A few heartfelt pleas from native Michiganders who don't want to see their state destroyed. Several emails and comments complaining that I'm a heartless, effete New York type who doesn't understand that if the Big Three go down, some darn fine folks and a beautiful way of life will be destroyed.
I am a New York type. Heartless, you have to judge. But I actually have a pretty deep connection to the Rust Belt, because my mother's from deep in the heart of it.
Not the part you've ever heard much about, though. Michigan and Ohio get a lot of attention from journalists looking to write stories about the sad decline of our nation's industrial stock--Michigan, because the auto industry is so central to the 20th century American mythos, and Ohio because those people often decide who our next president is going to be.
My mother grew up in the Other Rust Belt--the one journalists have no reason to go to. In a farm town nestled between Syracuse and Rochester, her father's gas station nuzzled right up on the mighty, mighty Erie Canal. It was one of those small-town childhoods that was probably much more annoying than it sounds, but it sounds idyllic. The town was so small, clean, and safe that when she was still in single digits my grandfather used to give her the week's take, in cash--maybe $10,000--and have her carry it four blocks down the street to the bank. 
Newark, NY is just about midway between the two cities, a forty five minute drive to either. Back then, both were the kind of small cities that towns hoped to be when they grew up: prosperous, bustling, content. Indeed, Rochester was so self-satisfied that author Curt Gerling dubbed his 1957 book about the city "Smugtown USA".
The Kodak Building, Rochester, Courtesy of Flickr user sailorbill
Just as the auto industry made (and broke) Detroit, Rochester was the creation of Eastman Kodak. Kodak bonus day was like Christmas without the tree: celebratory dinners at the local restaurants, shopping trips at the Midtown Plaza, which locals claim as America's first enclosed mall.
Then in the 1970s, it all began to change. Smaller companies filed antitrust suits. Fuji and Polaroid nibbled away at their film business. In 1997, Fuji started a price war from which Kodak's stock price has never fully recovered. And the advent of digital cameras has been devastating. Kodak has made up some of the lost ground by making cameras, but this is a fiercely competitive business much difference from the old core business of selling the cameras cheap and the film dear. At its peak, Kodak employed 60,000 people in a city of perhaps 300,000. Now the city's population has dropped to 210,000--but Kodak employment has fallen to less than 15,000.
Syracuse is slightly more fortunate, because it wasn't so heavily dependent on one firm. Nonetheless, its population now stands at less than 140,000, down from 220,000 in the 1950s. And the story is replicated in almost any town you can name in upstate New York. Utica. Elmira. Buffalo. Troy. These were major industrial towns, once. Now they are slowly collapsing in on themselves, surrounded by the discarded shells of once prosperous factories.
There are any number of candidates to blame. Cold weather. The Saint Lawrence Seaway, which destroyed the Erie Canal as a viable economic channel. New York's business-unfriendly environment, which has gotten worse and worse as power has shifted towards New York City and the financial industry which is not much affected by the various work rules its employees like to vote for.
But it doesn't matter. These vital towns, where generations of people lived happy lives and raised fat, burbling babies to a middle-class adulthood, are all dying. Should the government save these places too? Shall we support Eastman Kodak indefinitely, whether or not it can produce a product anyone wants to buy? And Xerox, and Carrier, and a thousand companies you've never heard of? Shall we make it illegal to make a better product than American corporations? Why not just ban new products that make old ones unprofitable?
To do that, we'll have to take the money from other people, in other cities. Other businesses will not get the capital that we give to dying firms, so they won't expand. Some other families, not yours, will lose their homes because their business failed, or have to move away from home in order to get jobs because their area is in the doldrums. Meanwhile, everyone in the country will be slightly worse off, because we've shifted limited economic resources towards products they demonstrably do not want.
I love western New York, which may be the most beautiful place on earth. I love the old cities, the Victorian shells that whisper of much happier days, and the broad, rolling hills, and the broad flat accents of the people who live on them. I love waterfalls softly falling downtown and the Buffalo City Hall. I love the place as you can only love somewhere that your family has been living for 200 years. I would save it if I could.
But I can't save it. Pouring government money in has been tried . . . and tried, and tried, and tried. It props up the local construction business, or some company, for a few more years, and then slowly drains away. Western New York has been the lucky recipient of largesse from a generous federal government, a flush state government, and not a few self-made men with happy memories of a childhood there. And still, it dies.
Moreover, it wouldn't be right to save it by destroying someone else's business, killing someone else's town. That's the choice we are facing. At its heart, economics is not about money; it is about resources. Every dollar sent to Detroit buys a yard of steel, a reel of copper wire, an hour of labor that now cannot be consumed by a business that actually produces a profitable, desireable product. It's not right to strangle those businesses in order to steal some air for the dying giants of an earlier day.
And while a financial intervention at least holds out the possibility of creating value for all of us, a bailout of Detroit is definitionally guaranteed to destroy value for the rest of us. Yes, the Big Three and their suppliers will be better off. But we will have taken a limited store of resources and spent them on something that the rest of us value less than the alternative uses for steel, copper, manpower, credit, and so forth.
I grew up in New York; you could say that our local industry is Wall Street. Certainly, without Wall Street (and its tax base), New York would be a much less prosperous town, more likely decaying than growing. Should America give Wall Street cash because some of my family lives there, because my friends work there, and because I love the vibrant city of my childhood? Or perhaps because the industry's tax dollars prop up the failing cities of western New York? No, no--a thousand times, no. America should give Wall Street money if it makes the country as a whole better off. Maybe the bailout doesn't. But that was the only argument in favor of it that I, for one, would accept.
I'm going to make a bold claim here: the people crying about Michigan being destroyed if GM collapses don't know what they're talking about. Michigan was already destroyed by GM when GM decided to outsource almost all of its factories to other countries. Just take a trip to Detroit or Flynt and you can see it with your own eyes.
As someone who's family has been in the steel business for generation after generation and a native of the Rust Belt - let it fail. It serves those bastards at GM right.
absolutely correct, we need to pass Megan's law that forbids better products being developed. That would fix everything.
Or everyone in those sad towns could just move to Ithaca. We love it here.
The rust belt could save itself. Kill off unions and the rediculous tax and spend regulatory governments they keep electing. Fifty years ago Detroit was the greatest industrial city on earth. Now it is a rotting shell. It is no secret how it got where it is. Big government, rapacious unions and high taxes destroy anything they touch. If the upper mid-west and western New York, cut off the public employees unions, set competetive tax and regulation rates, and became right to work states, they could come back in a heart beat. But they refuse to that. So instead we will bail them out and try out their approach accross the entire country.
As a WNY native, I love this post...its so fucking sad. Lately I've begun to think that the only way it gets better is by a secession from NYS. The taxes and the regulations are crippling
Welcome to the new world where the only requirement any firm will have to meet to justify a bailout is: How badly can we make you fear our demise?
"If we go out, we take not only our employees, but the employees of hundreds of contractors - And the employees of their sub-contractors...and so on, and so on, and so on..."
Their bet is that eventually, they'll hit someone you care about and then you'll go all in supporting their cause.
Watch as the trough will soon be overrun with swine desperate for their fair share of the slop.
Bailouts are never good for the economy as a whole - they're only good for whomever they're bailing out. They all divert money that could have (and should have) been used elsewhere to prop up a failing venture that *should* be allowed to fail.
But, don't you understand? The American auto manufacturers are the backbone of American manufacturing!
What I find interesting here is just how hard it is to handle the issue of dislocations caused by failing firms. When an entire region's economy just withers away then it is no longer the case that one merely need insert money to bridge people from one career to the next (which I often see as a legitimate use of bailout money -- things like unemployment insurance, for example).
But when the entire economy is crumbling then options are limited . . .
We could start by making the term "Rust Belt" unacceptable.
It is such a pejorative and used so freely. It is a beautiful area that does not deserve to have people use that for its nickname.
As a resident of the Rochester area, much of what you say is true. However, it is a great place to live despite the winters,and we are slowly adjusting to Kodak's shrinkage. And for what its worth, Kodak was never unionized. What did them in can now be seen at nearly any gathering or tourist destination with people snapping photos with their phones.
You missed talking about Rochester's Xerox, which is another object lesson of the rise and fall of industries. Or Syracuse's Carrier, which moved south. The bottom line is you need a critical mass of impact for appeals for government aid to gain traction. The farmers have it, car makers may have it, but the Kodaks, Xeroxes, and Carriers of the country don't.
Whoo boy! He's not even in office yet and the dems have already started. A "car czar"? what's next, a toaster czar?
Why not name a prominent government expert for every industry, good or bad. That way, the feds can get ahead of the curve and provide upfront guidance to industry so they can avoid the problems caused but the now discredited free market.
One side bonus is maybe if I make enough political contributions, I can get the 3-slice toaster that I have been craving for 40 years.
At its peak, Kodak employed 60,000 people ...
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You are not even close to the range in which I suspect you would like to extrapolate this example ...
The digital innovations were one thing, but do you sincerely believe that the fuji price-war occurred on a level playing field?
When you say "let them fail" you and your ilk fail to see the National Security implications of this.
2.5 million men and women jobless within a short period of time - with no money to feed their children, losing their homes and with no future income in sight. Are these people going to stand quietly and starve? Do you think they are going to be listening to Obama or Pelosi at that point? Or are they going to turn to people that are a bit more militant in their rhetoric?
But you can call me crazy - that will never happen here....we're Americans!
Only the idiot few saw the Wall Street bailout for what it was, socialism for the connected. "Absolutely necessary" we were assured, over and over again, for the survival of civilization. And so in the space of a month or two, the financial industry gets $3 trillion dollars, one from Congress and two from the Fed. And now, we will here it over and over again, that it is "absolutely necessary, completely unavoidable, regrettable, but unavoidable" that we bail out this or that rich Wall Street connected Democratic insider or union member Democratic insider. Seriously, what did you think was going to happen? Enjoy your new country morons.
One of the irritating features of discussions regarding this topic is how often protectionists describe the Chrysler bailout of nearly thirty years ago as being a "success", because the money was paid back with interest. The reality is that Chryler's failure was the best way to spur GM and Ford to fundamentally change their business model, and for the UAW's remaining membership to understand why the existing relationship with management was not viable in the long term.
Thanks for this post. As a native of Buffalo, I know exactly where you are coming from, and could not agree more. Industries have to save themselves, we can't do it for them.
If WNY is to recover, we have to do it by growing industry we can hold onto, biomed, engineering, tourism, etc.
Besides, if GM and Ford will just suck it up and go into Chap 11, they could restructure in a way that will allow them to become profitable. And if they can't, as you state, we're just prolonging the agony.
Michael, perhaps you missed the part where Meghan said it would be better to simply give the bail-out money to the employees who lost their jobs?
Wonderful post. I'm from central NY myself, and I try to get back once a year. Couldn't conceive of living there, though; the taxes are crushing. My sister looked at a house in our home town last year. Half the size of my house in Indiana, and the property taxes were 2 1/2 times what I pay. Add income and sales taxes and you have a major burden. And the people wonder why all the companies went South or overseas.
Toyota, Honda and Nissan make cars in the US, somehow without help from the government or the UAW. In spite of this disadvantage they are profitable and make cars with better resale value.
So if GM, Ford and Chrysler disappear from the face of the earth, if the their factories are torn down and sold for scrap, if the parking lots are plowed under and sown with seeds to produce bio-fuels and the auto workers become gardeners, even if this happened, there would still be an auto industry in the United States and the bio-fuels they need to run them.
Great post. I know all about the effects of the decline of heavy industry: family is from Erie, PA; born in Detroit; raised and currently living in Pittsburgh. And it's never as bad as it seems.
While the Big 3 would almost certainly continue to make cars even in bankruptcy, here in Pittsburgh there is literally nothing left of the factories that built the place. US Steel, Heinz, and Alcoa have front offices here, but the giant mills have been dead since the early 1980s. And yet there are (slightly) more people living in the area now than there were when steel was at its peak, and the city has been ranked in the top-20 best places to live every year for two decades. And the Economist thinks things will only get better.
I don't want to minimize the pain and dislocation that ensues when an economic mainstay collapses; certainly the 1980s sucked here in Pittsburgh. My point is just that things in Detroit won't be as awful as they are being made out to be.
Will Allen -
No - I didn't miss it.
That's not what the employees want. They don't want a handout - they want a job.
Anyone who proposes a handout directly to the auto-workers doesn't undertand them or their needs.
Labor is not just a commodity. You can't just thow money at it. Stop treating it such distain. Labor has a human face. And human needs.
Good post by Megan.
To Joe Magarac
Detroit won't be much more terrible then it is.
Great post. My only disagreement is with this sort of sentiment:
"I love the old cities, the Victorian shells that whisper of much happier days..."
If people were happier in the "good old days," it has nothing to do with their circumstances and everything to do with their outlook on life, their life choices, etc.
O.K., Michael, then you were merely lying, when you spoke of people with starving children. People with several hundred thousand dollar checks from the U.S. Treasuury have money with which to feed their children. Hell, nobody in the U.S. starves. People with large sums of money can relocate to find better labor markets, and learn new skills.
Why do you find it useful to be so obviously dishonest?
Some of the troubles of this industry mirror the larger features of our political economic culture; the tendency to believe that the primary purpose of young people without much wealth is to trensfer their income to old, retired, people who are, on a median basis, much wealthier. How many UAW retirees or retired auto industry executives have left the depressed real estate values of Michigan, Ohio, etc., and are now living elsewhere, mortgage free in higher valued housing , with nontrivial savings, while drawing substantial pension benefits, and also receiving Social Security and Medicare benefits paid for, in good part, by income tranfers from young people with essentially minimal net worth and modest incomes?
An economy which transfers large amounts of income from people who are just starting their economic productivity, to people who are not producing anything, without regard to the non-productive people's ability to care for themsleves, is an economy eventually destined for crisis.
Will Allen -
"Hell, nobody in the U.S. starves."
Maybe not in your ivory tower...but that sentence above really does point out your ignorance. How can I argue reasonably with someone who makes such an untrue statement?
I won't call you a liar - as you called me - because for you to tell a lie your would have to know what the "truth" is and then have the intelligence to fabricate a statement that is in direct opposition to the truth.
Your "nobody starves" statement just shows your ignorance and/or stupidity.
Look up the phrase "food insecurity" in Google and get educated and then come back and argue with me.
"When an entire region's economy just withers away then it is no longer the case that one merely need insert money to bridge people from one career to the next"
This brings up the question of why other businesses don't locate there, to take advantage of the suddenly available work force, existing infrastructure, cheaper housing, etc. In upstate New York, it was the taxes and regulation coming from NYC that made the location an unattractive option in spite of the low costs of almost everything except governmental burden.
What Michigan really needs is a shake-up in government, to become competitive. There would still be transition costs, but they could build a stronger, more stable future than the one they're planning on - clinging precariously to a dead way of life at great cost to all of us.
Will said "How many UAW retirees or retired auto industry executives have left the depressed real estate values of Michigan, Ohio, etc., and are now living elsewhere, mortgage free in higher valued housing , with nontrivial savings, while drawing substantial pension benefits, and also receiving Social Security and Medicare benefits paid for, in good part, by income tranfers from young people with essentially minimal net worth and modest incomes?"
What fantasy land are you living in? Firstly, you group UAW autoworkers with Auto Industry executives...why? Here's some facts -
1)auto industry executives do not get pensions - they have 401ks. Pensions are for union members.
2)the large majority of UAW retirees live in within 100 miles of where they used to work
3)A retired auto-worker has worked from 20-40 years - all the time paying into Social Security - they aren't being "given" anything.
Is your hate for union members the result of personal expereince?
Originally from Rome, NY, 'the copper city'. At one time the largest copper melter in the world was at Revere Copper & Brass. Revere Manufacturing made pot and pans. Federal Steel made the steel. Pettibone Crane shipped cranes to the whole world. Now the biggest employer in upstate is the prison system. Spend more than a few days there and set a suicide watch. Socialistic policies, strong unions, and short sighted management killed the whole area economically. Let's not do this to the whole country.
Look up the phrase "food insecurity" in Google and get educated and then come back and argue with me.
Food insecurity is a long ways away from starving. In the US we have two categories for food insecurity, and none of them approach starvation levels.
"Reports of reduced quality, variety, or desirability of diet. Little or no indication of reduced food intake"
and "Very Low Food Security"
"Reports of multiple indications of disrupted eating patterns and reduced food intake"
Out of the adults with very low food 24% had missed a day of eating in 3 months. With only 4% of the population in this category, this equates to less than 1% of the US adult population missed a day of eating in the last 3 months. When you use a word like "starving" that means more that people are dying from lack of food which isn't happening in the US.
JordanT:
"Missing a meal" is not starving. Starving people can eat every day and still die of starvation. If I eat steak every day - and nothing else - I will eventually die of starvation - even with a full stomach. It's called biology - look it up.
Are people this dense? Do I even have to go into cheap foods that are unheralthy and add to the health care burden of lower income Americans? The billions of dollars in health care costs all because the Dollar Value Menu is more a more economical choice than salmon or chicken breast?
People "are" starving in this country. Clinical, medical starvation...not missing simply missing meals.
Over in Britain, we had a large home-grown car industry that was on government life support for decades. In the end, there was no way to stop it dying. More, and much better cars are made in Britain now. Companies from other countries realised that Britain could be a good place to make cars. They are mostly made in other towns; just as car makers from other countries setting up in the USA have chosen fresh locations.
Three things should be remebered about the car industry's decline and "death" in Britain:
1. It didn't die. It moved.
2. Trying to keep it from dying led to a lot of existing car workers and not a few new entrants wasting much of their working lives amidst decline. That was not good for them.
3. Trying to keep it from dying wasted a lot of government money and political attention that could have been spent (or the money left in the taxpayers' pockets) with real benefit to Britain.
Fear not, Michiganders. There's enough Great Lake State representation on Obama's Economic Transition Team that, soon, the rest of the country will be sharing your wealth.....er, pain, before you know it........misery loves company, right?
Starving for lack of logic, too.
Having lives in Ontario for a few years, I know how dependent that region of Canada is on GM. How big are those operations compared to the US? I know they already either closed or announced the closing of some of their Canadian operations. If fear their presence there might be big enough that a significant chunk of any US taxpayer bailout of GM might end up helping Canada keep their manufacturing industry alive, not ours.
GM long ago abandoned the Flint, Michigans of the world. I fear that much of what we could "saved" now are places like Oshawa. And I'm sorry but I definitely don't want to see US taxpayers money being spent to protect the jobs of the Canadian Auto Workers union.
"They don't want a handout - they want a job. Anyone who proposes a handout directly to the auto-workers doesn't undertand them or their needs. Labor is not just a commodity. You can't just thow money at it."
Are you saying that they want a genuine job in which they contribute, giving full value in return for their pay? Then the bailout is a bad idea, and we should let the companies fail.
What we're debating here is whether to A) let these badly managed companies fail, while giving honest, open transition payments (one time handouts) to the workers, to help them get to the point where they can find productive jobs that they can be proud of; or B) continue supporting these companies without forcing massive changes, so that the workers will get an ongoing stream of back-door handouts, delaying the time that they find more productive jobs.
Are you saying that these workers want to genuinely pull their own weight, or that they want their handouts to be disguised so that they can pretend to be earning all that they get?
Unlike labor era Britian, American car companies still produce cars people want. Because of their obligations under the union contracts, they just can't produce them at a price the market will bear. The answer to this is Chapter 11 reorganization. Let the companies out of the contracts, reorganize and go back to making cars. But that would be bad for unions and bad for exectutives. So it won't happen.
Why don't we bail them out in the form of massive tariffs on foreign automobiles? I find temporary protectionism preferable to the other alternatives.
Ann-
Your A and B are a Hobson's choice. We need to put a bunch of smart people in a room and lock the door until they figure this thing out.
And please stop with the "Are you saying that these workers want to genuinely pull their own weight...pretend to be earning all they get" crap. OF COURSE THEY WANT TO PULL THEIR OWN WEIGHT. The fact that you even have to ASK that question belies your anti-union bias.
If you work in an non-union job and have a 40 hour work week, healthcare, a 401k and paid vacation, go ahead and thank unions for them. Because without collective bargining you would have never got any of them.
I've heard a couple of times now, in passing, that Chapter 11 is simply not viable for GM. But I've not heard why that might be the case. Anyone care to comment?
Obviously, it makes quite a difference in any decision to bail out GM if the alternative is Chapter 7 liquidation rather than Chapter 11 restructuring.
It is somewhat intriguing that the name of Wilbur Ross has not yet surfaced in the discussion of the auto industry. His efforts in putting ISG together out of the bankrupt components of the open hearth steel industry resulted in the creation of a successful and competitive steel company, which he was then able to sell to the Mittals.And his efforts at working out new deals with the Steelworkers allowed Us Steel to improve its labor productivity and to reduce the number of labor hours per ton of production. And all of this was done within the provisions of the Bankruptcy Code and with minimal governmental financial support beyond the pension bailout ( which is supposed to be funded by risk-related pension insurance premiums, but that's another story).
The open hearth steel industry faced the same circumstances as the auto industry, with new competition from the electric arc producers,largely non union, on cost,productivity, and product innovation. What had been a low value product producer suddenly became a major competitor,without the high legacy costs of the open hearth producers. Bankruptcy focused attention on the issues and allowed Wilbur Ross to come in and reorganize the industry and become competitive.
There is no question that both communities and the workforce suffered losses, but the end of the steel industry was stopped. The United States steel industry is now dominated by two effective producers that can and do compete worldwide.
The Big Three have only themselves to blame. They have never produced a worldwide competitive car ,largely because they used their lobbying power to protect themselves from the worldwide forces. Had the auto industry used its lobbying power to keep the total cost of gasoline at European and Japanese levels it would have been able to produce a vehicle that was competitive in the world. I have often wondered why the auto industry never learned from the sugar industry.
It is time to bring in Wilbur Ross and his team and send the companies to bankruptcy court. And give any money that is need to Mr. Ross and not to the existing management.Bankruptcy will be painful,but there really isn't any other choice. It will force new industry productivity standards and dump the legacy costs. It might also be useful to now raise that gas cost to European levels,just to put a floor under the industry's efforts.
Michael you are either so ill-informed or dishonest that you have asserted that the term "food insecurity" is synonymous with "starvation". They are not. Inform yourself, or stop lying.
Furthermore, there are executives from the auto industry who draw executive pensions, as googling " auto industry executive pensions" would demonstrate. Inform yourself, or stop lying.
Also, there are huge numbers of UAW retirees. Even if a large majority still have homes within 100 miles of where they worked, that still leaves a large number who don't, even ignoring those in the large majority who have second homes. I know they exist, because I've had many for clients.
Yes, retirees spent 20-40 years electing politicians who took their FICA taxes, and spent a substantial part of those tax revenues on such wonders as ethanol subsidies, porkbarrel defense programs, etc., etc.. The retirees now are saying to young people "Look, we're not responsible for electing, and then failing to supervise, the criminals who work in the building near the Potomac River with the big dome! Give us your wages without regard to our ability to take care of ourselves!"
Lastly, I don't hate unions or their members. I think Southwest Airlines is a paragon of intelligent management and an intelligent union, working in conjunction, to further each group's interests. That's why I have at times owned their shares. I really, really, really, really, hate idiotic, imbecilic, and incompetent unions and management groups. That description fits the U.S. auto industry perfectly.
Anyone who proposes a handout directly to the auto-workers doesn't undertand them or their needs.
Without denying that it sucks to be employed in a failing industry and that losing your job is traumatic, without some tangible and dramatic restructuring I don't understand how throwing money at the Big 3 can do anything but postpone the inevitable.
Which doesn't mean nothing should be done to ease the economic dislocation that is sure to result, just that trying to prop up the Big 3 is ultimately a losing proposition. One way or another, those UAW jobs are going to go away. What do you propose should be done to help?
"If you work in an non-union job and have a 40 hour work week, healthcare, a 401k and paid vacation, go ahead and thank unions for them. Because without collective bargining you would have never got any of them. "
What a steeming pile of crap that is. Unions had nothing to do with any of that. Increased productivity and competition for labor is what drove that. What unions did do, is secure above market wages for their members at the expense of non-union workers. That is why 100% unionization destroys the economy. The economy can only support so many people making above the market. When it gets high enough, either union benefits have to be reduced or the entire economy tanks under the weight of it.
It looks as if an auto bailout is inevitable now. It will be money down a rat hole. I'm afraid some kind of thinly veiled protectionism is coming as well. It will take protectionist policies to successfully prop up the zombie automakers.
Staash,
Because many "foreign" autos are manufactured right here in the United States: Honda has plants in Ohio, BMW in South Carolina, Merceedes in Alabama, etc.
Michael Garrity: "Look up the phrase "food insecurity" in Google and get educated and then come back and argue with me."
Done. Some numbers:
4% of America actually reduced food intake (not variety) due to money reasons (0.5% of children).
1.4% actually went an entire day without eating due to lack of funds (0.1% of children).
About 70% of these people are overweight and 45% are obese. Virtually none are underweight, and virtually none suffer from "hunger" (discomfort, illness, weakness or pain caused by involuntary lack of food).
A good summary, with all numbers taken from the USDA:
http://www.heritage.org/research/welfare/wm1701.cfm
40 hour work week, healthcare, a 401k and paid vacation
Personally, I'd rather be able to decide how much to work (value of cash vs. leisure time), what medical help to pay for (in a competitive market as opposed to current oligopoly) and what investment vehicles to use for retirement savings (without the heavy hand of the IRS directing my choice towards rather opaque mutuals). By Lenin's definition the labor unions are a school of Communism -- and that guy just might have known what he was talking about.
Will Allen -
Blah blah blah. Call me a liar all you want. Say you don't hate unions or their members...the bile in your posts is unmistakable. Blame the retirees, blame the working man.
What a tired old story.
BTW - how are these UAW members your "clients"? Do you mean to say you've PROFITED (GASP!) from these greedy UAW members getting all those crazy wages and benefits they don't deserve? How far is your nose in the Union trough? Do you have a summer home paid for by income from got from charging UAW members for a product or service? Geez - one would think they would be lucky to afford you - thank goodness for collective barganing and the inflated UAW wages that destroyed the auto industry.
Perhaps your arguments would hold more weight if your philosophical beliefs about unions were strong enough to force you NOT to take on UAW members as your "clients", hmm?
NewsFlash - you don't live in a vacuum.
Michael, also stop with the lie that there are non-mentally ill adults who cannot buy enough of the healthy calories needed to maintain their wellbeing. It is untrue. A person in front of me, at a grocery store located about 1 mile from the most economically depressed neighborhood in a major northern city last week, purchased beans, frozen broccoli, and raw, frozen, chicken last week with food stamps. If an non-mentally ill adult can't get enough healthy calories, it is due to choice. I have little solution to the tragic circumstance of children with horrible parents. Of course, no person has a good solution to such a tragic problem, either.
In any case, none of this applies to people who have received large checks from the Treasury. You are lying when you state or imply that people who do would be threatened with starvation. If you read Meghan's post, then you are lying. Stop it.
No, Michael, I blamed the executives as well. Stop lying.
John -
"What a steeming pile of crap that is. Unions had nothing to do with any of that. Increased productivity and competition for labor is what drove that. What unions did do, is secure above market wages for their members at the expense of non-union workers."
Competition for labor? Do you know ANYTHING about the industrial revolution and the history of labor in the US?
Davis-Bacon Act....Walsh-Healey Act..Fair Labor Standards Act...Equal Pay Act...any of these ring a bell?
It's like arguing with a wall. A stupid wall.
Michael Garrity is a troll.
Megan, you are one cold-hearted d-bag.
I lived in Western New York for 2 1/2 years in the mid-90s and it was one depressing -- and depressed -- place. And your answer is to wash your hands and shrug? Now THAT'S the conservative thinking we've come to love and expect the past eight yeares. "My mom's old town and the entire surrounding region have imploded but, hey, watcha gonna do?"
The answer is easy, of course: Attend an Ivy League university, get at MBA from UChicago and stumble into a new technology that rewards highly-educated individuals who could be living anywhere.
Reading Andrew Sullivan religiously the past few years has definitely made me more conservative in my economic thinking. Then I read amoral ***holes like you and I'm all for government intervention.
One more thing: The government still pours money into Western New York in the form of prisons. Attica. Auburn. Elmira. Otisville. How's about we de-fund your jails in exchange for cutting the cord on the Rust Belt?
Well, via Kaus, here's a partial answer to the question I asked above:
http://www.businessweek.com/magazine/content/05_50/b3963114.htm
Basically, the argument is that Chapter 11 would seriously damage consumer confidence in the brand, as well as push a number of suppliers into chapter 11 as well.
Beyond that, here's a very interesting piece of data from that article:
"...cutting prices further could just exacerbate GM's already severe revenue problems. Its per-vehicle revenue of $21,000 is $3,500 less than rival Toyota's."
That's a pretty strong indicator that much of GM's problem is, indeed, an unattractive product mix. However real the "union penalty" is, no amount of contract renegotiation is going to give GM a $3500 per vehicle cost advantage to offset their revenue disadvantage.
Davis-Bacon Act? My God you are stupid. That was a Jim Crow era law designed to ensure that black workers in the South were not allowed to compete with white union workers. It is literally the last vestage of Jim Crow left on the books. Even union people are embarassed by it. Do us all a favor and know a little something about history before you start shooting your mouth off and accusing people of being stupid.
Adam01 writes:
"Honda has plants in Ohio, BMW in South Carolina, Merceedes in Alabama, etc."
The primary purpose of those plants is political, as it's considerably cheaper to produce the cars overseas. Without a viable American alternative, the foreign manufacturers have little incentive to keep the plants open, and they'll begin to compete on price instead.
From Tom Piatak at Takimag:
"Nor is the Japanese investment in the US at all comparable to the Big Three’s, even setting aside the nearly million retired Americans who depend on the Big Three for their retirement benefits and health care. General Motors alone employs more Americans than all the foreign automakers put together, and Ford runs nearly as many assembly lines in the United States as do Toyota, Honda, Nissan, Hyundai, and VW put together. The Big Three buy 80% of the car parts manufactured in the United States, and their cars average 79% domestic content, compared to 35% domestic content for foreign cars sold here. And the Big Three employ the vast bulk of their engineers, designers, and managers in the United States, unlike their foreign competitors, which keep most such work in Japan or Germany, which is also where the profits they make from selling cars here wind up. In fact, the Big Three spend more each year in America on R & D than does the pharmaceutical industry, employing 65,000 skilled workers on research and development in Michigan alone. "
Temporary tariffs keep sounding better to me, even though I proposed it mostly to troll the free traders commenting here.
The Davis-Bacon Act essentially prevents a contractor on a federally funded construction project from bringing in labor that is cheaper than labor that is available locally, right? I'm sure that it's true that some have seen this as a way of protecting local labor from the competition of cheaper black workers from the South. On the other hand, in the context of the Great Depression, it seems to me unsurprising that legislation was passed to encourage contractors on federal projects to hire local labor. Maybe there is a clear Jim Crow connection -- I would actually be interested to know.
John -
Sorry Charlie - that dog won't hunt: Opponents to the Davis-Bacon Act have claimed that there was racist intent to the law, but critics have countered that this is a red herring, stating that it was a sincere attempt to make amends for local workers and flatly dismiss the conservative claim that it has Jim Crow origins.
Translation: More BS from anti-union forces. I urge everyone to google Davis Bacon Act and read it for yourselves. Don't take my word for it.
"but critics have countered that this is a red herring, stating that it was a sincere attempt to make amends for local workers and flatly dismiss the conservative claim that it has Jim Crow origins."
That is just saying "because I said so". The reality is that when you demand a "prevailing wage" you price out immigrants and blacks and other non-union workers. That was exactly what the act was designed to do.
Unions have absolutely destroyed any industry they have touched. Name one unionized industry that is competetive? The big three can't make a dollar yet non union foreign car makers build plants and do just fine.
Go read the history of the US auto industry some time. Why do we have the Big 3? What happened to the other companies like Pakcard and DeSoto? What happened to them is the UAW would never give any wage concessions to any company no matter how bad things were. That killed off all but the Big 3 auto makers. It also killed of competition and kept the US auto industry from evolving the way the Japanese and Europeans did. Why did an American like John Deming go to Japan and watch them adopt his quality control methods rahter than Detroit? Because Detroit couldn't adopt those methods because of the UAW. The UAW and the rest of big labor has done nothing for this country beyond rip off the consumer and kill one industry after another.
Michael Garrityl,
Some day you will grow up and realize that businesses don't print their own money. All those wonderful union benefits people got had to come from somewhere. Further, all of the deadbeat employees who were kept on the roles because they union made it impossible to fire anyone, work had to be done by someone. Yeah, all the UAW workers from the 60s and 70s got paid above market wages and generous retirements. Better wages and retirements than the non-union workers got. The difference is that the non-union businesses are still in business and not asking for a hand out to stay alive. Eventually the parasite will kill the host. But what the hell, they got theirs, what they care about the country or the future or the company they worked for. Just take it all and when it is gone, take it from the tax payer.
Libertarians/Republican/whatever-you-people-are have consistently opposed a national health care system - like other industrialized car producing countries have - and this has helped destroy our domestic manufacturing base. Change your mind?
Also, now that our economy is on the verge of implosion, can we leave Iraq? Surely the argument that "we can't just leave" no longer holds, since "we can't just nationalize our banking sector, stuff money into badly run money markets and at the same time let GM fail" is out the window.
Finally, if Republicans stand in the way of bailing out GM, they'll be in the minority for a generation. Americans (the non-Ivy league, MBA variety) tend to remember little things like destroying the economies of Michigan, Ohio, Indiana and Wisconsin - for a long, long time.
John -
"That is just saying "because I said so".
Um, no. I actually said: "I urge everyone to google Davis Bacon Act and read it for yourselves. Don't take my word for it."
Your anti-union bile must be clouding your vision. Take two .50 cent an hour jobs in Sri Lanka and call me in the morning. It should clear up by then.
John, are you aware that the foreign automakers who are cleaning the Big 3's clock are themselves unionized, always in their home countries and often here as well?
I am no lover of unions. But you cannot accurately blame the decline of American industry solely on them.
Thanks for the excellent article, Megan. (And the commentary Will Allen.)
At the end of the day, the largest influence on workers wages is economic efficiency. Without increases in efficiency, increases in wages lead to inflation or the company going out of business. If higher wages via unions make goods more expensive, those costs are either passed on to the consumer, lowering their standard of living, or else the unionized plants are out competed. Outside of safety standards, anyone care to make the argument that unions increase efficiency or quality of goods? If this argument can't be made for the UAW then the organization hurts not helps my quality of life. If unions were able to get all bonuses from reduced CEO pay this might be a different story, but I don't see that happening.
Stories of drug free, hard working Americans starving are simply bs and the numbers have proved it. It's possible to avoid malnutrition at very little cost. Cabbage and rice for instance serve quite well and are readily available. I've gotten by on very little when I was starting out, so I know it's possible. So lets not pretend that this is about starvation or malnutrion in the US.
John - regarding the rest of your post:
Post hoc ergo propter hoc
Thanks for this post, Megan. I lived in many places upstate, but longest outside Utica. In the ten years I lived there, two major factories closed that I know of, and the Rome air force base was downsized. The downtown area was filled with rundown buildings and vacant lots. It's very sad.
Ryan W: "drug free hard working americans"
http://feedingamerica.org/faces-of-hunger/hunger-101.aspx
They have all the numbers you need.
Michael Garrity, you seem to have missed or ignored my post containing the numbers. Here is the link again:
http://www.heritage.org/research/welfare/wm1701.cfm
How do you reconcile the fact that fully 70% of those suffering from "food insecurity" are overweight and 45% are obese?
You can't be fat and starving simultaneously. Just not possible.
Michael, you liar, I've stated exactly zero "philosophical beliefs" about unions. I've stated that the UAW is and has been a stupid one, and that I don't like stupid unions. I've stated
that there are union retirees who are substantially wealthier, before government benefits, than the people who are earning the modest wages which make the government benefits possible. These are facts, not "philosophical beliefs.
Are you capable of writing a single post which does not contain a lie?
They have all the numbers you need.
You trotted out food insecurity statistics that I had thoroughly debunked in an earlier post. Food insecurity is defined as the feeling that you can't always eat balanced meals because you can't afford to. It says nothing about ability to afford to, or whether or not the meals are balanced. It also doesn't say how often you had this feeling Just the feeling that you couldn't at some point in this year. By this measure I was food insecure all through college, but I was no where near starvation.
Very low food security means that at some point in the last year you had to go hungry. 4% of adults fall into this category. Of this 4%, 25% reported missing at least one day of eating in the last 3 months. Even at the most extreme measure of food insecurity collected in the US, it's a far cry from starvation. Even that measure only affects 1% of the population.
I suffer from sex insecurity, where is my government handout?
Ninja Zombie: Heritage Foundation? What's next, Fox News?
JordanT: Nice cherry picking of the USDA report - how about adding this:
7.7 million adults and 3.4 million children lived in households with very low food security.
How many millions is too many?
Will Allen - Are my pants on fire? You never answered the question: HOW MUCH of your income if derived from having UAW members and retirees as clients? If you hate that Union so much, how could you profit from it? You know what they call people who take money from people they hate just to have money, right?
Are you capable of writing a single post which does not contain a lie?
Posted by Will Allen
I dunno - let me try:
Will Allen is a hypocritical douche-bag who profits financially from the very people and organizations he claims to hate. He is part of the problem not part of the solution. If he had an ethical bone in his body he would tell every UAW member or retiree he has had as a client to take back their money.
How's that?
Great Post, Thanks
7.7 million adults and 3.4 million children lived in households with very low food security.
I know that the words sound nasty, but you must look at the definitions. Very low food security is defined as feeling that at least once in the last year you felt like you didn't have enough food. Not that you didn't have enough food and not that you couldn't purchase enough food. How can the poor in this country be obese and starving at the same time?
Michael Garrity: "Heritage Foundation? What's next, Fox News?"
The numbers all come from the USDA. Heritage merely aggregates the data and links to the original sources.
But I suppose that if the facts don't fit your case, attacking the messenger is the way to go...
Michael you just can't avoid lying, can you? I never said I hated the people who belonged to any union. I said I hated that particular union. No,
the two statments are not synonymous, you moronic liar. For instance, one can say, logically and honestly, that one hates the U.S.P.S., because one despises being forced to do business with a government-enabled monopolist, without hating the postal worker who sells you stamps. One can hate the restaurant which sold you food which gave you food poisoning, without hating the cashier. Just how unspeakbly stupid are you, along with being incredibly dishonest?
I sold services to as many as couple of dozen of UAW retirees. I hate their union because it, along with management, did a great deal of economic harm, via sheer stupidity, as we are seeing now. I have no hate for individual members of the union; it wasn't as if they had any option to avoid union membership, if they were to take the job which paid the best, and I don't hate people for taking the job which benefits them most, as long as it is a legal activity.
When I sold them the services I had to offer, they gave me money which was legally theirs, and my service, in their judgement, served them best. If they had not given me their money, there would have been a net increase in economic harm, because they then would have purchased an inferior form of the service.
Along with being dishonest, you really are quite ignorant in regards to the meaning of words, and the employmnet of logic, aren't you?
trolls like mike have to be masochists. oh, i know he think's he fighting the good fight, but there's no way he'd keep engaging if on some level being the lone voice speaking truth to power wasn't exactly what he was looking for, effectively a source of pleasure.
dj, I really dislike the accusation of being a troll; too often it is simply hurled at anyone who challenges a consensus. No, Michael is simply a liar, and not a particularly bright one at that. Nearly every post of his in this thread contains an outright lie, or an attempt to deceive via false implication.
Some people do find lying a pleasurable activity.
Interesting story: My daughter wants to go to college in Rochester: Despite my warnings about absurdly cold winters she seems bent on attending the Eastman School of Music there.
In an ironic twist of fate, I gave serious consideration to RIT, but Kodak busy collapsing at the time and the financial aid melted away.
I prefer to keep my distance from the rest of the thread, except to comment that when I read your post I thought of the imagery in The Pretenders "My City was Gone".
The same story seems to have played out in medium-sized cites in an arc from Sheboygan to Buffalo.
Hi there.
Cleveland-born, Detroit-raised kid here. Mom and Dad met each other at GMI. Dad, granddad, mom, uncle, and two aunts are all ex-GM employees; dad's still in the auto industry, working for a parts supplier spun off from a bigger parts supplier spun off from GM.
Let them fail.
Wow, I started reading a comment thread that was a fairly interesting discussion of the malaise of the current state of manufacturing and relationship between American labor&management, and I ended up reading a bunch of angry people calling each other liars and trolls. Can anyone give me my 15 minutes back? I'm calling Hank Paulson and asking for a piece of that bailout money as compensation...
Megan's old pseudonym, her talk of a moratorium on brains--not that she called it that--and Mr. Garrity's remark that, "[t]hat's not what the employees want. They don't want a handout - they want a job," made me think of this:
"Philip is unhappy."
"Well?"
"He feel it's not right that he should have to depend on your charity and live on handouts and never be able to count on a single dollar of his own."
"Well!" he said with a startled smile. "I've been waiting for him to realize that."
"It isn't right for a sensitive man to be in such a position."
"It certainly isn't."
"I'm glad you agree with me. So what you have to do is give him a job."
"A . . . what?"
"You must give him a job, here, at the mills--but a nice, clean job, of course, with a a desk and an office and a decent salary[.]"
To the contrary, Dean. I'm not angry in the least. However, one can't have a real discussion when it includes a person who insists on lying with nearly every post. When a participant plainly writes something which is untrue, or makes a completely dishonest implication, it needs to be noted, if an honest discussion is to ensue.
Hi
You have been on a posting roll today, I really felt like I learned a lot about the situation w/ the potential automaker bailout.
And I was happy to see you speaking about Central/Western NY (I'm a graduate student in Syracuse). Like Alan Gunn said, there are really high property taxes here. (Here are some rates, w/ Onondaga County and Syracuse
http://www.ongov.net/Realproptax/taxrates.html
versus counties in Indiana
http://www.incontext.indiana.edu/2006/may/2.html
Basically, it's about double in Syracuse.)
But something I would point out is that it's coupled with some of the cheapest real estate in the country. So you can actually own a home in Syracuse as a grad student, and even live basically rent-free if you sublet to roommates. If you wanted to, you could get a 3-bedroom house for $65-75K in Syracuse, or $100-150K in the suburbs. (Sorry- I know you're looking for a place in DC, so this must be slightly galling.) Obviously, you could pay more if you wanted a mansion. So thankfully there's some trade-off b/w the high taxes and the low values. Low cost of living generally is a really good thing about being in Syracuse, and if they resolve the property tax thing, it would be a really strong draw.
Aaaaaanyway.
You also mentioned government largesse in Upstate NY. Are you familiar with the DestiNY project? There are two parts- the first is to make Syracuse's mega-mall, the Carousel Mall, the biggest in America. Are there enough consumers for that? Almost certainly not, but if you have a fanciful hope for tourism, then that would be something. It certainly helps to be #1.
The second phase of it is to build a dome around it, and terraform the inside into a bunch of regions, each w/ a hotel and stuff- including the Tuscan Village and the Whitewater River. And also, somehow, be a "green" technology research center.
I hope the best for it, and it would be sweet if it succeeds- I, for one, will be all over the whitewater river. However, I can't help but think of a cross between Pauly Shore's Bio-dome and Autoworld from Roger & Me. Hopefully the Green initiative isn't totally hollow. I'll let you know in 5 years. It just seems like they might spur business w/ tax changes and business incentives rather than this wacky 10-year plan, and have it cost the same.
Michigan is going to be alright because it has more manufacturing know how than anywhere in the country and it's cheap.
Well as alright as possible under the circumstance, that Paulson and the gang are destroying the US Treasury with their criminal operation trying to bail out the unbailable. Trillions to prop up paper that needs to be spent on stuff.
If Obama and the Dems don't get on board the transparency on Fed asset purchase train to expose what a crock it all is then he and we are in big big trouble. Paulson is actively wrecking the markets now, not saving them.
I could make a good case that a lot of the problem comes from the "right" to strike---a right that apparently includes the right to ignore laws that the rest of us have to follow. If Ford and GM had been able to deal with strikers trying to physically intimidate replacement workers to protect jobs they didn't own as they deserved to be dealt with, with no second-guessing from the government, I'd bet they'd be in a lot better shape today. Heck, even Flint might look good, and Michael Moore would be this guy who once worked at Mother Jones before they fired him for being too much of a sphincter muscle.
Will Allen: "To the contrary, Dean. I'm not angry in the least."
Anyone with a scroll wheel on their mouse can dispove that sentence.
And Mr. Fraizer - I read Atlas Shrugged as well - when I was 13. I thought it was wonderful. Then I grew up and discovered I needed roads, bridges, highways, courts, prisons, schools, libraries, parks, water and sewage systems, street lights, airports, harbors, tunnels, as well as the military, police, fire, postal, and hospital workers...you know, all those nasty things government does to make my life easier.
Any time someone quotes Rand, I get the same feeling - like I'm talking to someone with a childlike, simplistic view of the world.
I thought Megan's post was wonderful--in the end it wasn't rapaciousness or even high taxes that were the undoing of Western NY, it was a very old physical and intellectual plant that was unable to compete with more recent players. Complaining about this is, on some level, like complaining that old people are less healthy than young people and die first--they did, you know, have a good run as young, healthy people.
There is presumably some population level, and collective education-and-training level, at which WNY can have a stable and prosperous existence. That may well require a smaller population than it has now, which is already far smaller than it had in 1950. These things happen, and I say that as a highly statist liberal. Government can fight a lot of badness and install a lot of goodness, but it can't prop up a region and its peak population without doing excessive harm to other people and other regions, as Megan notes.
Yes, everyone knows that national healthcare is funded by money raining from the sky. It doesn't actually come from anyone's pocket, and that's what makes it great. Of course it also comes with the choices and superior level of service you expect from civil servants; just look at how well the DMV and the IRS treat their 'customers'. And if you don't like the way the government does things, you can always go pound sand.
The UAW and company management had nothing whatsoever to do with GM, Ford, and Chrysler building crap for cars. It was the lack of a national healthcare plan that destroyed the auto industry.
Rich in PA, it's the taxes. Low taxes are like pure air and WNY is suffocating. Everyone works for the government.
Michael - I too dislike Ayn Rand for her over-simplification and cartoonish straw men. And yet, when I read your posts, I think perhaps she had a point. There's not much there except for knee-jerk leftist invective, ad hominem attacks, misleading use of data, and straw men. And the Rand quote is very appropriate, considering that you're advocating giving the car companies money to keep people in jobs that aren't productive. It's a handout, but you don't like to think of it that way.
Rich in PA: After wading through all this bullshit, it was such a pleasure to read your post. Next Christmas, in Bedford Falls!
Your description of CNY and WNY choked me up - not only because they are incredibly beautiful and filled with some of the most decent people you can ever imagine, but also because your description of what happened there, and the proven futility of trying to reverse it, are 100% correct. There are few things sadder to me than the knowledge that an area I love so much is dying as it is, except the knowledge that there is nothing to be done other than help the local workforce re-tool and, most likely, find greener pastures. Year after year, government money flows into Buffalo in the hopes of somehow reviving the local economy by subsidizing some new venture or another, each more desperate than the previous...and year after year, that money fails to do anything to stem the flow.
Eventually, enough people will have left to leave some sort of stabilization in the local economy, and I've seen some pretty sensible proposals for how to re-energize the region, but with a far lower population. Meanwhile, those who do leave the city tend to find greener pastures (you can't throw a stone in the DC or Charlotte metro areas without hitting a CNY/WNY transplant); throwing more wasted money at the problem just discourages more people from finding those greener pastures, which is to the detriment of just about all involved. Bailing out Detroit will be no different.
Megan's condemnation of death for CNY and Western NY is a bit premature. Around Syracuse, where I visit regularly, there are still quite a few jobs and home prices are very reasonable. Farming is thriving, (visit the Farmer's market in Syracuse), and education is better than in many other places in the USA. Admittedly, taxes are high due to the excellent teaching salaries being paid. But they've got the best supermarkets in America: Wegman's! And you're right about the physical beauty there.
There are lots of happy, contented people in CNY and probably in the Western part of NY with which I am less familiar.
Unfortunately, Governor Patterson is spouting Ayn Rand drivel in his pleas to the US Govt. for assistance to the Financial Center and sending negative feedback to upstate NY (everything outside the NYC Metro area) about cutting everything. It's true that the excellent roads in the area are benefitting from taxes from the City but....do we need such wide roads anyway? (in VT, where I spend most my time, it's much more tight in transportation outlays.)
As I read this piece and many of the posts, I am reminded again of growing class divisions in our society. Only partly can these be defined by income level. But more to the point they distinguish those whose education and vocation aligns with mobile capital versus those more "dependent" shall we say upon actually making products. While it is true that propping up unproductive businesses is (probably) unwise, the alternative as presented here and elsewhere is to concede that the owners of capital have won, even when they lose (as in our present condition). I submit that our current predicament is a consequence of a type of passivity that only those who benefit from mobile capital (and I am one of those) can appreciate. After all, we care about cheaper products and healthy IRAs, and don't care where those products are made. We need to restore our manufacturing base. Much of this will come from the development of new industries; but some must result from revitalizing companies that have fallen on hard times. The answer here, in my view, is more public investment, with significant strings attached; rather than a continuation of the hands off passivity that has produced this mess. People in the rust belt, and elsewhere across the country, have much to contribute. And saying that their towns and jobs must disappear isn't much comfort to them, or use to the rest of us.
Michael Garrity: "And Mr. Fraizer - I read Atlas Shrugged as well - when I was 13....Then I grew up and discovered I needed roads, bridges, highways, courts, prisons, schools, libraries, parks, water and sewage systems, street lights, airports, harbors, tunnels, as well as the military, police, fire, postal, and hospital workers...you know, all those nasty things government does to make my life easier."
Perhaps you should reread Atlas Shrugged. Then you will notice that Ayn Rand agrees with you! There is a scene where one of the protagonists (Ragnar, I think) describes police, fire and similar things as legitimate functions of government.
But I'm curious what your argument is; "we need the protection from fire and epidemics, therefore wasting money on unions is a good thig?"
Mr. Garrity,
I also read Atlas Shrugged at age thirteen. I'm no Randian: I don't hop from bed to bed sharing cigarettes and rough sex with heroic minarchists between soliloquys. That is to say, I don't smoke. 8-)
Seriously, though, I wasn't trying to invoke Atlas Shrugged as a mystical response to your posts. I was, however, struck by the fact that you seem share a view of what constitutes a job with Ms. Rand's villain. You say that the employees "don't want a handout - they want a job," but seem unclear on what it is that makes work a job: the trade of labor that someone wants in exchange for money that the worker wants. A handout from the government that keeps GM alive making cars that people don't want to buy is even worse than just giving the handout to the workers themselves. With the latter, at least we're not using up physical resources that could go to better purposes.
I understand that you grew up and realized that government could provide some positive things. I realized this even before I grew up. I appreciate having courts of law, prisons, and a few other public goods. A car company is not a public good and, though I'll be sad to see it go, I think the GM goose has laid its last golden egg. I hope you can see that unions (and any workers) can only reap rewards long-term on the basis of their own production.
Given the wistful nature of this thread, I'll include some obligatory nostalgia: I have fond memories of plant open house days when my family got to tour the Chevy factory where my dad made transmissions. I remember Dad's pride in the work he did and I remember the Chevrolet and UAW branded knick-knacks we received at the end of the tour. The plant is gone now, torn down and ripped up, replaced with a field of grass.
The demise of GM will mean hardship for my folks and for my own family as we struggle to make up the benefits lost. Ah, well, that's what families do. I hope resurgent unionism doesn't lead more companies down this unsustainable path.
Best regards,
--Colin
Brian writes: "And saying that their towns and jobs must disappear isn't much comfort to them, or use to the rest of us."
And this is the reason why libertarians will never have any substantial political power. The "fuck you" platform isn't going to win many friends or voters.
Colin Frazier writes:
"A car company is not a public good and, though I'll be sad to see it go, I think the GM goose has laid its last golden egg."
The car companies actually were public goods during WWII. Their expertise and infrastructure produced the equipment that enabled us to win that war. You can't just bootstrap something like that from scratch, or rely on the wonders of globalization or "the market" to take care of it for you.
Staash,
I was using the term "public good" in the economic sense. GM was certainly not a public good, even in WWII.
FWIW, I understand how scary the concept of markets is. As an emergent phenomenon, no one is "in charge" of it, which scares people. However, markets (free exchange between willing traders) have a better track record than any system humanity has known when it comes to actually delivering prosperity.
Best regards,
--Colin
Colin Frazier writes:
"I was using the term "public good" in the economic sense. GM was certainly not a public good, even in WWII."
National defense is not a public good, in the economic sense?
"FWIW, I understand how scary the concept of markets is. As an emergent phenomenon, no one is "in charge" of it, which scares people. However, markets (free exchange between willing traders) have a better track record than any system humanity has known when it comes to actually delivering prosperity."
While I mostly agree, the accuracy of your statement really depends on how you define prosperity. There's more to prosperity than goods and services.
National defense is a public good. "Airman Dougherty" is not a public good, though his labor is part of providing that public good.
And this is the reason why libertarians will never have any substantial political power. The "fuck you" platform isn't going to win many friends or voters.
The obstacle facing libertarianism is finding a succinct way of explaining how saying "fuck you" to 5% of the country is synonymous with not saying "fuck you" to the other 95%.
If I offer to buy you dinner at the vegan restaurant of your choice, would that persuade you to stop saying things like, "I, for one..."?
I, for one, am more of a carnivore, but I'm always up for a good dinner out!
Like thousands of others, our family moved from Erie County in the 1970s, never to return save for the occasional wedding or Bills game.
Still, at least some (most?) other "crap towns" (A U.K.ism, but fits here) in the rust belt have at least make a go at revival: Baltimore, Cleveland, Providence, New Haven, and smaller mill town cities like Manchester and Portland. Hell, even Newark tries.
Note that none of these are in New York State. Albany is a broken government, and has been since Rockefeller/Carey. The governor and legislature seem unable to do anything except deadlock and think of creative ways to collect revenue that would make the Sheriff of Nottingham blush.
If the reason to subsidize GM is to maintain an industrial base for possible future military needs, why not just convert the bailout to defense contracts and have them make military equipment? If they happen to stumble on something like the Hummer that has crossover appeal, more power to them.
That seems better scoped and just more honest than subsidizing them to produce goods for civilian markets that are unwanted in the marketplace. And doesn't risk opening up a trade war either (Isn't bailout money to the Big 3 essentially an illegal domestic subsidy? Isn't it a GATT/WTO violation of some sort?)
"People in the rust belt, and elsewhere across the country, have much to contribute. And saying that their towns and jobs must disappear isn't much comfort to them, or use to the rest of us."
If we believe that these people have "much to contribute", then we should help them with the transition, so that they can find a way to once again support themselves. Supporting bailout after bailout only makes sense if you believe that they have nothing to offer and thus can never find productive jobs to replace their obsolete past.
"Every dollar sent to Detroit buys a yard of steel, a reel of copper wire"
"a yard of steel??"....how about a handful of milk?
You do not know what you are talking about.
A massive failure in the auto industry would trickle into every corner of the commodities buisness. Iron ore mines in Brazil depend on robust steel demand from automobile and white goods producters accross the world. A huge demand vacum would create a climate of falling prices that would effect the bottom line of every buisness that uses metal. It is happening right now. Not just in cities that you never lived in, and now lament the demise of, everywhere.
The United States' largest export by weight is scrap metal. Ferrous scrap prices have dropped by over 50% in the past two months. This means fewer back-hauls for cargo ships, and greater losses for already pinched shipping companies. If there are fewer ships for cargo, there will be fewer markets for the goods of the developing world....heavy industry is not just some relic of America's past, it is one of the bedrocks of our whole current system of trade. Without it, all imported products will be much more expensive for Americans.
Greg from Pittsburgh -
You seem to be assuming that, if people can't buy cars from the Big Three, they'll just stop driving. Why would there be a "huge demand vacuum"?
What specifically are you referring to?
Colin -
Your wistful skip down memory lane begs the question - now that your family got "theirs" - that being a good living raising a family on a union wage, is it now time to scrap unions?
For all of the anti-union bluster on this board, complete with Randian soliloquies and Objectivist Dogma, there seems to be a complete lack of a sense of history.
Without the Pullman Strike, we would have had a past filled with company towns and workers treated little better than slaves.
Without the Brotherhood of Sleeping Car Porters, there would have been no civil rights movement in this country.
Without the Uprising of 20000, there would be no modern OSHA laws or worker protection or oversight employee safety boards.
Union wages funded the massive expansion of the middle class in the 50s and 60s - providing a growing tax base that funded numerous programs - like the interstate highway system, the space race and the Cold War.
I could go on and on and on.....
I don't need a time machine to go back in time to see what life was like for workers before the rise of labor unions in this country. I already have one, it's called the library.
Are there problems with modern unions - YES. But to simply say "unions are bad, they are the cause of our problems" is intellectually dishonest.
And lastly, with the Wall Street mess not even in our rear view mirror yet (along with the last eight years or Haliburton and Enron and the like) I can't - for the life of me - believe that people are actually touting the "market" as the answer to our problems. NewsFlash - All companies care about it PROFIT. It is a MEANS and and ENDS. There is nothing else.
There is more to life than money.
"Building Cars People Don't Want"
I have read this phrase - or similar phrases - often in this thread. The argument is that the auto companies don't build small, fuel efficient cars and that's why they are failing.
Or, the argument is that Detroit built SUVs and Trucks that WERE wanted but now with gas so expensive that was a bad decision and the Detroit should have forseen this.
Either way - it's their own fault.
With all this blame going around between the executives, the unions and Santa Clause - I would like to blame the entity responsible for this mess - the market.
That is YOU and ME.
You see - we (THE MARKET) have known for some time that oil is a finite resource. We knew that with most of it controlled by people who don't really like us that we were living on borrowed time. Sure, we heard about alternative fuels and electric cars and hybrids and bicycles and all that - but that was for granola eaters - not for US!
So this being a SUPPLY and DEMAND economy, we demanded fuel guzzling cars, trucks and SUVs. So Detroit happily supplied them to us. Bob Segar and Travis Tritt made commercials singing about our big autos - even Led Zeppelin did a Cadillac Commercial!
And the banks were more than happy to give us Zero Down, low interest loans for these behemoths because - after all - the market DEMANDED IT.
And now, our big honking cars are in the driveway - tanks empty. Or perhaps, the repo man has them.
And it's all someone else's fault.
Maybe we bail out Detroit because it's our fault they are in this mess.
And maybe we realize that just because the market WANTS something that doesn't mean it's in the best interest of the country, the economy or humanity.
Dear Megan,
As a native Detroiter, I am greatly distressed as to what the collapse of the US Auto companies would do to our region. But in all honesty, neither the Big 3 nor the Unions prepared themselves to be more nimble and ready for the future; they've used only short-term fixes during the rough times and blew opportunities to invest/restructure during the good periods. This process has been going on since the '70s. And sadly, the same has been true for our political institutions. It has often been noted that Michigan was too reliant on this industry alone but little has been done to attract other kinds of business.
Sadly, I do not see any government aid to the US car companies as helping in the long run. Such aid only postpones the difficult choices that need to be made. Of course the problem with bankruptcy for the Big 3 is properly stated by Gov. Granholm; few consumers will risk buying big price items like cars when there is great uncertainty about the company being there in the next year. So going into Chapter 11 is made extra difficult. It is a bad option but the other options are far worse.
However, I am interested in your thoughts as to what would happen in the event of the failure of the Big 3 companies. It seems to me that there are several car lines (such as Saturn, Mustang, Corvette) that are successful. Wouldn't there be investors/investment firms willing to try to pick up some divisions/lines for the right price? Also, in the medium-term, won't the foreign car companies that build in the US increase their production?
As for my city, it will take a revolution in thinking and ability to deal with reality among the political leadership before we can even think of coming back. Currently our City Council President has led a resolution requesting that the Federal Gov't give Detroit a $10 Billion bailout so that in part housing is provided for Detroit citizens. Clearly, there is no willingness to face what we (as Detroiters) must do to cope with these hard times.
Steffen Solomon
Beautifully written and eloquently expressed. I couldn't agree more. As a Michigander, albeit not one in the auto industry, I know that GM's failure will effect me personally...my job, my home value, etc. But I also know that, in the long run, giving expensive and useless first aid to an industry that is all but dead will only make me much, much worse off. Why should the many suffer for the few?
In the summers of 1963 and 1964 I worked at a relatively small steel mill in Western Pennsylvania where my dad and most of my friends' dads worked. The place employed about 6500 people (men it should be noted) making all kinds of steel. The pay was for the time very good. Some men made 2x what a college professor made and they had an 8th grade education. By 1975 or so, the thing was tanking. And when it finally closed -- for 5-6 years -- all those jobs were gone. When it reopened, there were jobs for 300 or so in a rump operation, which was profitable, thanks to some realism on the part of the steelworkers union.
There was no call for government takeover or bailout. I still remember one of my high school classmates observing sardonically that his becoming a computer programmer after working for 6-8 years in the electric furnace was highly unlikely. There was some retraining. Many people moved away. And the country and the people survived. We all miss those days and places, but we more or less got over it.
This idea of bailing out the carmakers has UAW and Democratic politics written all over it. If President Obama goes down this road, he will be spending political capital propping up a rotting edifice. It could be the undoing of his first term. For what will he or can he say to all the other workers and investors in dying industries? There is not enough money to go around.
We are not talking about some town in American losing 6500 jobs because the old mill closed. This isn't a play or a heart-wrenchinig movie bemoaning the fading of old-America starring Jack Nicolson and Meryl Streep.
We are talking about three million jobs being lost. In one region. At one time.
We are talking DUST BOWL. This is Grapes of Wrath proportions here. Why doesn't anyone get that?
The dust bowl was caused by the farmers, who were destroying the land by farming in crude ways. The displacement from those small farms had to happen eventually. To take your analogy further, are you saying that the government should have helped the farmers keep on doing the same thing? That's what bailing out GM will do.
The difference is that for auto workers this crisis has been easy to see coming for over 20 years, I'm not sure the farmers could so easily see the writing on the wall. The auto workers have also been paid so well over those years that they had more time and money to sock something away than dust bowl farmers.
Timothy Domst - "auto workers have also been paid so well over those years that they had more time and money to sock something away than dust bowl farmers."
Christ you are a miserable person. I don't know what to say to that. You're right - fuck 'em.
And we wonder why the free market is failing us. You must run a bank or something. Are you Mr. Potter?
As a native of Buffalo, NY, I have to agree with the poster above who says Western New York has the best grocery stores in the nation. Wegmans! This Rochester based company outsells all other grocery stores, even Wallmart, in the WNY area. I lived in New York City for 16 years and Wegmans beats any of the best food stores in NYC. It's too bad Western New York doesn't have more successful businesses like Wegmans. Western New York has excellent food, cheap home prices, beatiful natural scenery - but, sadly, few jobs!
//Christ you are a miserable person. I don't know what to say to that.//
I can think of a few things. Like, maybe, 'if you're interested in your own future, you should plan for it.' Or maybe the fable of The Ant and the Grasshopper.
I have tremendous difficulty caring for someone else's future when they can't even care for their own.
//you're interested in your own future, you should plan for it//
Plan for it? Like the people who have their retirement savings locked up in 401ks that are in the toiliet? Like people who bought homes and fixed them up so their value would go up? Like people who followed all the rules but were unlucky enough to work at a company named Enron and lost everything?
Come on! Let's lay the blame on the backs of your free market - the market that ignored all the evidence (political, economic and environemntal) and kept asking Detroit to build SUV and trucks. The market that demanded everyone "can be super rich by buying multiple properties they can't afford" and created the sub-prime market mess that brought the whole house of cards down.
None of this happened in a vacuum. You can't just say "tough shit" and wash your hands of an entire industry and three million jobs just because you don't like any of the solution options.
When I was a kid growing up in Rome, NY, the Revere plant employed 2500 people. Other companies in Rome back then included Rome Cable with perhaps 800 workers, and Pettibone with another 500. This was back in the 1970s. Today Revere still exists but is a shell of its former self, and the latter 2 companies are gone. Oneida Ltd, in nearby Sherrill, employed 2000+ people and was the largest maker of quality flatware in the world. It has since gone bankrupt, and what remains of it is a small local operation that simply imports products from overseas. The biggest employer in the greater Utica-Rome area can be found just minutes away from where Oneida once had such a large presence-the Turning Stone casino, owned and operated by the Oneida Indians. Service/hospitality jobs don't generally pay as much as the old vanished manufacturing jobs, but I guess they're better than nothing.
I don't know the solution to all of this. I think there's plenty of blame to go around, for both management and labor. And I have to say that New York state government is run in such a way as to make my current state of Massachusetts look thrifty and efficient, if you can believe that. Upstate NY has been hit by a perfect storm of high taxes, foreign competition, excessive regulations and business costs, and even lousy weather(in the pre-air conditioning era, there was much less incentive or inducement for people and/or companies to flee to warmer, Southern climes).
I am generally a supporter of free trade, and NAFTA notwithstanding, our economy has added 25 million net new jobs in the 15 years since NAFTA was passed. Unemployment remains lower than it was then, as well(though it seems that will soon change). Many good jobs have been among those 25 million, but the problem is that the good "new" jobs are not typically available to those who held the good "old" jobs, due to the typical education and skill requirements for the former. This is the difficulty-what may in fact be better for our economy in the long run has at the same time a great negative impact on many individual Americans in the short and medium term.
Bail out GM, Ford, and Chrysler? I can't help but wonder if that's not just throwing good money after bad, though I don't have a definitive answer to the question of whether or not to do it.
Troy, NY is not entirely the same animal as the other Upstate towns....not anymore, anyway. It's trying to turn itself into Ithaca.
I've lived either in or near Troy for many years now. Back in the '80s, it was indeed a decaying, post-industrial husk. Over the last 10 years, the town has started working synergistically with its colleges, especially a big, tech-heavy one with a very dynamic president (RPI). The downtown is actually beginning to become fashionable, which I wouldn't have believed possible. Worn-out old row houses are being taken down and replaced with hotels, and old dead industrial buildings are being turned into luxury condos. Tech companies are being incubated.
It's not all peaches and cream. The Mayor and City Council still have their moments, several areas are still depressed, and we'll see how much the gaping hole in State finances affects spending in the area. It does feel different, though...as if the town finally let go of its mental concept as a dying Northeastern manufacturing town. The place just might succeed in remaking itself.
Just stop this ”free trade” already! No one in America profits from free trade, except a few billionaires in top hats, whereas in poor countries, everyone profits from free trade.
Without free trade, it would be advantageous for Americans to buy stuff produced in America, creating jobs producing it for Americans. America prospers. With free trade, stuff gets produced in China and Mexico instead. Great, Chinese and Mexican workers profit ... thanks to US policy.
For years and years, the US has been laying down policy that benefits Chinese and Mexican workers at America’s expense. There must be very few people in America, literally, who actually want this. What’s the point, America?
"Christ you are a miserable person. I don't know what to say to that. You're right - fuck 'em."
According to your all-knowing ability to see the future, we are headed for a new dust bowl. That's not the case. I used to deliver steel to auto manufacturers, and as people have mentioned there was a reorganization in steel to more efficient, much smaller factories. Tens of thousands of people are not needed to make steel anymore, and the same thing will happen in the auto industry, reorganization into smaller companies with fewer workers.
The question is whether it will be sooner or later, and if later, after a great amount of tax money thrown away. But it will happen, no matter what. That should be clear to anyone with more facts than imagination.
Christ, you are an ignorant person.
Well, I see Mr. Garrity lied once again. No, Mr. Garrity, the internets can't detect emotional states accurately. They are pretty good at detecting dishonesty and stupidity, however.
Sheesh.
I couldn't agree more. Somehow all the smug grins on the CEO's faces and the ingratiating, (always) insincere big smiles of Pelosi signalled only one thing to me: "This is a done deal, folks and up yours if you don't like it." Well, I don't like it and regret that we have such little power to change that back-slapping closed circle of union money, and their despotic corporate world.
But I appreciate your effort and your well-written article. Thanks!
Aside from the general excellent anti-bailout arguments made above, doesn't anyone think that things would look a lot rosier for Ford if GM significantly contracted its output? By propping up GM, we doom Ford to a faster collapse and its own bailout.
BTW, as Holman Jenkins pointed out in some of his WSJ columns, Big 3 management, while richly deserving of much of the criticism they receive, were placed in a difficult position by the "two fleet" provision of the CAFE standards. The Big 3 are able to make profitable small cars in Europe, Latin America, and Asia, but they can't use those to fill out their US product lines because these cars don't count toward their domestic fleet MPG average. Instead, they have to make a lot of unprofitable small cars in economically nonviable US plants to balance out their profitable pickups and SUVs. The "two-fleet" rule was supposedly put in to protect UAW jobs.
I am a Michigander. I am hopeful that the Feds do not bail out the auto companies. Autos and their unions have ruined the economy in southwest Michigan. It's time to say goodbye to GM, Chrysler and the UAW. Goodbye! Once they are gone, all those smart workers and engineers will find work, making innovative things that actually have positive value. It will be a bright, capitalistic future!
"Or everyone in those sad towns could just move to Ithaca. We love it here."
Ithaca has the great fortune -- available to so few towns -- to sponge off the hard work of 20,000 or so sets of hard-working parents in other parts of the country.
Now, don't get me wrong, it's great work if you can get it, but the rest of us have to actually make stuff, mine the dirt and grow things to create the wealth that supports you. Rich liberals do create pretty towns, though, I'll grant you that.
Timothy Domst - you used to deliver steel and I'm a cowboy astronaut millionare.
Its the internet and it's anonymous - your personal story, whether it's true or not - carries no weight because it can't be verified.
However I can extrapolate that 2.5 million people losing their jobs in one geographic area will visit an economic destruction to that area not seen since the DUST BOWL.
Of course, one of the reasons the DUST BOWL was so catastrophic was because there was no social support system. No money went to those farmers who lost their land, their equipment and their livelihoods. There is no reason for that to happen if GM fails. Money can go directly to workers who've lost jobs. GM could be bought out by the government and repurposed for national defense. There are lots of options.
Also, the word you're looking for, Michael Garrity, is malnutrition. It's really, really not the same thing as starvation, though it still sucks.
Ed Glaeser on why government can't save NY's rust belt:
http://www.city-journal.org/html/17_4_buffalo_ny.html
Michael Garrity, whether you like it or not I hauled steel from 1999 to 2007 so keep trying to avoid arguing facts and rant about the distant past.
I find it amusing to contemplate the schizophrenic view Michael Garrity apparently has of the people he purports to defend:
This seems to be a demeaning point of view 2.5 million men and women jobless within a short period of time - with no money to feed their children, losing their homes and with no future income in sight. Are these people going to stand quietly and starve? Do you think they are going to be listening to Obama or Pelosi at that point? Or are they going to turn to people that are a bit more militant in their rhetoric?
Besides the idiocy of asserting that they would have no money to feed their children (there will be food stamps. They won't starve), it makes no sense to claim that the only thing between the auto workers and dangerously militant (possibly criminal) behavior is bailing out the industry and then say this:
That's not what the employees want. They don't want a handout - they want a job.
Anyone who proposes a handout directly to the auto-workers doesn't undertand them or their needs.
Labor is not just a commodity. You can't just thow money at it. Stop treating it such distain. Labor has a human face. And human needs.
The bail-out is a handout. Is Garrity positing that auto workers are too stupid to realize that? Does he truly think so little of them that he believes they are so criminally minded that they will resort to some sort of dangerously militant rhetoric if the industry dies a natural death?
Persia:
What safeguards or "social support system" is in place that can support 2 million people (in Southeastern Michigan and Northern Ohio) losing their jobs in the course of a six month period? When they all apply for unemployment? Or Medicaid? When the go to the foodbanks? When they go to regular banks to withdrawl whatever savings they have to pay their bills. I won't even mention how taxed local police and fire departments will be by the more nefarious of the now unemployed.
What system is in place to handle that? Please advise...
Wow, Megan. You've got the Syracuse-Rochester thing almost perfectly ass-backwards. I live in Syracuse (note present tense), and I will tell you that the economy sucks here. Rochester is about the only upstate city that has anything going for it, at least by your standards. I find the total lack of yuppies around here to be strangely refreshing.
Ms. McArdle,
I was with you right up to the paragraph where you said "And while a financial intervention at least holds out the possibility of creating value for all of us,..."
You can't have it both ways. Either either taking money from profitable businesses and giving it to someone else is smart or not. Either taking money from one person and giving it to another is ethical or not.
You must chose sides. And if one side results in accusations of being heartless, so be it!
go sexy bastiat!
seriously though, those other industries you talke about aren't as important as mine because they're not mine. I win , you lose...
As a note on the 'Building Cars Nobody Wants', yes the Big 3 did spend most of the last 15 years building trucks and SUV's everybody wanted. That masked the fact that their cars were not in the same category and when the demand for trucks and SUV's started drying up the Big 3 were left with completely uncompetitive car lines no longer being subsidized by their high-margin SUV's.
The fact that the foreign companies had also managed to dominate the small SUV/Crossover market which is the last of the SUV market standing didn't help.
Competitive products subsidizing crap is not a viable long-term business strategy. And no amount of money thrown at the big 3 is going to make them viable (with the possible exception of Ford, which figured out a few years ago what they did wrong and have been steadily improving their car line)
"Ithaca has the great fortune -- available to so few towns -- to sponge off the hard work of 20,000 or so sets of hard-working parents in other parts of the country.
Now, don't get me wrong, it's great work if you can get it, but the rest of us have to actually make stuff, mine the dirt and grow things to create the wealth that supports you."
So, giving people an excellent education is now some kind of welfare scam involving "sponging off others' hard work"? Baloney, and frankly, bigoted baloney. If you don't think professors at a place like Cornell work hard, you don't know much about universities. And the people that universities educate are crucial to making our economy and society as strong as it is.
Mr. Garrity,
Inflation will do the trick. But whether you give the money to people directly, or give the money to their "employer" to have them do work that they are overpaid for, it's all the same.
It's a sad economic fact that if your company, as a whole, is losing money on a long-term basis, you - and everyone else at the company as a group - are overpaid. As for those retirees who thought a dollar tomorrow was a worthwhile exchange for part of an hour today, well, they were just as wrong as the other lenders and investors who made the same bet and they deserve the same fate.
If you argue that "it's not their fault" that they were economically uneducated and couldn't recognize the bad decision they were making, I'd argue you're right... But that's not MY fault and I don't deserve to be punished for it. If it's in my economic interest to keep GM afloat, I'll buy a GM car, thank you very much. I don't hear Mr. Waggoner making that plea.
No job is "guaranteed" anywhere, ever. States can pass laws saying otherwise, but if no one is willing to buy a GM car, no one should be employed making one. No amount of government money to GM is going to fix that underlying problem. GM, Ford, et al have known about the Japanese since the 1970's. We gave them import quotas then. Just how long do you think we should give them to figure it out?
Unions served a very useful purpose 100 years ago. Just as the tall ships did in the colonial era. And buggy makers in the 18th century. Life moves on. Things change. Change is hard. It's not a surprise that the only place unions thrive now is government, where there's no one on the other side of the table actually trying to hold labor costs down.
Or do you believe that if we ALL worked for the government, producing nothing but paperwork and wealth transfers, that we could somehow survive as a nation? Too many people truly fail to understand "wealth creation" and confuse it with "a job". A job isn't necessarily wealth creation for the economy as a whole. And when the person writing the check figures it out - or is forced by their own customers to figure it out - the job goes away.
Businesses and entrepreneurs have a bad image in today's America. Nonetheless, it will be them who lead America out of this morass, not government, and certainly not unions.
If Michigan or New York want to lead the way out of the mess they've created, they should create a way for unemployed workers to create new businesses quickly and cheaply - to become entrepreneurs. That means lowering (not necessarily eliminating) barriers like licensing laws, filing fees, excessive taxes to employ people, regulations that increase the cost of employing people, etc. These things may have value when things are going swimmingly. But when they aren't, they represent expensive impediments to true wealth creation that our current economy needs to reduce.
Unless you think the rules are more important than your starving Americans. Then keep the overhead. Your choice. What you can't choose is to force people to buy things they don't want to buy at the prices offered, which is the only thing that can save GM as it is today.
The manufacturing base didn't go away. It still represents about 20% of the economy.
What went away was jobs. John Henry can't compete with the steam drill. Joe the factory worker can't compete with the automated machine.
Wow. I couldn't get through all the posts here but hang in there Garrity, and also the open-minded among the free-marketers.
The tendency to attack the workers as the source of our problems (or immigrants, or the obese poor - and yes you can be fantastically unhealthy nutritionally AND obese) is among the more unpleasant aspects of modern "conservatism". It's never the people skimming off the top, the ones not contributing in any way to that car that rolls off the line or that head of cabbage, they are never the economic problem. It's the freaking worker that's to blame, for the outrage of demanding a living wage, the ability to feed and educate their family, to live with a basic level of economic security. F**k that... You guys lost this election, and for good reason.
We need big changes in this nation, and in this discussion. We elected someone to lead that change. The death rattles of old ideas exhibited in this thread are proof that this country made a good choice. Not to retreat to old "tax and spend" policies (despite the Heritage foundationers attempts here to ring that tired old bell) but to redefine both liberalism and conservatism, to establish a new American progressivism, that creates a reasonable level of decency for our hard-working population, while maintaining a vibrant economy that has the public good as its goal, not simply to be Wall Street's latest crush.
We can get there, but these old arguments are definitely not part of the solution.
Back in 2000, gas prices leapt. They adjusted again in 2002, but crept back up. This gas price insanity has been hitting us hard since 2005. Something amazing happened in 2005. The gas price was bogusly inflated under the guise of Katrina, as if hurricanes had never hit the Gulf before, and people bought it. What SHOULD have happened in 2005, is the people should have reacted to gas prices and started buying smaller cars and the big three should have reacted and started offering more efficient cars. If they couldn't produce their own, they should have rebadged some of those products made by their successful Japanese partner companies. But it didn't happen like that. The American market continued to buy bigger and bigger cars and pay more and more for gas without complaining. And then the oil companies played their little price game for us again this summer, with ACTUAL oil prices lower than they had been in ages, and people suffered. Lots of towns didn't even have gasoline to sell and in some places the Premium pumps are still closed! Yes the Big 3 have been really gambling by continuing to over-produce over-sized, under efficient vehicles, but the consumer is also to blame for buying them. People talk alot about stupid investments in the housing market, well how about buying an SUV that gets 10 miles to the gallon when gas prices at the pump are $4 a gallon? What kind of stupid do you have to be to look at a car that's going to cost you over a quarter a mile in gasoline to drive, with a loan thats going to take a decade or more to pay off, by which time gas prices may equate to over fifty cents a mile, and think to yourself, "Man, I reallly want THAT one!"?
Let 'em fall. And if you are one of the ones dumb enough to jump into the SUV fad after gas had already crossed the $2.00 marque, then I have some first-class tickets to the moon you might be interested in.
Most of the people in this country DON'T have pensions, don't have platinum healthcare coverage and don't have the wages of these UAW workers. When you plead for the taxpayer to guarantee these jobs, pensions and healthcare coverage, you are asking the HAVE-NOTS to take care of the HAVES. Is anyone gonna replace people's 45% losses on their 401k's like the Pension Benefit Guaranty Fund is going to take care of these private UAW employees? What makes these private citizens more worthy than the rest of us? Government is discriminating when it takes care of one group to the detriment of the rest. Either that, or put ALL of us on the dole.
"building cars that people don't want" is a little more complex than just not building fuel-efficient cars. For example: what I want in a car, whether I'm looking for new or used, is a small-to-midsized station wagon that will be reliable for at least a quarter of a million miles of rough roads, all kinds of weather, and maybe less than stellar maintenance. Subaru makes them, and has for close to 40 years. Volvo's been making them even longer. Toyota generally makes one or two such. In the past couple of decades, the US automakers have made a FEW wagons the right size, but none that would take the licking I need to be able to hand out-not and remain reliable. So I buy Subarus, Toyotas, and Volvos--generally used. My current Volvo has something substantially above 271K miles on it (that's where the odometer died, sometime before we bought it last year)--and it's still rock-solid reliable, with a 30-mile daily commute each way, on mountain roads.
Chrysler has had some decent designers in the years since Daimler bought them (yes, I know Daimler no longer owns them). Ford and GM haven't produced anything to be excited about, besides their high-end sports cars since the '70's. When "variety" is producing 4 different versions of the same car with little difference but the name plates, you deserve to go out of business.
For the Big 3 to survive in the long run, they are going to have to go through a restructuring similar to Chapter 11, where each interested party gives up something. Top management gives up their jobs with no severance, shareholders get their equity reduced by 90% or more, bondholders take a haircut, UAW accepts reduced health benefits for retirees and maybe active employees and the paid no-work layoff program is eliminated, and dealers have their franchise agreements restructured to allow easier termination. This then leads to further layoffs and income reductions for everyone, since the US auto industry has too much capacity, but the companies would survive in smaller form.
The problem is with the timing. We are all relearning that the business cycle still exists and that it feeds upon itself both on the way up and the way down. So now is about the worst time to experience these losses of income (including the effect on suppliers), even though in the long term they are unavoidable. In the ideal world a federal bailout would include this restructuring outside of Chapter 11, but I can't imagine all the parties voluntarily agreeing to the concessions in any reasonable time frame (although this is what Barack Obama was hinting at in his 60 Minutes interview http://www.cbsnews.com/video/watch/?id=4608192n
).
So that brings us to the question of whether a federal bailout is worth doing simply to defer the restructuring to a time when the economy is healthier and can absorb the negative effects. If it''s not too expensive, maybe so. But no matter what happens, the Rust Belt is going to see a decline in jobs; the only question is the pace.
I live in the Rochester area, and I hope to stay here. One of the things that is noted from time to time by our local news media is that we have weathered the downsizing of Kodak and Xerox relatively well. At the same time that that has been occurring, many smaller companies have been founded or have grown.
Rochester is not by any means a boom town these days. But it is the home of quite a few healthy and innovative companies. We'll do just fine if the state government will stop layering on more taxes, regulations and unfunded mandates.
My goodness this is stupid. The Big 3 are asking for a *loan* that would have the happy byproduct of not turning the recession into a depression. They aren't asking for permanent subsidization. This entire argument is about a straw man. You're a libertarian of course, so I really shouldn't have expected any better.
Aside from that, I think it would be beneficial to lop some of the fat off from the coasts to support decent midwestern folks.
I find this discussion reasonable and needed, but why are we spending so much time talking about $25 billion for real jobs, when every day I read about some new bailout in the hunderds of billions for the banking and investment community?
The auto industry is asking for a loan. I may be confused, but we seem to be doing the equivilent for the banking industry of buying the failures directly. Can you imagine the outcry if the federal government spent hunderds of billions to buy all the unsold cars off the dealers lots to "get the industry moving"?
Why are we looking at the auto iundustry problems and saying they should be allowed to fail, when we seem to believe the bankers should get a free ride?
You guys are idiots! The reason for the collapse of our economy is all of the jobs that have been moved overseas and outside of the U.S., regardless if they are union or not; Sprint, GM, Dell, and several other companies outsourced American jobs, for a quick cheap profit, using the the money that was earn for the companies by American workers. The only way people could afford to buy things anymore was by using credit, because they did not earn enough money to actually pay cash for the items and viola, you have a credit crunch, housing market tanking, and a total economic collapse. What are we going to do shop our way out of this depression/recession? GM will fail but GM does still have products that are viable, unlike Kodak, every body needs transportation, not camera film.