Nancy Pelosi and Harry Reid would like the government to loan the auto industry $50B on top of the $25B they have already been granted. First off, I do not believe they should have been given the first $25B. Their system is broken and they present no systematic risk. I love this statement: "A healthy automobile manufacturing sector is essential to the restoration of financial market stability, the overall health of our economy, and the livelihood of the automobile sector's work force," they wrote. "The economic downturn and the crisis in our financial markets further imperiled our domestic automobile industry and its work force."
Yes the financial markets have impacted the auto industry, but the auto industry caused 80-90% of the damage on its own. They are using the financial crisis as a scapegoat. Yes jobs are at risk, but they should be. Auto sales are down 40% and probably will not come back to previous levels any time soon. I agree that a healthy auto industry is important, but loaning these companies $50B to delay the inevitable will not create a healthy industry. It will just forestall the inevitable.
Another great comment: "We left the meetings convinced that our nation's automobile industry -- the heart of our manufacturing sector -- and the jobs of tens of thousands of American workers are at risk," Pelosi, D-Calif., and Reid, D-Nev., said in their letter to Paulson.
Yes, tens of thousands of jobs should be at risk, if not hundreds of thousands of jobs. This is a bloated industry that needs to be fixed. It needs to be right sized. It is broken and $75B will do nothing but forestall the inevitable. Break the unions and right size the industry, don't let them continue to operate in an environment where they cannot be profitable. The odds of the government getting this money back (if the unions are not broken) are slim to none, and slim is halfway out the door.
In addition, can anyone tell me if Pelosi ever took an economics class? It sure doesn't look that way to me. She continually shows us that she is incompetent, but somehow she keeps getting re-elected.
Hey Nancy, why don't you do what is best for this country for once? Just once.
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4 comments:
One in ten jobs in America is tied to the auto industry. Its welfare is important to our economy. That said, i agree that giving a broken industry money is corporate welfare. I have to disagree with the author that the problem with the industry is solely the fault of the unions. Had the auto makers been forced to produce fuel efficient cars and invest in electric and hybrid technology that was put in place in the 90's they would have had a much softer landing in the current economic climate because they would have a product people were interested in buying. But they instead lobbied hard in 2001-2002 to have the laws repealed so they could build Hummers and other SUV's that were more profitable short term. The problem is, nobody wants those cars anymore. People aren't buying American cars b/c they suck and they get lousy mileage, not b/c unions fight for their workers rights! I would encourage the author to invest an hour of his time watching "Who Killed the Electric Car". It's a great analysis of the auto industry and how they got themselves into this mess.
If the $25 billion Pelosi and the dems are earmarking for the Auto Industry goes towards R&D and developing cars Americans want to drive isn't that good for everyone? Doesn't that create jobs and products we all want, and ease the damage we are causing the environment? How can anyone argue against this? I can understand oil executives being pissed but I think the days of making $1800 a second are behind us.
I did not say it was solely the unions, but the auto industry has gone downhill since the 1950's when the unions gained enormous power at GM. The companies also need to produce a good product, but if they do not bring costs in to line first, they have no chance. Hell, they have minimal chance if they do bring costs in to line. If the US can't produce a car at a reasonable price and profit then we should get out of the business. It is just the free market system working. The government wouldn't bail you out and they wouldn't bail me out, so they should not bail out management or a union that has now done more harm than good. In just hourly costs of a line worker, GM pays twice what Honda and Toyota pay, so you tell me how they can compete? Do you think a worker at Honda is worth twice the worker at GM? These costs are due to deals the unions cut, but in the end it will cost more jobs than it should have. This is what happens when you play hardball like an idiot. Union managers have done this for years. Now it is time to pay the piper.
In addition, I know about 1 in 10 jobs in the US is linked to the auto industry, but 1 in 10 jobs is not linked to the Big 3. The industry needs to cut at least 25% of its workforce to be a viable industry long term. Do you think the industry should continue to be run inefficiently at your expense. Well you can write a check to Washington (they will accept it) but I'm not.
Like I said before, if the $25 billion goes towards developing cars that run on alternative energies and help break our reliance on Middle East oil than I think it is money well spent.
In regards to unions being the culprit here, I just don't think that is the case. Yes occasional malfeasance among union officials can be sited, but for the most part unions help workers earn a fare wage. Let's remember that were it not for unions we wouldn't have much of a middle class in this country. We'd have rich factory owners and a big peasant working class. They tried that in Europe in the Middle Ages - it was called feudalism. Land owners (factory owners) and serfs (low paid workers) or a thriving middle class? I choose the latter every time. All of that being said, it's unrealistic to think that some concessions won't need to be made by each side. I strongly believe though, that America can solve this problem, put its people to work, and make money in the meantime.
To me, this is simple. Create a good product, pay people a fair wage (including the corporate big wigs whose greed in the past decade has become unconscionable), sell the product, and reinvest the profits ensuring better products for the future. Our sole motivations can not be huge earnings and shareholder returns. Let's get back to the basics: make good products and take care of your people.
So you are saying that Honda and Toyota do not pay fair wages? Perhaps the people that work for them are slaves and I was unaware?
Perhaps you can explain this to me. The US worker is the most productive in the world, yet they are not the most productive when it comes to autos. Matter of fact, they are far from most productive when based on pay. Why?
Toyota and Honda have developed and sold the type of products you are talking about. The US automakers decided not to focus on these products and now they are paying the price. This is what happens when you have bad management. The company goes out of business. You can't say the workers should be saved because they worked for a company that had poor management. These people are at-will employees and can leave at anytime. If you believe management is incompetent, then you should have respect for yourself and get a new job. The problem is these union workers stay because they know they are overpaid for their skill-set. It is this type of thinking that has led to the death spiral of the US auto business.
The Japanese automakers have not been subsidized since the 1950-60s, and they seem to have invested in the right technologies. Their management made the right call. The US automakers management made the wrong call. Again, I'm not saying the unions are the main culprit, but they are definitely part of the problem.
In addition to a previous point you made, the auto industry increased its jobs in the US by 4% from 1990-2005, while the production at Ford and GM fell by 24%. Wow! Does this make sense to you. Also, the 1 out of 10 workers is an enormous stretch because really the auto manufacturers plus auto parts manufacturers account for closer to 1 out of 100 jobs. You really have to stretch to get to 1 out of 10. I know the media claims this but if you look at the department of labor’s statistics you get a different story. Plus, a lot of these lost jobs in Detroit have been picked up by foreign automakers in the south.
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