<-"The Eclipse, Part II" or "Killing Elle Seemed Extremely Unnecessary" |Main|Are the Grammys Completely Out of Touch, or Am I?->

Looking for an Opinion

December 3, 2008 12:18 AM

o, the Big Three car companies showed up in Washington again to beg for money. This time, they jetpooled or something. They didn't each fly their own private jets, anyway. And the CEOs of each of the companies have apparently promised both to work for $1 a year and drive hybrid cars to DC for the next meetings. Because that makes sense somehow.

All of this was some sort of good-faith demonstration which, I assume, was meant to soften the blow of the fact that they're no longer asking for $25 billion, they're asking for $34 billion. Huh That seems to me a little like saying "Mom, you know you said that if I kept good grades this year you'd buy me a Mexistrat? Well, I found some spare change on the way home today, so I was wondering if you could get me a 1960 vintage Gibson Les Paul instead? Thanks."

Anyway--and I realize that this may come as a shock--but I don't have an opinion on this whole bailout for the car companies thing. On the one hand, it seems to me that Ford, GM, and Chrysler have been running their businesses like shortsighted idiots for a while now. From personal experience, it seems to me that the general quality of American cars has increased, but that's not all that matters. I mean, while foreign automakers were producing attractive, economical, fuel-efficient vehicles, Detroit was busy churning out SUVs and trucks. I mean, GM bought the Hummer brand in 1998, a year after the Prius debuted in Japan. I know that trucks and SUVs were selling well and represented huge profits for the Big Three, but how much foresight does it take to see that that shit isn't going to last? Here we are a decade later and I can't think of a single competitive American hybrid or electric car. And the truck and SUV market has pretty much imploded.

So no, I'm not sympathetic to companies that, based on my limited understanding, have run their like idiots who think that they are above change and innovation.

On the other hand, I don't really want to see a giant portion of American industry simply disappear. I mean, what would happen to Michigan? How many millions of people would be affected? And how fucking terrible would all of that be for an economy that's already in the shitter?

But then, if the government's gonna spend billions of dollars to help these companies out, it seems to me like maybe they should have some oversight of how the money's spent A lot of oversight, a part of me says But then I start thinking that the government giving companies money and then telling them how to run themselves seems kinda contrary to the whole "free market" thing, which I'm a big supporter of. I mean, I was listening to Air America the other day and Ed Schultz was talking about he thought that if we bailed out the car companies, they would have to agree to have a large number of viable hybrid vehicles on the market within a few years. And I'm all for hybrids, but something about the government telling a company what products to sell seems really disturbing to me. So it seems, to me, at least, like there's this slippery slope: we want oversight, but we don't want socialism How do you decide?

But then, if we're so against socialism, which I guess I am, why are we all about using the government's money to save stupid companies.

I really have no idea. What do you guys think?



7 Comments


tRJ said:

1. I love the free market and loathe socialism. But if you are giving this amount of money to failing companies, you have to have some kind of oversight. Otherwise, you have companies taking that money and going on fancy corporate retreats, like AIG did.

2. Deferring to free market principles as much as possible, these companies should be forced to turn a critical eye to their operations. For instance, the Big Three compensate their employees at a rate 50% higher than market. That can't be supported in a bailout environment.

3. If these companies aren't willing to make major changes in the way they do business, let them tank. This isn't a question of saving the auto industry, it's keeping one segment of the industry afloat, despite poor business practices. By way of example, GM has been, and will likely continue, to lay off thousands of workers. Meanwhile, Toyota is investing in training while its plants idle, and laying off zero workers.

December 3, 2008 9:08 AM



The Reeg said:

I think the Big Three should be allowed to declare bankruptcy. This would force the companies to hire new leadership that doesn't result in a clusterfuck of bad ideas, and also to renegotiate with their unions, which are also part of the problem--GM, Ford, and Chrysler are bound by contracts to past, present, AND laid-off workers (look up "Jobs Bank GM" if you want your head to explode) that they just can't afford. I'm all for hard-working people being compensated fairly for their efforts and being taken care of in their old age, but their benefits and pension schemes are pretty ludicrous and certainly not worth killing one of our biggest industries when, as you said, our economy is already in the shitter. I'm willing to bet my life savings that former workers would rather have fewer benefits and get a little less money during their retirement than get no money at all, and that people laid off by the Big Three will rather have fewer benefits than no job AND zero benefits.

Additionally, we as taxpayers wouldn't have to foot the bill for this (maybe indirectly via a short-term deepening of the recession, but I believe that the transition would be much easier than if they just shut down) and any desperately-needed adjustments that take place within the companies will be done via the free market, not by government decree. There will still be some job losses and strife, but that would have happened anyway since GM et al have absolutely refused to accept that a)the US just isn't that efficient at producing cars anymore and b)if they insist on continuing to produce cars, they need to get with the program and make more fuel-efficient ones. But then, they ALSO have contracts with oil companies promising a certain degree of fuel inefficiency so as to make said oil companies richer.

It's funny--I remember reading an interview with some dude from Ford where he poo-poohed the idea of introducing "green" or "Euro-style" cars because big-ass old-fashioned American cars are this great symbol and that image is part of their shtick. And even though it was maybe 2004 or 2005, I remember thinking, "Okay, but don't hit Congress up for money because you bet wrong in thinking that people in a pinch would choose romanticism over their bank accounts." Remembering it now, I'd really like to not be vindicated on this one.

That said, if there is a bailout, the $25 billion the Big Three are asking for will mostly if not entirely come from a Green Technology Transition fund (or something like that) which was set aside ENTIRELY to aid the auto industry in being more efficient on the world market--in which case it's absolutely legit for the government to demand that the companies who benefit from this money use, well, green technology and perhaps other cost-cutting measures. I'm absolutely a fan of the free market, but there's an exception to every rule and I'm pretty sure this is one of them. Also, in a strange kind of irony, the government would in this case be forcing companies to actually comply with what the free market has been telling them for a few years now--which is that their products need to be comparable to what people actually want to buy (i.e. more fuel-efficient) and their agreements with unions need to be revised.

I see it as analogous to the following dismal situation (that I'm sure you'll never be in): you have a kid, in his 20's, say, who epically failed at life. He gets out of jail/rehab and says, "Dad, I don't have a job and no one will hire me because I didn't graduate high school and I don't have an address either. Will you loan/give me $5,000 to help me find a place and get back on my feet?" But you don't trust him not to spend your money on coke and strippers and booze, so you say, "Why don't you send the application and lease over to me, and I'll write the checks to them until you get things sorted out." You take him grocery shopping and pay for his GED classes yourself rather than simply depositing money in his account; you help him out, but that aid is completely conditional on turning his life around. Normally, that kind of intervention in someone's life by a parent is ridiculous, but since the reason he's receiving that help in the first place is because he fucked up, "tied" aid isn't the worst thing in the world.

Of course, government's not a parent and I think it's creepy to consider it as such. But if we're gonna save the Big Three from bankruptcy (which again I don't think Congress should), it only makes sense that that money--OUR money--is actually a solid investment in our country's economic future. They need that money because of bad decision-making, and our economy is still too dependent on the auto industry, and too fragile, to just let that industry die. Therefore, it's pretty reasonable to set a few of what my mom would call "ground rules" regarding the auto companies' conduct with billions of the government's dollars.

Of course, all of the same changes that the government would probably recommend would most likely also result from bankruptcy, without the disturbing resemblance of a planned economy. That's why I'm pro-bankruptcy.

December 3, 2008 7:35 PM



morenonesense said:

I have lots of thoughts on this but also don't have the time to type out an accurate response. Here's a short one.

The Reeg said that he remembered when some guy at Ford said the shit about big cars being awesome america and 'green' cars to be gay. well, if i remember correctly, that dude is the VP or something similar at Ford, and he is infamous for being very outspoken for his disbelief in global warming. Seems like that guys is the shit. Give him a raise.

Anyway, i think the bailout can work if the gov't makes un-official preconditions such as: the unions MUST renegotiate so workers can get fair salaries and benefits. If the unions do not agree to this without assurances that without acceptable renegotiation, no bailout. No jobs.

Also, the gov't doesn't have to decree to companies 'you must make x number of hybrids, etc.' Simply, whether or not there is a bailout, moves must be made for federal standards for MPG must be raised, as well establishing standards for particulate emmissions. This only hasn't happened because of the intense lobbying efforts by car companies and unions in washington. once sensible federal standards are in place, car companies will be forced to comply; a positive secondary effect will be that *gasp* American car companies will develop foreign markets because their cars will comply with european standards. previously, american car companies were allowed to operate as a cartel in the US because of low gas standards.

i def. think we should raise gas taxes as well. this would have similar results and perhaps even instill a move towards decent public transportation in this country.

i guess that spiel was longer than i thought.

December 3, 2008 10:30 PM



Ismael Tapia II said:

tRJ,
Yeah, the AIG thing was complete bullshit. Also bullshit, I think, is that these companies continue to pay their executives outrageous wages when, really, they're not doing that great a job. And I agree that you can't just give these companies a huge check and say "Ok, be good." But, at the same time, the idea of having the government intimately involved in the day-to-day decision-making of a company rubs me the wrong way. I'm sure that there's a point at which all the interests balance out, but I just don't know where that balance is.

And I agree that the companies have to take a hard look at pretty much everything they're doing with an eye towards increasing efficiency and reducing, well, idiocy and waste. But I also think they should have done it years ago rather than promising to do it now, right when they're about to go under. The fact that they didn't makes me think that maybe they just don't deserve to survive.

I think we basically have to face the fact that the Japanese are better than us in almost every way. Well, in every way except one: their rock bands still suck.

The Reeg,
I think you make some really good points, and don't necessarily disagree, but wouldn't there be some pretty terrible far-reaching effects in letting these companies go bankrupt? I mean, from what I've read, these companies think they're pretty close to being completely out of money. If GM stops being able to pay its employees, isn't that pretty much the end of the road for it? Is restructuring under bankruptcy really an option? Or, at this point, would these companies have no choice but to start selling shit off and call it a day? If the former's possible, then yeah, I think things would eventually get better. But if the latter is necessary, then what happens not only to the American auto industry or Michigan, but to American production generally? Things seem pretty bleak, no?

Morenononsense,
I don't really see a problem with requiring higher MPGs out of the cars these companies produce--that's something that the government already does, and rightfully so, I think. But, like I've said, I am creeped out by the idea of the government having more direct say over what goes on--that's just not the way our government's supposed to work.

But here's something I just thought of while reading this article. Ford and Chrysler are asking for significantly less money than GM. If I remember correctly, I read an article a few days ago where the Ford executive said that his company would probably be ok without a bailout, but that they still wanted some money just to make sure they were cool. So that got me thinking: why do we need to bail out all three of these companies? If GM is doing so much worse than its competitors, why save it? I mean, if you take the other two companies, give them what they're asking for, attach the strings people can agree on, and let GM fail, don't you sort of get a lot of the benefits that you'd get if you bailed out all three of them but at a much lower cost?

What do you guys think?

December 4, 2008 11:09 PM



Bobbe said:

I'm out of league here. Too much brain power on dislpay!

July 10, 2011 7:10 AM









Leave a comment


Type the characters you see in the picture above.