Friday, December 12, 2008

Bein' All Economic and Informed


I just read a headline that the auto bailout package failed in the Senate, and I couldn't be happier.

Why? Not only do I hate, hate massive government intervention, but for the life of me I can't understand why we would sanction such a move to save a dying industry. For a fantastic articulation of my thoughts, go here to read a great piece by Thomas Friedman, author of The World is Flat. If you haven't read the book (or at least skimmed it), pick it up at your library and get crackin'. The man has his finger on the pulse of the future of our global market and economy, and he speaks like a psychic. If you don't have time to read it right now, then at least read over that article I linked. Again, psychic. His analogies make it seem ludicrous that we would pour billions of dollars into a business model that is soon to be outdated--in one analogy, he likens it to the government bailing out the CD music market on the eve of iTunes and the iPod.

As Stephen said (and I paraphrase), "We bail out an industry that isn't moving forward with greener, more cutting-edge practices, and then moan and groan that we need to change it all without ever doing anything to actually change."

Amen, brother. Er, husband.

Now I understand what the failed bailout could mean. Believe me, I know. My father-in-law has been employed by GM practically his entire working life. He works as a carpenter/sign maker at a plant in Michigan, and a potential collapse of the company would be a big deal for him and my mother-in-law, not to mention other family members and close friends who are employed by the auto industry and related companies. They saw what happened to Flint when plants shut down. What happens if everything related to GM shuts down? This is huge, folks. It could suck large-scale.

But you know what? That's what happens. Businesses which aren't run effectively, which don't respond to projected trends (like, I don't know, the not-so-surprising lack of fossil fuels we will experience sooner rather than later), which allow monsters like unions to enact a strangle-hold on them, will fail. Welcome to a free-market economy. Supposedly we believe in a laissez-faire approach (yes, I am somewhat educated--I remember these terms), so why in the heck would we want more government intervention?

It boggles the mind.

Thus my opinion, based on my limited perspective. Let me know if you have any other thoughts to add on either side of the debate. I know my mother-in-law gave some good insight from the other side of the fence a couple weeks ago, which definitely helped me understand why some people would be in favor of such a move. It's good to be informed, even in bits and pieces like I am.

7 comments:

Laurie said...

Christine,

It’s your mother-in-law with some points I just have to address. You made some good ones, but please remember that even though GM/Ford/Chrysler have not kept up with the "cutting edge" of technology, their contribution to the working class and the economy of this country has been HUGE over the past eighty-plus years. You won’t be reminded of that by CNN and especially not by NPR.

I do agree with you in the respect that our government cannot continue to "bail out" failing industries and/or financial institutions. (Actually, this would NOT have been a bailout, but a bridge loan, which would have required not only payback but also very close government scrutiny.) However, the far-reaching consequences of bankruptcy for the auto industry would be devastating for millions (we are talking MILLIONS) of individuals and their families. The trickle-down effect would affect countless companies, organizations, and even colleges and universities.

I also agree with you and Stephen that the Big 3 should have been engineering "greener" technology much sooner. This should have been happening a long time ago, especially following the early 70’s and the oil crisis that took place at that time. It is important to realize, though, that the auto industries have been working toward innovative changes, but the current economic crisis along with the sharp decline in sales (due to the current economic crisis - it's a vicious cycle) have led to this. I have to believe the executives when they say that their situation was unavoidable. The UAW is a contributing factor here, but they are NOT the main culprits, as the media would have you believe.

As far as the UAW, I have feelings of pros and cons. The factory conditions before the UAW was organized were terrible and the autoworkers were over-worked and under-paid. My dad was a strong union leader for the railroad and union wages enabled my mom to be at home most of the time when I was growing up. GM's union wages allowed me to be a stay-at-home mom, too, and I will always be thankful - to God first, of course, but also to the UAW. These wages are a good, decent wage, but certainly not over-the-top. Bill's income is on the higher level of the union pay scale because he is skilled ... he went to trade school for four years. His wage reflects his area of expertise. Plus he has 28 years of service. Assembly line workers are now hiring in at $14 to $15 hourly. Not much to raise a family on. So the UAW has begun to take concessions and they are willing to take much more to save their jobs.

Of course, I am personally involved, and I am hoping that the AMERICAN auto industry will emerge stronger than ever to lead our nation into a new era of energy-efficient transportation.

We'll see what happens ... I have a feeling that Bush will use his last few weeks of power to throw them a lifeline.

See you soon! We can have some good discussions at my house!

-Laurie

Christine said...

Yay for contributing to my understanding of the situation! Thanks, Laurie. You rock.

Courtney said...

I think you should watch this documentary (in all your free time) it is the story of how GM had electric cars in the 90s and the oil companies helped to squash it. (Ignore the subtitles)

http://video.google.com/videoplay?docid=1729787377772036013&ei=d4lFSZzdJJjUqAO-p5SEBw&q=who+killed+the+electric+car+full+movie&dur=3

Lauren said...

My dad works for Toyota.. Even though that company isn't part of the big 3, it will be effected by this bailout package. Certain parts that are necessary to manufacture a car, are made by third party companies.. If the big 3 fall, these third party companies will too. If those companies fall, other car companies, who are keeping up with new technology, will have a harder time coming up with some of those parts, that they also ordered from the third party companies... So if the big three falls, everyone falls.. If everyone falls, a LARGE percentage of the population will no longer be employed. Including my dad, who took a pay cut that took 1/3 of his income away..

I'm sorry, sometimes government intervention isn't the best idea, but a necessary idea. It's a tough call, and I understand why some do not agree with it, but honestly more people without jobs is not ideal. If the big three had been better with their accounting practices, their overall budgets, and their interactions with union members and retirees we wouldn't be in this mess.

Christine said...

OK, here's a point my mom brought up today: If this "bail out" is truly just a loan, then where are the banks? Why is it the government's responsibility to get involved? Surely banks, who know when to intervene when it's a sure bet, can offer aid to the Big 3 if it's so important. Why does it HAVE to be on my tax dollar? Or are they staying away on purpose?

And I have a hard time with the argument that we should rush in to save them just so that jobs won't be lost. Jobs are going to be lost even if they do get their act together with a loan--it's just going to have to happen, from the bottom to the top, to cut costs and restructure their business. None of us have job security, and none of us are guaranteed that our current line of work is going to a) last for decades, b) stay as current as it is now, or c) viably contribute to society. So can someone explain to me why this particular argument is so compelling as to justify the use of billions of tax dollars?

Laurie said...

Key word here is BILLIONS, dear daughter-in-law. I'm not sure if there are banks that would actually loan billions to failing companies.

Also, the banks are not doing too well themselves lately.

See you soon!

Christine said...

OK, that only solidifies my argument. Sure, maybe there isn't one bank big enough to loan that much. But we just saw with Republic Window Co. (in Chicago) that more than one bank can join together to put up a lot of money. So if this bridge loan/bail out is a good enough thing that the government should take it on, then why aren't multiple banks jumping on board to take on the failing company? Another key word: "failing." If they are truly failing, then it's not a good thing. Not for my tax money, at least.