The right way to do it:
Credit this idea to Robert Reich, the former Clinton administration official. We’ve had lots of disagreements with Reich in the past, and no doubt will in the future. But on this he’s right: If a bailout is to be given, the Big Three and their unions must thoroughly revamp their businesses, almost as if it were a bankruptcy. Call it a Chapter 11 Bailout.
Above all, the companies’ poisonous contracts with the United Auto Workers union have to be torn up. The problem is that the UAW, under President Ron Gettelfinger, remains adamant: No givebacks. This is financial lunacy.
Thanks in part to managerial incompetence, but mostly due to pricey union contracts, it costs American carmakers too much to build cars here; they can’t compete. When you fold in health care, pensions, hourly pay, vacations and the rest, average total compensation for a Big Three autoworker is $73.21 an hour, according to data cited by University of Michigan economist Mark Perry.
Toyota, Honda and Nissan pay a still-generous $44.20 an hour in total compensation — a cost edge of nearly 40%. Is it any wonder that Ford, GM and Chrysler can’t compete? Or that, after paying their workers, they never have enough cash left to retool?
Today the total market capitalization of the Big Three has fallen to about $7 billion. Is it better for the owners of those companies to suffer a total loss or for taxpayers to lose $25 billion? The answer is obvious. As such, the only case for a bailout is if it would force major changes on the industry. That won’t happen with current management in place or with giveaway union contracts that make the companies unviable.
And, remember, if Big Auto did go out of business, it would only be in the sense that the corporate bosses and union chiefs who currently run the show would be out of business – the plants, themselves, would either never close at all or only close for a short time as new management comes in and simply keeps things going, now without the corporate pinheads and self-destructive union contracts. The talk of millions of jobs lost is the typical Big Corporation/Big Government scare tactic when reality is about to overtake them – they don’t want to change, so they claim that if the taxpayers don’t pony up, we’ll have fire, famine, war and a plague of locusts o’er the land…don’t believe them. Its utter BS they are selling.
We were stampeded on the $700 billion bail out (and kudos to those few – left and right – who warned from the start that it was an idiot idea), but we must not allow ourselves to be snookered in to becoming Uncle Sugar for every corporate behemoth and corrupt union in the nation. Unions are, at best, useless – and more often downright destructive. Big corporations like GM are essentially devices designed to hide incompetence until the CEOs get their golden parachutes. The swifter these dinosaurs die off, the better our economy will be for it.
Democrats will fight tooth and nail for these bail outs – because unions shovel massive amounts of cash at the Democrats and, additionally, the corporate bosses are also more than happy to shell out to the Democrats in order to keep the corrupt government process going whereby well-connected corporations help Democrats write the tax laws to advantage big corporations and disadvantage any prospective competitors. Another bit of bull flop not to believe is the leftwing story that liberals fight against corporations – they fight off the corporations with all the determination of hookers fighting off Johns in Vegas on a Friday night…
Let them go belly up – if they are failing, then taxpayer money will only go to reinforce failure. Better to have done with them and allow a rational auto industry to replace the current failed system.