What to Do About the American Auto Industry
I’m of two minds . . .
Very bad news for November: highest unemployment rate, 533,000 jobs. One in ten homeowners are behind in their mortgages by at least one month. And by the way, the country is officially in a recession, has been for at least a year. Woo hoo. Glad to know that it’s official. I never would have known if someone in charge hadn’t told me. Thanks.
Corey and I were talking, and we realized that this is the first time that we have officially been in a recession. I mean, in the last one, we were both employed, so while we felt its effects peripherally, as in higher prices, we didn’t feel its effects directly, as in unemployment and higher prices and late mortgage payments. Have to tell you, I like it much better the other way. When you are just hearing about this stuff on the radio on your way to work, you can empathize. When you pay more at the pump and at the grocery store, you can bitch and moan, but you still have that paycheck, and it doesn’t really occur to you just how bad it can be on the opposite side.
Well, now we’re on the opposite side, and I have to tell you that every time I read a new article about the recession and Congress and the bailout and their plans for helping main street, I start to do a slow boil. I mean, I’m sitting here on main street, and so far, that $700 billion hasn’t found its way to my door yet. And what’s worse, they aren’t even sure where some of it went.
Excuse me? You lost track of some of the $700 billion bailout money, Mr. Paulson? How does one do that exactly? Is the money located in some ultra secret location that you forgot to close the door to, and someone just came in and took out a few billion? Did you just happen to leave a million or two on the table and go to lunch? I mean really, how do you lose track of a few hundred billion? BILLION?
And then when the Big Three auto makers come asking for some help, you treat them like proverbial ca ca, like something you stepped on and can’t quite identify and send them off with their tails between their collective legs. Granted, their method of arriving was a bit ostentatious: The private jets didn’t quite jibe with the hats in hands. However, a bailout of the Big Three seems a bit more reasonable and practical than the bailout of Wall Street. And I have to wonder about the very different way in which the two requests were treated.
In the first case, we had flashy suits asking for money with no strings attached; AIG execs took spa days after receiving a bailout; many of said execs are still going to receive their bonuses, bonuses that are far beyond anything the average UAW earns in one year, and there has been little to no oversight of that big $700 billion price tag. No one is sure yet what the money from the first bailout is going to be used for or how or when, which leaves me just a teensy bit concerned.
In the second case, when the Big Three came calling, they were treated like Oliver Twist asking for another bowl of gruel: “Please sir, may I have some more.” They were told to go away and come back with a game plan, a revised strategy on exactly how they would use the money they were requesting, how it would help to save the auto industry from going under, how they would compete with the foreign market.
Why the discrepancy? After all, if the auto industry goes down, America loses the ability to manufacture on a big scale, and then there is that small consequence of three million jobs lost, that’s million. After November’s jobless numbers, can we really afford to have that many more people out of work? And while the UAW certainly isn’t blameless in this mess, neither is it completely to blame. Auto workers do not make as much as the suits on Wall Street. When they do, then you can start to complain to me about auto workers’ salaries. Sure, there are problems with unions, always have been, always will be. Does it make sense that a pallet will sit unloaded while a union worker sits nearby doing nothing because it’s not his/her job to unload it? No. Should things be better? Yes. Is this whole mess because of the UAW. Absolutely not.
Granted, there is a lot wrong with the American auto industry. Let’s put mismanagement right up there at the top. How about lack of foresight in there somewhere? Designs are not keeping pace with foreign auto makers as far as producing cars that are more fuel efficient. We are behind in electric and hybrid designs. Drive train design hasn’t kept pace, nor have basic things like what kinds of warranties American care companies offer in comparison to their foreign competitors. And then just small things, for example, compare the ergonomics of a Toyota with a Ford; there is a noticeable difference. Unfortunate but true.
President-elect Obama is taking office on the promise to reduce our dependence on foreign oil. He has named this as a priority in his administration. Until the big three can begin to make cars that can live up to that promise, do we have an obligation to help them restructure or should we let them fall? This is one of those rare times in which I am actually truly torn. Part of me is sick to death of bailouts. After all, the bottom line is that the bottom line belongs to us, the taxpayers, and I don’t know about you, but my checkbook is way past being able to support any more bailing out of anyone other than myself.
On the other hand, part of me feels that if we bail out anyone, it should be the American auto industry, that they should have gotten a piece of the pie well before AIG or some of the other greedy bastards who received bailout money without any preconditions. After all, people who work in the auto industry, for the most part, are not millionaires (I’m ignoring the upper echelon who deserved the spanking that they received for flying in on private jets).
On the other hand, this is a free economy system. Those who cannot make the grade should be allowed to fall, which is why we shouldn’t have bailed out some of those banks in the first place. If Chrysler falls, and it probably will even with a bailout, then we should let it. Lee Iacocca was able to turn it around a few decades ago, but I don’t think that an Iacocca is in Chrysler’s future this time, and since it didn’t learn its lesson after the first time, it deserves to go down. As to the other two, maybe they should file for bankruptcy, restructure, start all over, renegotiate with the UAW so that American union workers are more like their foreign counterparts: the wages and benefits are essentially the same; the big difference is in how the jobs are handled. With the foreign unions, jobs aren’t pigeon-holed.
Of course, one of the things that a lot of people keep forgetting to mention is the trickle down effect of the failure of this industry: how many smaller industries will fail, and subsequently American workers will lose their jobs as a result of the Big Three going under? There is no easy answer to this one. It is a “riddle wrapped in a mystery inside an enigma” (Winston Churchill).
For once, I think that I am actually at a loss for words. Hmm. A liberal Democrat who doesn’t know what to say? Mark it on your calendars people because this doesn’t happen often. There will, of course, be more later. Peace.