Calling a Duck a Duck
In the debate about whether to bail out the Big Three automakers or let them go into Chapter 11 (an issue about which I’m still genuinely on the fence), one of the commonly-repeated talking points I keep hearing from the anti-bailout crowd is that Chapter 11 would allow the automakers to “dispose of legacy costs.” It’s pretty clear what that actually means, however, and why the Chapter 11 proponents don’t want to call it what it is: Screwing the pensioners.
Now some will doubtless object that the federal pension insurance will cover the pensioners, but there are two problems with this. First, this insurance will only pay a fraction of what the pensioners are currently receiving, and secondly, it makes those payments on the taxpayer dime, which means that from that perspective, we’re screwing both the pensioners and the taxpayers.
Now maybe this is unavoidable at this point — maybe the pensioners can’t fully be saved. I don’t know. But when we’re talking about real people, real benefits, and real jobs, we should at least be honest about what it is we’re talking about doing.
November 19th, 2008 at 7:36 pm
Again, if you can declare bankruptcy and default on all your debts and promises to pay money, why can’t a company?
We seem to be quibbling over semantics here. Whether or not something is legally permissible isn’t terribly relevant to whether or not it’s right. (Or, depending on your perspective, shitty.) Whatever else your perspective may be, I fail to see how anyone can think it’s not shitty to live by a “company reaps rewards when times are good, shits on employees when times are bad” philosophy, which is precisely what we’ve been doing (well beyond the Big 3), and what some here seem to be advocating as the way things ought to be.
And again, that’s our primary disagreement — the disconnect between the way things are and the way things ought to be, and what, if anything, we should do about that disconnect.
November 19th, 2008 at 7:38 pm
Job implies that there’s work to be done. Your own people seem rather convinced that there won’t be any.
November 19th, 2008 at 7:39 pm
Sure they can get it ($29/hr), but it’s artificially set by a Union instead of by the market at large.
The IAM just tried to do that to the Lazy B, and luckily they got smacked down for it and gained nothing significant.
November 19th, 2008 at 7:44 pm
We (the taxpayers) can bailout the pensions (although I would make the UAW and the execs all pony up a whole buttload of cash to help out, they all have quite a bit), but the companies should go bankrupt.
Well, to my mind, that’s dependent upon what option costs us (the taxpayers) less money overall. It may be that what you suggest is the most cost-effective method, in which case I’d be all for it. But if it’s possible, and cheaper in the long-term, to keep the companies afloat, then why not prefer that option? What if, as in the case of Chrysler in the 80’s, a bailout loan really could save the companies, and the loans really would be paid back with interest? If that’s the case, then the net cost to the taxpayer is less than zero — it’s a net benefit to the taxpayers. I can see arguing that you don’t expect the companies to be able to recover (I frankly don’t have enough information to accurately speculate one way or another, and I doubt very many people commenting here do either), but I can’t see arguing, as some seem to, that we shouldn’t save the companies even if they can be saved and if saving them is beneficial based on some pie-in-the-sky laissez-faire principles divorced from reality.
November 19th, 2008 at 7:49 pm
What irks me about the whole thing is these workers agreed (or were forced) into contributing to a pension plan on the promise that they would receive X compensation after Y years of service. So whether by choice or force, they did so and help up their end of the bargain. Even if the bargain was a devil’s errand on the part of the auto maker and the union controlling it.
So is there this pile of pension money that was being managed by the company or is it another IOU ponzi scheme ala Social Security?
I can understand not having a Plan B if you’re engaging in a system that your parents did and others had done successfully with no indication it was a bad system. Pensions, in a way, represent a set of values we should wish for. The notion that the company rewarded your loyal service of a lifetime. There’s something noble and ethical in that.
Those people deserve to receive their pensions or some form of compensation for the promise they kept. If the pension funds were raided or manipulated in accounting games, I’d like to welcome the accountants and corporate officers who abetted such actions to your nearby Federal PMITA prison.
I believe in ethics. I believe in morals. I have a real problem with the notion of a corporation as an entity that is permitted to exist with the absence of either. A corporation isn’t a person; it is a puppet with real people yanking the strings. Those people above the stage should be held responsible for jerks and tugs they make.
But they aren’t. No accountability. “They got theirs and got out. Screw the rest.”. What kind of fucking value system is that? Money’s nice but I’d like to be able to sleep at night.
And a bailout won’t suddenly create halos. As you say, too late argue about what happened. I’m with MRS, bailout the obligations the workers accepted and paid into in good faith (even if outlandish). Or find a compromise. My Dad certainly didn’t get one when they liquidated a pension he had contributed to for 16 years. His age trumped his seniority. Older workers got far more for less input. It went against and still goes against my notion of fairness.
But that’s it. Let Chapter 11 deal with the rest. If they’re too big to fail, then even in bankruptcy, people will still buy their cars. Fear of that not happening is ludicrous. Even if they stopped production tomorrow, there’s still enough parts in the inventories of various suppliers to keep those cars going for 10-20 years. Hell, I was still able to get parts for an 1973 Honda motorcycle 30 years after it was out of production through the dealer as a catalog item.
Otherwise, all we’re doing is stretching the net of funded Communism further down onto the American people where ultimately all of us will be given a stipend by the Government and the whole system grinds to a halt.
November 19th, 2008 at 7:49 pm
but it’s artificially set by a Union instead of by the market at large.
A distinction without a difference, in my estimation. Unless unions somehow get a special exemption and somehow magically “don’t count” as players in the market. Consumers and corporations use pressure to influence markets all the time, and as you yourself point out, sometimes they succeed and sometimes they fail. Why should unions be any different? What part of free market theory says that consumers or workers must not under any circumstances come together to exert pressure for their common interests? I don’t get that.
November 19th, 2008 at 7:53 pm
Exactly. I do think the executives of these companies and the Union bosses should suffer dearly for their incompetence, but I do not think the company has any obligation to do anything except try to remain profitable.
November 19th, 2008 at 7:55 pm
Given that unions have several dozen special powers, have had police officers ignore acts that would have gotten any other player in the market arrested, and otherwise been protected by the government, the only way to consider them as a normal player is to use the TNSTAGI principle.
November 19th, 2008 at 8:02 pm
Matt:
What irks me about the whole thing is these workers agreed (or were forced) into contributing to a pension plan on the promise that they would receive X compensation after Y years of service. So whether by choice or force, they did so and help up their end of the bargain.
Traditional pension plans are not funded by the workers, but by the company. So the company was supposed to contribute into the pension plan, and as Uncle pointed out upthread, they underfunded it (i.e., they contributed, but nowhere near enough to cover the fund’s obligations).
So is there this pile of pension money that was being managed by the company
I don’t know the specifics of the Big 3 pensions, but generally there’s some degree of co-management between the company and the union. But the problem for GM as I understand it is that because the pension fund was underfunded (by GM), they’re contractually obligated to pay out benefits to cover the shortfall. Hence, the “legacy costs” we keep hearing about. Had they properly funded the pension plan on the front end, the fund takes care of its own obligations, and these legacy costs are a non-issue in the larger scheme of things.
I have a real problem with the notion of a corporation as an entity that is permitted to exist with the absence of either. A corporation isn’t a person; it is a puppet with real people yanking the strings.
Opposition to corporate personhood is one place where I can wholeheartedly agree with you. Just understand that this aligns you with liberals a lot more than with conservatives. 🙂
And a bailout won’t suddenly create halos.
Which is why any bailout, if it’s to be pursued, has to come with serious strings attached, and serious oversight. I’m not optimistic about that, by the way.
If they’re too big to fail, then even in bankruptcy, people will still buy their cars.
I think you misunderstand what it means to say they’re “too big to fail.”
P.S. If social security is a “Ponzi scheme,” then who’s the guy at the top who’s raking in the money hand over fist, i.e., who’s playing the role of “Ponzi?” And Ponzi schemes are characterized by a promise of paying abnormally high returns on investment, whereas the common complaint made against social security is that it’s a low ROI. But I digress.
November 19th, 2008 at 8:07 pm
Madrocketscientist:
I do not think the company has any obligation to do anything except try to remain profitable.
Let me just make sure I have this perfectly clear: You don’t think a company has any obligation to fulfill its contractual obligations? We shouldn’t be able to hold companies to their promises? If that’s the case, where’s the disincentive for a company to just make all sorts of promises and then reneg on them as soon as profitability takes a hit?
gattsuru:
Given that unions have several dozen special powers, have had police officers ignore acts that would have gotten any other player in the market arrested, and otherwise been protected by the government, the only way to consider them as a normal player is to use the TNSTAGI principle.
I’ll be glad to grant you that. Unfortunately for the point you’re trying to make, every one of those exceptions also applies to corporations, except that it applies to them in even greater measure. So we can get rid of unions the day we can also get rid of corporations, and then we’ll have something more like a True Market™, by your rationale. 🙂
November 19th, 2008 at 8:24 pm
Actually, you’re more correct than you think. The workers believe $30 an hour for a job any monkey with a lobotomy could do is proper compensation because they’ve been lead to believe that. Company X pays them that, then has to raise the prices of their product to cover it. People decide that the product isn’t worth the money. Company X can no longer turn enough profit to stay in business. Now, the workers are looking at $0 an hour vs what they thought they were worth when they used the group as leverage (instead of their actual worth as an individual).
How’s that working out for them now?
November 19th, 2008 at 8:25 pm
And you won’t hear a peep of protest out of me if you can figure out a way to ensure that the people pulling the strings of a corporation suffer first. I dislike the idea of a corporation removing the risk and punishment of bad behavior and actions while providing all the reward.
November 19th, 2008 at 8:37 pm
Re: underfunded pensions
Yes the company underfunded the pensions, but do keep in mind that the pension liability is not a fixed value. It’s not like they need to make sure the pension has $10M dollars at all times. That liability grows every year as people live longer and as new employees earn more (and hence get larger pensions), so last year the fund was $10M, this year it is $11.2M, next year it is $12.1M (projected). If the company is suddenly barely making a profit due to excessive costs (including government regs), bad decisions, and market downturns, it gets easy to suddenly find the pension underfunded. Now normally when things get profitable again, the excess profits are used to get the fund back to the black, but the Big 3 haven’t been profitable for a long time.
As for promises, the company is keeping it’s promises. It promised a pension, and in the event that the company can not keep that promise, it bought insurance. The fact that the premiums PBGC charges are insufficient to cover it’s liabilities is not the companies fault.
It’s all well and good to say a company should keep it’s promises, but that only works until the company is out of money to keep those promises with. Ergo, if the company can not remain profitable, it CAN NOT keep it’s promises. However, the company has no will of it’s own, so ultimately it’s promises are kept by the men and woman who work for the company, all up & down the food chain. If they fail to keep those promises, then they all pay the price.
November 19th, 2008 at 8:59 pm
t; You’re starting to catch on in one sense– this proposed bailout is a union bailout, and not a company bailout. The union pushed the auto makers into this position, and you’re asking your neighbors to pay the price. Rather; you’re asking the government to force your neighbors to pay the price.
W. Williams has a good analysis of this practice. “Evil Concealed by Money”;
http://www.gmu.edu/departments/economics/wew/articles/08/EvilConcealedByMoney.htm
You’re continuing claims of being on the fence here are contradicted by your arguments. Is there something about being on the fence that you consider virtuous, that is, when we’re talking about government-sponsored coercion?
November 19th, 2008 at 10:27 pm
Last I checked, rather few people have tried to protect — to take a rather generic example — GM going around and breaking the legs of scabs. Or, to take another example, people can rather easily choose to stop working at a job, but GM is rather significantly more limited when it comes to firing workers. Oh, and if GM gets 51% of a market, it doesn’t automatically win control of all of it in any state, nevermind 28 of them.
November 19th, 2008 at 10:36 pm
tgirsch, The method by which the unions magically “don’t count” in the free market anymore, is they want taxpayers to pay their now very apparently unsustainable salaries and pensions.
I feel unions are fine, and should have no more or less rights than a single worker, to wit-
I say if they can get $29-$75 an hour for their work by combined bargaining, and the company agrees, let ’em.
I say if they can get endless pension contracts signed by combined bargaining, and the company agrees, let ’em.
I also say that if the company isn’t allowed to hire non-union laborers because they find the labor or pension costs to be unsustainable in the long term, let ’em.
I also, also say that if the if the union wants more of MY goddamn tax dollars to bail them out, because they strong-armed a company which had no choice but to use union labor, into bankruptcy with unreasonable pay requirement, then fuck ’em.
Let the free market, by those definitions, decide both their collective salaries, and their fates, just like it does with me. Someone in a right-to-work state will pick up the slack, and build a car people can afford, and maybe the UAW guys can go get jobs as Union Journeyman Sheetmetal workers – oh wait, no, sorry, that takes an actual skill.
KsR
November 19th, 2008 at 10:47 pm
Unions enjoy considerable protections from bad behavior that corporations are penalized for. When my company had the audacity to post the IAM contract proposal on a company website, the union filed a grievance with the NLRB (and won) that the company was direct dealing with the union members.
November 19th, 2008 at 11:09 pm
Robb Allen:
I don’t know about “Company X,” but GM’s problems go well beyond its labor costs. If you could wave a magic wand and make GM’s costs suddenly lower than Toyota’s, they’d still be in trouble. But somehow, it’s all the union’s fault? Sorry, not buying.
Gatt:
Last I checked, rather few people have tried to protect — to take a rather generic example — GM going around and breaking the legs of scabs.
Hey, I’m all in favor of prosecuting that type of thing to the fullest extent of the law. Of course, that type of practice hasn’t been widespread in what, decades? In any case, those wrongs committed by unions (and I don’t doubt they exist) are utterly small-scale when compared to what corporations routinely get away with.
Lyle:
You’re far from the first person to try to pin all of GM’s woes on the union, but that dog won’t hunt. The union’s not responsible for GM’s terrible business decisions, which are the stuff of legend. And that’s just one example. And, of course, the union has made concession after concession, yet this is still somehow all their fault.
And you can question my sincerity all you want, but I really and truly am on the fence about whether or not to support a bailout. No, I don’t think that’s a virtuous position to be in, it’s just that in this particular case, there doesn’t appear to be any “right” thing to do. It must be nice to be able to see everything in nothing but black and white, but I can’t think that way.
Kingsiderook:
You seem to be of the opinion that the unions are the only ones lobbying for a bailout. If the union is as terrible as you say, then it would seem that Chapter 11 is the perfect way to get rid of them, and the executives would welcome bankruptcy to accomplish that goal. That they aren’t doing so is quite telling.
And let’s also note that what the auto makers are asking for is a pittance as compared to the amount of “your goddamn tax dollars” that are being spent to bail out other sectors of the economy, the demise of which had absolutely nothing to do with the unions.
Look, union bashing may be a fun spectator sport, but I fail to see how it’s likely to be productive in this context.
MadRocketScientist:
Unions enjoy considerable protections from bad behavior that corporations are penalized for.
And vice-versa.
November 19th, 2008 at 11:18 pm
Hey! someone’s working my side of the street!
So yea, I firmly believe that the only valid reason that our government (of, by and for the people) ought to allow these extra-human corporations to exist is that they do such a dandy job at creating wealth, creating jobs, and growing our economy. While I certainly agree with keeping them on a leash, the collar ought not be too tight.
And speaking of too tight, are you liberals ready to admit that the whole SUV/Truck/Crossover craze is a fault of those who tried to legislate innovation by requiring the CAFE standards? Or maybe you have some other reason why the Cadillac Eldorado transmorgified into the Cadillac Escalade?
American car companies tried to innovate using unibodies, chrom-moly steel, turbochargers, transverse mounted engines and front wheel drive,but the easiest way for the auto companies to meet the quotas decreed by a bunch of lawyers inside the beltway is to sell dozens of Ford Festivas for every full-sized V8 Lincoln.
So you have a long commute, idling on the freeway because the NIMBYs and the BANANAs fight every single highway proposal, and you have a choice: Toyota Echo or a Nisson Xterra? What do you chose? (and no, subsiding Amtrak is not one of the choices)
November 19th, 2008 at 11:29 pm
Let’s look back at the big issue here, no matter the fault, GM is in trouble. Now, tgrisch, it seems your real concern is making sure the benefits are protected, particularly the pensions. Fine, let’s be pragmatic.
Best case, we bailout GM, who uses the money and somehow manages to become profitable again (how no one has made clear yet, but let’s say they do). We get the money back, with interest. Yaw we win.
Worst case(s), we bail them out, they continue to ride the fail boat to insolvency, and we lose the bailout money PLUS we are on the hook for the pensions and the rest of it; OR we tell them to file Chapter 11 (hell, if they can’t file Chapter 11 for some reason, modify the rules so they can), all of their conracts get renegotiated (from Union deals to Dealer Contracts) to reduce their debt liability and what is still left in the pension fund gets transferred to the PBGC (I do believe that is what happens when the PBGC takes over a pension, they get whatever is in the fund and the company starts over) thus reducing the hit we the taxpayers take and the Big 3 emerge in a better position to be profitable (and they will hopefully clean house in the meantime).
Either way we get hit with the pensions, but in one case we get a smaller hit. And seeing as how the likelihood of a bailout being a win is pretty small, I’m still rooting for Ch 11.
November 19th, 2008 at 11:32 pm
I thought we settled this, it’s a “Ponzi-like” scheme. And the person at the top is Congress, spending it far faster than they can tax it.
The money collected in SS taxes that exceeds current expenses goes right into the general fund. But wait, it isn’t a freebie by any means. No no, the federal government hands back IOUs to SS. Those IOUs are not backed like “asset-backed securities” , they are backed by the power of congress to borrow and tax in the future.
There is no lock, there is no box, there is no interest returned. FDR set things up that way and it still would be working if everyone still died at 55 and people kept having 3+ kids per couple.
Besides robbing us at gunpoint and funneling all the money into the general fund, they cheat us a second time by constantly cooking the books on the cost of living adjustment. Sure it’s just a bit each time they lowball the adjustment, but it all compounds.
November 19th, 2008 at 11:33 pm
Standard Mischief:
And speaking of too tight, are you liberals ready to admit that the whole SUV/Truck/Crossover craze is a fault of those who tried to legislate innovation by requiring the CAFE standards?
Err, how does that follow? The problem isn’t that we instituted CAFE standards — it’s that we did it and then stopped there. The CAFE standards were enacted during the oil embargo of the 1970’s, and as a result, the average fuel economy of cars sold in America doubled by the early 1980’s. But that caused oil prices (and therefore gas prices) to fall, and suddenly fuel economy became a non-priority for short-sighted American car manufacturers and consumers. Attempts to further improve CAFE standards have been staunchly opposed — generally by Democrats from Michigan, I might add — until very recently, when a very modest increase was finally passed.
The result: despite 20+ years of improving technology, the average fuel economy of cars in America was worse in 2007 than it was in 1985. It seems that if we wait for car manufacturers to make more efficient cars on their own, without a government mandate to do so, we’re going to be waiting an awfully long time. As long as gas is below about $3 a gallon, short-sighted American consumers will gladly fork money over to terrorist-supporting nations by the fistful.
All that said, I fail to see how the Cadillac Escalade is somehow the fault of 1970’s fuel efficiency targets that most manufacturers meet easily, and could substantially exceed almost equally easily.
November 19th, 2008 at 11:36 pm
Clarifying a bit, the real reason car companies started pushing Escalades and the like is because the CAFE standards weren’t stringent enough — they held light trucks and SUVs to a lower standard.
November 20th, 2008 at 1:32 am
I have no doubt that the CEOs mismanagement would be better covered by free money than Chapter 11. That they aren’t screaming to be free of union labor tells me that they *gasp* are working together to keep both unions and management above water by whatever means necessary, especially free bucks, by yelling “We’re too big and important to fuck up and totally fail!”
God forbid that we suggest that the management prefer a bailout to publicly admitting total management failure by following the nature of all businesses that pay people more than is profitable – to go out of business, and be replaced by companies that make a profit.
Second, I didn’t support the bailout of sloppily managed financial institutions either. I don’t think Freddie Mac should have their failure subsidized any more than GM should.
KsR
November 20th, 2008 at 1:40 am
Yes, everyone knows Van Church wasn’t a union member, and that whole thing with Rod Carter and the Teamsters was just a big bunch of balognae.
Of which you’re unwilling to bring up an example, and the last example within the United States I can find with a few quick google searches involved an unsolved crime in the forties.
I’m sorry, but we’re not in Kevin-land, here. We’re in real-world-real world, not some strange DailyKosiverse. Legally and by any reasonable interpretation of the word, assaulting people beats WalMart not sucking the genitals of every worker to enter their stores.
November 20th, 2008 at 8:17 am
Simple. It’s because some consumers seem to want larger cars, however, a SUV does not get averaged in to the car CAFE standards because its a truck. It that a revelation to you? How else do you explain the death of the family station wagon? Station Wagons are cars (BTW, the Subrau Outback is a truck for CAFE standards)
Now for innovation, lets say I wanted to start a car company today. Let’s say I wanted to refurbish/re-manufacture government surplus HUMVEE for farm/contractor/light industry. I couldn’t get my foot in the door unless I can also sell smaller/lighter version to meet the CAFE standard. That means my barrier to entry is that much higher. (I also could not do it because all the surplus HUMVEEs are scrapped. They are not DOT legal and they cannot be titled by a buyer. That’s a condition of the contract that the feds signed with AM General. That’s your and my tax money there getting crushed)
Let the car companies got into chapter 11. Take a good look at the federal regulations that raise a high bar against entry into the industry, and remove them. You’ll see a better sector rise from the ashes.
November 20th, 2008 at 8:34 am
As long as you stereotype every single consumer of the auto/truck industry as being just like yourself, this makes sense. Detroit holds a gun to the drywall contractor’s head and makes him buy that shiny white pick-up truck, otherwise he would be happy with a subcompact.
Wanna know why the Toyota Prius is wildly popular around the sprawling northern Virginia suburbs of DC? More government regulations that let a hybrid driver ride all by themselves in the HOV lanes.
N.U.G.U.N. made some good comments on your other thread about GM trying to hit a moving target with government regs.
November 20th, 2008 at 9:20 am
A business (also called a firm or an enterprise) is a legally recognized organization designed to provide goods and/or services to consumers. A business needs a market. A consumer is an essential part of a business. Businesses are predominant in capitalist economies, most being privately owned and formed to earn profit to increase the wealth of owners. The owners and operators of a business have as one of their main objectives the receipt or generation of a financial return in exchange for work and acceptance of risk.
When unions start interfering with the above definition it is time to reorganize and cut the pork in order to stay in business. A bailout would not fix anything but delay the failure. which will occur.
I thought is was real smart of the big 3 CEO’S to fly to D.C. in private jets to ask for OUR money.
November 20th, 2008 at 12:00 pm
KingsideRook:
they *gasp* are working together to keep both unions and management above water by whatever means necessary, especially free bucks
To be fair, a low-interest loan isn’t exactly “free bucks.” Any such loan could be structured such that it gets top priority for repayment should the companies find themselves in bankruptcy anyway.
gattsuru:
Yes, everyone knows Van Church wasn’t a union member, and that whole thing with Rod Carter and the Teamsters was just a big bunch of balognae.
OK, you’re going to have to clue me in on the Van Church reference, since Google is of no assistance in that matter. As for Rod Carter, an isolated incident that happened 11 years ago (and for which the Teamsters eventually settled) is hardly a compelling counterexample to my assertion that such incidents haven’t been widespread in a very long time. At no point did I say they never happen.
Of which you’re unwilling to bring up an example
How about widespread illegal wiretapping on American citizens? That’s a pretty good recent example. And as far as I can tell, nobody has been prosecuted for the sort of book-cooking and obfuscation that caused the current financial crisis to be so wide and so deep.
SM:
It’s because some consumers seem to want larger cars, however, a SUV does not get averaged in to the car CAFE standards because its a truck.
How does this invalidate my point, exactly, or help yours? That corporations took advantage of a loophole in the regulation and aggressively marketed to maximize their profits from doing so doesn’t mean that the regulation is at fault in the first place. The answer seems simple: increase the standards for trucks and/or modify the “truck” exemption so that pickup trucks and other work trucks are included, but SUVs, wagons, and SAVs are not. Preferably the latter.
That way, your proverbial drywall contractor is unaffected, while the hordes of suburbanites who never haul anything, apart from a few kids, are.
November 20th, 2008 at 1:44 pm
That is a very good point. These guys do get to enjoy the insulation from liability that incorporation provides, while the worker will suffer for their incompetence.
BTW, RE: That $70/hr number
RE: Trouble getting Ch 11
November 20th, 2008 at 2:07 pm
Here is an interesting piece on how some folks seem eager to bail out the big 3 for the good jobs while at the same time are doing their level best to reduce the market share even further.
Link Here
November 20th, 2008 at 3:54 pm
Madrocketscientist:
Interesting reading. I genuinely appreciate you trying to add substance to the conversation. Both of the first two reads were a welcome dose of perspective, and of cutting through spin.
November 20th, 2008 at 5:23 pm
Let me weigh in….
Tgirsch..up thread, you mentioned something to the effect of why should the workers be the ones to suffer and that GM should honor the contracts that it has made. Well, the reality is that if GM isn’t solvent, it can’t honor its contracts including to its employees. And when a company goes under, its employees usually lose their jobs and benefits. Thats pretty standard free market economics..companies rise and fail and when they fail, they usually can’t meet all their obligations whether its to past and current employees, suppliers, lenders, shareholders (GM’s have lost 90% of their value), etc.
The union didn’t force anyone to sign any of the contracts that were signed and its the unions job to look out for their members and get as high a compensation package as possible for its members. As a non-unionized employee (like myself) you may feel that unionized employees are better compensated than they should be..but you can also flip the coin the other way and say how can I be better compensated and perhaps that thought process might include unionizing.
A good deal of the problems with GM has to go to the management..from cars people don’t want to buy to negotiating union contracts. The Japanese automakers don’t seem to have the same problems and seem to be doing fairly well.
On the bailout, thats a tough one. GM going under would hurt a large part of our economy. At the same time, the US auto industry probably needs to downsize considerably..the trends are that fewer and fewer people are buying their cars (both due to a shrinking market for cars and losing market share). I read a suggestion somewhere that instead of bailing out the big 3, we should pay the Japanese automakers to create more factories in the US.
November 21st, 2008 at 8:34 am
In other words, do it again, only harder!
manual trackback: The road to a planned economy is paved with “good” regulations
November 21st, 2008 at 10:48 am
Standard Mischief:
Waaah. The fact of the matter is, the passage of CAFE standards doubled vehicle efficiency in less than ten years, something which simply wouldn’t have happened without the standard. Now you may think that’s a bad thing, but you’d be in the minority on that one.
Today, technologies exist to even further improve fuel economy across the spectrum of offerings, so it’s not like an increase in CAFE standards is dependent upon some magical, not-yet-existent technology.
As I alluded to before, there’s a reason we need stricter CAFE standards: the market has had more than two decades to give us improved fuel economy on its own, and it has utterly failed to do so for anything other than a small niche market. So unless you’re going to argue that we shouldn’t be working to reduce our dependence on foreign oil, and shouldn’t be trying to move toward cleaner energy sources, regulating efficiency is the only answer, because the market has proven itself to be utterly incompetent on that front.
Of course, to the anarchists like you, regulations are never the answer, I know. We shouldn’t have banned PCBs, for example, we should have just closed our eyes, clapped three times, and hoped the Almighty Market would find its own way to get rid of them. Just like The Market Will Provide™, as if by an Invisible Hand™, some magical solution to our energy problems without any prodding for it to do so. Right after Ed McMahon shows up at my front door with a giant cardboard check.