I think I'm against the auto bailout

[thesquanderer]

It's a complicated issue, but I keep thinking, they're talking about all the jobs that would be lost and the ripple effect if the big 3 failed. But here's what seems to be missing in everything I've heard...

People are going to buy the same number of cars whether or not one or more of the big three fail.

People don't buy cars because the big 3 are around, they buy cars because they need to buy cars. If there are no GM cars to choose from, they will buy more Fords. If there are no GMs, Fords, or Chryslers, they will buy more "foreign" cars, the biggest brands being Honda and Toyota. Honda and Toyota make plenty of cars in the U.S. and use many U.S. parts. Without the big three here, foreign companies like these will probably build more U.S. plants and/or be purchasers of many big 3 assets, and they will need to hire auto workers.

It's long been the case that you can go into a big 3 dealership and drive home with a car made in Mexico or overseas, and you could go into a Japanese manufacturer's dealership and drive home with a car made in the U.S., so it's a blurry distinction to begin with. Does it really matter if the people at the top of the company are in Detroit or Tokyo? As long as there are plenty of American workers down the line, maybe with no bailout, the only jobs really at risk in the long term are the corporate execs at the top of the big three, a small minority of the work force, and probably people who will do just fine even if we don't bail them out.

So what's wrong with this line of thought?

[BlueJac]

1. Nothing if...........

You want to unemploy millions of American workers. I suppose dumping everything on Wall Street is what we should do.

[thesquanderer]

20. no

I'm not looking to unemploy millions... my point is that I don't think the two (letting GM go under, and unemploying millions) necessarily have to go together. If that wasn't clear from my original post, please check my followup posts in this thread.

[MineralMan]

2. Shortly, you will have many folks telling you

what's wrong with your line of thought, I'm afraid.

[YOY]

3. "a small minority of the work force"

It's not. It's a big chunk of middle class factory workers...and they do not earn "70$ an hour" if you heard that.

[thesquanderer]

15. sorry for the ambiguity

By "small minority" I meant the people at the top, not the factory workers you're talking about.

Here's the sentence again with an insert to remove the ambiguity

the only jobs really at risk in the long term are the corporate execs at the top of the big three, who are a small minority of the work force, and probably people who will do just fine even if we don't bail them out.

[kentuck]

4. And what is your opinion of the $300 billion bailout today for CitiGroup?

Do you have an opinion on that one also?

[sinkingfeeling]

5. Sure, putting a couple of million people out of work here in the USA and successfully breaking the

UAW is a great idea.

[thesquanderer]

6. Please explain

This is what I don't get. Why millions of people unemployed? People still need to buy cars. Honda and Toyota are successfully manufacturing cars in this country and would need to expand. In this scenario, the GM worker who loses his job may well end up employed by Honda or Toyota.

Do we really need to save the management of badly run companies? The skilled workers can work elsewhere, because the total *demand* for cars remains the same whether the big three survive or not.

And it's not necessarily all or none. If GM goes out, the one who appears to be in worst immediate shape, then that also means more sales for Ford, who will then have to hire more workers.

[GReedDiamond]

7. I know it's difficult for you...

...as your ideas are so completely and obviously flawed.

You say "(t)his is what I don't get. Why millions of people unemployed? People still need to buy cars."

Millions of people will lose their jobs in the immediate aftermath of the "Big 3" going belly up.

That includes the people employed directly by the 3, as well as those employed in the automotive aftermarket sectors, and down the line from that in areas not even directly related to the auto industry.

Those autoworkers are not going to be able to relocate to some honda/toyota factory in the south somewhere overnight, and therefore there will be a large number of people who would be long term unemployed, or under-employed in fast food joints and the like, and so not be able to afford to buy the cars they "still need to buy." Which means, those cars will not be ordered, from a southern honda/toyota factory or anywhere else, which means your entire premise is simply wrong.

Not to mention that, as previously mentioned, there will be a major loss of UAW (that's the United Auto Workers union), one of the few remaining viable unions, so those Big 3 former employees who ARE lucky enough to get a job in the southern honda/toyota factory et al will most likely find they are working for less pay and benefits, with less job protection/security, and less money to purchase the cars they "still need to buy."

BTW, it's already happening: my brother-in-law, age 62 (but with plenty of good years left in him), was just last week laid off from his job in the General Motors truck division. He and my sister are now facing bankruptcy...

ON EDIT: One more thing - the Big 3 are looking for a "bridge loan" (which theoretically would be paid back), NOT a "bailout" (which, it seems, in the case of the crooks in the financial sector, is a GIFT, not a loan).

[thesquanderer]

8. OTOH...

re: "Millions of people will lose their jobs in the immediate aftermath of the "Big 3" going belly up."

Yes, in the immediate aftermath of closings, there would be a period of redistribution of jobs... there would be a case here for extending unemployment benefits for a transition period for those who lost their jobs.


re: "That includes the people employed directly by the 3, as well as those employed in the automotive aftermarket sectors"

I'm not sure what "automotive aftermarket sectors" are, but the ripple back to GM's suppliers, again, would be mitigated by the fact that while GM won't be buying parts anymore, surviving companies will need to be buying *more* parts to be able to make more cars than they had been making, with GM out of the market.


re: " and down the line from that in areas not even directly related to the auto industry...Those autoworkers are not going to be able to relocate to some honda/toyota factory in the south somewhere overnight"

Good point about relocation. And even if worker relocation were subsidized, it would leave behind poor ghost towns. Maybe instead, the government could provide incentives for honda/toyota to open up plants in Michigan (or purchase and rework old existing plants). I mean, if the government needs to put money into the car sector, maybe it's better to provide the money to companies that are succeeding rather than companies that are failing.


re: "BTW, it's already happening: my brother-in-law, age 62 (but with plenty of good years left in him), was just last week laid off from his job in the General Motors truck division. He and my sister are now facing bankruptcy..."

Sorry to hear that. If the auto industries are bailed out, though, I bet there are still layoffs and pay reductions. I'm just saying I'm not sure the worker situation is better in the bailout scenario than in my scenario of letting them go and having other mfrs pick up the slack. But at least in my sceanrio, you're left with well run companies instead of poorly run companies.

[spoony]

16. "Maybe...government could provide incentives for honda/toyota to open up plants in Michigan"

So, the government should help the foreign makers replace the domestic makers it shouldn't help?

[thesquanderer]

17. why not?

re: "the government should help the foreign makers replace the domestic makers it shouldn't help?"

Why not? It keeps the workers employed and the towns viable. It puts money into successful, well-run companies instead of putting money into failing, badly-run companies. As long as the people have jobs, does it really matter if the CEO and the board are in Detroit or in Tokyo? Apart from pride, what is the real benefit of the "company" being domestic vs. foreign owned?

[Edweird]

9. Yay, more anti-labor douchebaggery.

:thumbsdown:

[thesquanderer]

11. did you read all this?

It's not anti labor, it's anti incompetent management.

[Pithlet]

12. I think people are reading you a-okay

It's you who aren't getting it. The loss of such a huge unionized labor force for this country is too great. The reasons for that are many. We're more aware that the big three are incompetent boobs.

[spoony]

14. The idea that you think non-union jobs can replace good union jobs

is, at best, anti-labour.

[Breeze54]

10. We, the USA, can NOT afford to let all those people lose jobs and all the people connected

to those jobs. Period!! And it would cost the GOV. (US) billions in unemployment, health insurance, retirement funds, etc. No. They should be given the loans to stabilize them until the banks and credit comes out of the deep freeze but the loans should be based on A PLAN to retool the factories for greener cars, cut down the production to 3 or 4 good sellers, in the meantime, clean house with management and the board of directors and possibly less benefits for the workers. They're going to feel pain but so is everyone but to have a complete collapse of the auto industry and all the suppliers and small businesses that would be affected is just crazy.

[thesquanderer]

18. my point

re: "We, the USA, can NOT afford to let all those people lose jobs and all the people connected to those jobs. Period!!"

My post and my followup answers were trying to explain a scenario where most of the jobs are *not* lost, even if GM fails.

[madmom]

13. You're saying these "new" companies are going to hire

45, 50 even 60 year old workers when there are all the younguns out there clamoring for jobs? What will the oldsters do for money for oh say mortgages, prescription drugs, food, hell even a car, because they aren't going to be getting enough from pensions and or social security for these things.

[thesquanderer]

19. that could be negotiated

The assistance (given to *successful* car companies to build/rebuild in Detroit) could be contingent on many factors, including a hiring system that would not be age-discriminatory, i.e. that would have an age balance roughly the same as what currently exists in the Detroit factories.

Pointing out a possible problem doesn't mean my premise won't work, it just means you have to think of a way to address the problem. This was an easy one.

[sinkingfeeling]

21. You sure are willing to give out a lot of taxpayer 'assistance' to any other

"successful" car company to bust the UAW aren't you?