planned sit-down.

    Republic claims that BoA – which got $25 Billion in the bailout – canceled their line of credit forcing them to shut the doors but they have not explained why a company whose revenues dropped from $4 million a month to $2.9 million last month is unable to meet their obligations to their employees:

    “We feel mistreated. We don’t make business decisions. We just make windows but because of bad decisions we suffer, our families suffer,” said Melvin Maclin.

    Update: Obama today said “I think they’re absolutely right,” Obama said today in response to a question at a Chicago news conference. “And understand that what’s happening to them is reflective of what’s happening across this economy.”

    There’s a meeting Monday between the workers, union, Luis Gutierrez (their congressman), BoA and perhaps the company owners if they show up (they did not show for the first)

  35. And when everyone is given free healthcare and the hospitals go belly-up, will people claim it’s because the nurses make too much?

  36. @44

    Alarmist nonsense. It’s the insurance companies that will adjust or go belly-up. Doctors will be allowed to make medical decisions, it’ll be great.

  37. Bawrence @ 47: Before the ARC, it needs another revision. Before the revision, it needs to be edited. That’s where we stand at the moment.

  38. Need any help? I was the go-to tutor for English Comp. in college and I am the Geek to English translator at work.

  39. No thanks; I’m just waiting for Teresa to get to it (she has a new job, plus as I understand it a new job within Tor, so it may be a bit). Whatever else happens, Teresa is going to need to go over it, so there’s no point in sweating before that happens. Soon, I hope.

  40. The wage of auto workers is only a tangential problem. The real issue with UAW is work rules.

    A labor movement should exist to protect that natural rights of the workers: that they should be paid a fair wage in a safe and clean work environment, and that reasonable expectations of vacation/family leave and medical/pension should be met.

    The UAW has gone well beyond that into dictating to the auto industry who may do what job and the circumstances under which they may be done. And, thanks to the Wagner Act, protesting and renegotiating every disciplinary action against every employee, whether the employee in question deserved the punishment or not. The result is people doing 3-to-5 hours of work while getting paid for 8 hours, and turning out an inferior product in the process.

    Why such insanity? Unions want to maximize membership, which maximizes dues. So we maximize employment, so we maximize the amount of work to be done, so we minimize the amount that actually gets done.

    Wages are nothing compared to a work-rules contract that rivals the U.S. Tax Code in length. Such a monument to bureaucratic sclerocity would have made Standard Oil broke.

    I know we’re supposed to be damning the fat cats with their top hats and cigars made of $2 bills, but even in the worker’s paradise the workers are expected to actually work, right?

  41. L. Raymond. I don’t think perceived class mobility is the answer. Australia has at least as strong a belief in class mobility and they have a long and proud history of Labour movements. Indeed, their current government (The Labor Party) until very recently had 50% of its members elected by delegats of the ACTU (Australian Council of Trade Unions).

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