I‘ve heard all of the arguments for the Big 3 going the bankruptcy route. They seem to be ignoring a few facts.
First, let’s ignore all of those to whom ideological purity is more important than the economic health of the country. Our economic health has a direct effect on our national security, our perceived leadership position and other important national and international concerns. More immediately, it can have a devastating impact on the lives of millions of our fellow citizens.
Those who would elevate ideology, any ideology, above the national security and financial distress of millions of other Americans are far from being the patriots they see themselves to be. They are aliens in our midst. They are, purely and simply, treasonous. So, as I said, ignore them. Any solutions they might offer are not in the best interests of the people of this country.
Although significant spending based on increasing indebtedness, by the government or individuals, is not usually advisable, in light of such a major economic crisis it is necessary. Money must flow, even if it must be borrowed.
We need spending and we need jobs. See how simple it all is? While spending is necessary, it would be better if it were wisely spent. There are ways of doing this that are agreeable to the vast majority, if they understand the reasons for it.
There is little dispute that our infrastructure is crumbling. Spending on the repair of it makes sense. It is something that will provide benefits for generations.
Spending to create jobs related to new energy technologies will have some near-term benefits but will deliver immeasurable benefits in the longer term. It can help us position our country as the leader in a field that will grow to preeminence.
Finally, to the automobile industry. Over the past decades the executives have exhibited a marvelous incompetence. There is no way to defend them. But a number of ideologues in the Senate have turned to diversionary tactics. One would think that union members designed and marketed the gas-guzzling behemoths that are now such an inventory burden. These economic dinosaurs – the Senators, not the SUVs – have demanded that the unions, the only players that have offered to make any sacrifices, make very specific further concessions. These Senators are requiring no other players to share the burden.
Senator Bob Corker is not a subtle man. He is one of those that Robert Borosage is speaking of when he says, “By blocking the auto bailout, Republicans defined themselves. They are class warriors, willing to risk an economic calamity in order to break a union.” His great plan puts the lie to his previous position that Washington is incapable of managing businesses. He wants to micromanage to the point of enforcing specific wage levels and benefits. When it comes to destroying a union, so much for ideological purity.
Bobby Corker’s state, and mine, has given more money per job created to foreign manufacturers than the Big 3 are asking for to save jobs up North. This is true of every Southern state that has foreign auto plants. Just to be certain that I am making this as clear as possible, the monies for the foreign companies were gifts. The monies that the Big 3 are asking for are loans.
They may not be needed in the short term but 18 new auto plants are planned for the South. The Toyota plant in Kentucky is the largest outside of Japan. Toyota executives have touted the fact that, counting bonuses, the workers in that plant make over $2 more per hour than union workers. Other than a single-minded devotion to union-busting, there seems no real call for Senators to demand that the union take further cuts.
Volkswagen and Toyota are part of a group that has petitioned European governments for $56 billion. The Japanese government subsidizes its automobile manufacturers. The problem is not limited to Detroit. $150 per barrel oil caused automakers to take a serious hit even before the economic meltdown. Since Detroit had decided to depend on SUVs and trucks far more than other manufacturers they are taking a bigger hit. How stupid could those union workers be to make so many SUVs and trucks?
The very same ideologues are saying that bankruptcy court is the correct path. Let’s look at the courts. Over 40 percent of companies going into Chapter 11 end up in Chapter 7 – liquidation. Other than attorneys, there are no jobs saved in Chapter 7.
The loss of 5 million more jobs means disaster for the economy and long-term misery for millions of Americans. The cost to the governments, state, local and federal, are far greater than the cost of a bailout. With reduced revenue at the local and state level, either services must be curtailed or taxes raised.
Two polls have shown that people will not buy cars from a company in bankruptcy. It isn’t like taking a flight on Delta Air Lines. Cars have warranties. The government would have to back those warranties. I actually saw a car the other day that was out of warranty. The owner may want parts at some time in the future. Will the government have to bail out the parts manufacturers?
Parts manufacturers are heavily dependent upon the automakers. They supply parts to the foreign companies as well as the domestic ones. However, few will be able to survive the hit of a loss of one or more of the Big 3. That means the foreign companies must shut down or increase prices to ship parts from overseas. It’s possible that the dominoes would fall until there is no auto manufacturing in this country. So much for those 18 new plants.
There are other problems with the courts. Will the judge be competent or a political hack? Will the judge have any expertise in the industry? If so, was that expertise gained by association with management or labor? What resources will the judge have available in such a massive bankruptcy? Will the judge be male or female? Will the judge be young or old?
Does anyone think that lenders will flock to the court to provide the loans GM or one or more of the others would need? It still would fall to Washington to provide the funds. Washington would also be called upon to provide manpower and expertise to the court. Are we better off leaving the decisions to one unknown judge?
If Washington will have to provide the loans in any case, why involve a court that will, on its own, be inadequate to the undertaking? If Bob Corker, Richard Shelby and the others of that ilk are going to represent foreign manufacturers’ interest against the interest of American workers, our economic well-being and national security, they should register as lobbyists for foreign entities.
{ 1 comment }
Right on!
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