Idiots and Bailouts
By Dave Lindorff
It’s a safe bet that within the next several months, Congress will
vote to bail out General Motors. It will be a colossal boondoggle
involving, probably, upwards of $50 billion when it’s through, and it
will fail in the end.
The reason is before our eyes. This bloated megacorporation is being run by idiots.
For years, as it became evident to everyone that oil prices were
going to soar because demand has been exceeding both production and
supply and will continue to do so, it has been obvious that to succeed,
a car company had to offer well-made cars that could demonstrate high
gas mileage. GM, perhaps more than any other company, ignored that
reality and has been paying the price, watching its share of the car
market wither.
Now the company, worth about what Starbucks used to be worth, its
stock now down to where it was in the depths of the Great Depression,
has bet the farm on a new car, the Volt, which it promises will, two
years from now, be able to go all of 40 miles purely on electric power.
It will have a motor too, and not a small one, but rather one the size
of what you get in a typical conventional Honda Civic—1.4 ltr. That
motor wouldn’t drive the car; rather it would keep charging the Volt’s
huge lithium-ion battery so the car could keep going for a few hundred
miles.
Wow.
The management wizards at GM obviously don’t do much driving. If
they did, and found themselves in typical commuter traffic, they’d see
that maybe 90% of the cars, or more, have only one person in them.
Occasionally, they’d see a passenger. On a typical 45-minute trip from
the burbs into Philadelphia at rush hour, I can count the number of
cars I see with three or more people in them on my fingers.
So why is GM making the Volt as a full-sized four or five-passenger
car? That’s not where the market for an electric car is. What is needed
is a two-seater little car.
Because GM is trying to make an electric family car, they’ve made
something so big that, if they are lucky, they’ll be able to get it to
40 miles on electric drive only, but at a cost in excess of $40,000 and
perhaps much higher, which will put it out of almost everyone’s reach.
The car is destined to be a bust.
And yet, because President-elect Obama will want to win Michigan
next election, and because Congressional Democrats don’t want to be
seen as ignoring the fate of GM’s workers, GM will be bailed out and
the Volt will be funded right through to its introduction and
subsequent disaster in the market.
I’m not opposed to the idea of government support of industry, but
that support has to involve government input or even control over
decision-making.
Maybe GM wouldn’t make much profit on a little electric commuter
car, but a little two-seater electric commuter car would have a huge
impact on reducing the output of hydrocarbons into the atmosphere,
particularly if efforts were made to increase solar and wind-generated
electricity. A small electric commuter car would also massively reduce
the amount of oil the US imports, making a major contribution to
reducing the nation’s trade deficit. Those are results that justify a
bailout.
Making an overpriced electric family car is not.
At this point, since the Democrats in Congress and the White House
are congenitally incapable of imagining a state-owned or partially
state-owned enterprise, it would be better to just let GM go under, and
maybe Ford too, if it comes to that (another stupid company). The
pieces could be sold off, and allowed to sink and swim on their own.
Maybe one of those smaller, more entrepreneurial fragments would see
the wisdom of developing what the public really needs.
The truth is that the entrepreneurs over at Tesla, a star-up in
California, have already made that car—a high-performance two-seater
commuter car that can go 200 miles on a charge and that doesn’t need an
auxiliary engine. Their problem is that small size and too little
capital have forced them to pimp it up into a high-priced luxury
show-off item for rich people costing $100,000. If they were to team up
with a GM spin-off—say Saturn—they could make a stripped-down version
of that baby and crank out 100,000 of them to start at a price ordinary
people could afford.
Meanwhile, regarding those poor autoworkers, they have a legitimate
complaint. While Republicans like to blame the auto industry’s problems
on them, saying they have demanded too much pay, and too much in
healthcare benefits, it’s not their fault that GM and Ford executives
have been stupid and greedy and short-sighted (besides, the high wages
and benefits that the United Auto Workers won over decades of bitter
struggle helped to set standards that raised the wages of all workers
across the nation). But let’s do the math. There are about 125,000
unionized hourly workers at the two companies. For a lousy $8.7
billion, every one of those people could receive a $70,000 buyout from
Congress. Double that if you want to give them two years to adjust and
find new work at an electric car plant or something else. That would
cost $17 billion, or less than half of what the doomed bailout of GM is
going to end up costing.
And of course, with the rest of us suffering from the massive
mismanagement of the nation’s economy by its corporate leaders and
their puppets in Washington, there’s no reason why our tax dollars
should be subsidizing those particular workers tat that high a level.
After all, companies are failing and will be failing all over the
place, without such largesse. Besides, if the bailout goes ahead, all
it will do is delay the time these workers will be out on the street
anyhow.
The point is, however, there are more cost-effective ways to help
out workers in failing businesses than to have the government simply
subsidize the continued operation of enterprises that have been
destroyed by management. In truth, all the talk in congress and in the
Obama camp about rescuing jobs is just a cover for bailouts that are
really aimed at rescuing managers and investors, not workers.
___________________
DAVE LINDORFF is a Philadelphia-based journalist and columnist. His
latest book is “The Case for Impeachment” (St. Martin’s Press, 2006 and
now available in paperback edition). His work is available at www.thiscantbehappening.net
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Friends gettin' the bucks
I aggree. These bailouts seem to be nothing more then helping friends out on a gigantic scale at our expense. Lets look a little closer. All the banks getting money are among the worst of the worst preditory lenders. Which means they knowingly go after financially weak individuals or companies and intice them into debt, extracting unreasonable fees and then piling on when they fail or even fall behind. Then there is the investment firms (stationary gamblers), they bet on anything that moves and most times even cause imaginary issues to drive stocks up or down to their benefit. Now comes the automakers. They want five cars in every garage. They churn out more cars than there is people on the planet. They live extravigantly, spend money wildly and build cars most people don't even want. And they build several models most people don't even want. They never change with the current environments wheather that be financial or style, or to help the environment or the trafic we face daily or the roads we drive on. They always try to monopolize whatever pertaining businesses and can't even do that successfully. They tried to steal the custom car business buy building these extravigant models resembling old classics and they came up with expensive knockoffs that don't even compare to the real things. Yes These are idiots with no real business sense, just going through motions of a time when building real cars for real people meant something. I believe this is just a transfer of wealth from our pockets to the wort of the worst crooks, idiots and con men from their friends in high places (the people we elect). Yes lots of jobs would be lost but the upside would be these crooks would be driven out and the systems they corupt and do their dirty deeds in would be cleansed and in the aftermath new companies with better people and more honesty and greater business sense would emerge and new jobs would be created. If we keep propping up the shadiest of our society how can we ever free ourselves from them. These are all the guys we complain to our elected officials about who scam us every chance they get and they throw them the lifeline. Well it remains to be seen who is on what side but we will find out soon enough.
From Bailout to Boycott!
This is one, we the people can undo the government on. If we are truly as ticked off with this as we act, and we are sick at the idea that these companies think they have some right to OUR money - undo it, and undo them. Boycott ALL bailout companies.
Buying a car? Buy Toyota.
Citi cards or bank acctounts? CLOSE THE ACCOUNT
Insurance? Theres better than AIG …
Get the point yet? Its time to send two messages, first to the companies: thats all of our money you will ever get. Then, to the government: When we the people say they dont get our money, they DONT - now they DO fail, now they die.
Actually, there is a better
Actually, there is a better way than to buy foreign products, or to cut off our collective noses to spite our horrified faces.
Think New Deal. Think re-regulation. Think reinstituting (and actually enforcing) anti-monopoly laws and regulations. Think restoring this country to its former greatness by actively regulating American-style Capitalism, and restoring American Labor's seat at the table.
Like Murphy's Law, if greed is allowed to run amok -- it will.
Almost better
Its almost a better idea - all except the part about regulation, eq more government power, more agencies and more excuse to tax and spend.
We the people should be the ones deciding what banks, businesses and corporations survive, and how strong - deciding by our consumer habits.
We the People VOTE.
That is the only way to COORDINATE hundreds of millions of folks IN AS POWERFUL a way as Monopolies do via collusion.
Presently however, America finds herself thusly:
America needs defending from BOTH Socialism and Aristocracy.
Too powerful a collusion and the Nation suffers. This can come from either the"Mob" or the "Monarch". Non science based rhetoric on Economics must make way for nuance. The solution is more complex than the extremes.
Jim
Except for the fact that
It is not our consumer habits that decide what banks, businesses and corporations survive. And 'deregulation' is nothing but quid pro quo.
It is not our consumer habits that decide ...
... because of government interference in free markets. Consumer-driven markets (as they should be) would only provide success to those who have provided the best, without robbing the people for their survival.
Hence turning the biggest bailout in world history into the biggest capital loss in world history will give the government reason to stop and think before they decide to give trillions taken from tax payers, to corporation; if people WOULD decide they wont do business with the companies who went vulture on our treasury, this is exactly what would happen.
Spoken like a true
Spoken like a true Libertarian. You blindly defend "free-markets," when all the evidence points to the fact that unregulated markets can never remain truly unmanipulated, or fair.
A totally "free" market, is nothing more than a license to steal, and to monopolize all market segments by the aristocracy. That path leads to unbridled greed, and corporate Fascism. Case in point: the past three decades, beginning with Gingrich and Raygun, and the mess that needs to be cleaned up, yet again, by American Liberals. You know, the same philosophy that founded this nation, and wrote the Constitution. The same "can do" mindset that brought this nation out of the Great Depression, and made it a World Leader.
Thanks anyway, but I'll take American-style regulated Capitalism over survival-of-the-fittest, anything goes, "free markets" everytime. The latter is what caused the Great Depression, and the current economic crisis that we face. In both instances, it was right-wing, faux-Conservative Republicans and Libertarians who facilitated the unbridled greed of "free markets" through government deregulation.
You are being silly.
What you say is PARTIALLY true: Markets are moved for the better, in PART, by consumers.
Look at the details however and you'll find that near monopolies are RESISTANT to feedback from consumers. They kill start ups which provide far better products and services. They can patiently wait out attempts to topple some of their power.
Libertarian feedback is feeble with respect to d-e-e-p pockets. Soldiers, Scientists, Etc. can't simply drop what we are doing and form start ups to counter the giants who COLLUDE rather than compete in any meaningful way.
If you wish to advance Libertarian principles which ARE valid then you need to apply them within their range of applicability.
Jim
Welfare markets
not free markets. The businesses that survive over the long term are the large corporations and as we all know they get so many tax shelters some of them don't pay taxes at all.
Don't call them free markets, because they're not free. They cost me a hell of a lot last year.
At least be genuine.
Deregulation is nothing in the world but quid pro quo. It's government paying corporations back for the political contributions that keep them in office.
Somewhere ...
Im checking, and I am not finding - where exactly I said to deregulate markets. You ALL added that, thx. I do believe in most libertarian ways, except deregulating markets and wide open borders, two things which the federal government was mandated to defend/regulate by the constitution.
I also dont think adding MORE regulation and agencies is the answer to THIS problem....
In this case these companies are dying because of their own bad business decisions, and consumer decisions - a process that should be allowed to take its course; politicians should NOT be looting the treasury to rescue bad business; they should be replacing the trillion dollars that have been pilfered from Social Security, or maybe investing more in future tech/fuel/etc. ANYTHING but this.
And I ALSO think the absolute worst answer is throwing trillions at it.
Dammit John
If you're not going to be an Ideologue/Philosopher, you just made this conversation much more complex ;)
Jim
How about this line from one
How about this line from one of your earlier posts:
We're NOT talking about new regulations, but restoring the regulations that the neocons have abolished, otherwise there is no way to restore order to the markets. There is no need for "additional agencies," as they are already in place, but their regulatory power has been severly weakened by Dubya and his gang of thieves. That is the main cause of our current economic crisis.
Your idea of boycotts, and consumers dictating which companies live or die, will not work on the large scale, because there is no coordinated political, or social, effort to do so. That is why we need our government to step up and put the brakes on this runaway deregulated greed.
As LootieMaye pointed out, as long as big money (aristocracy) controls large segments of an industry, or market segment, and doesn't pay taxes (continuous "bail out") the consumer is at their mercy. Do consumers control interest rates? No. Do consumers control the price of bread? No. Do consumers control the price of gasoline? No. Get the picture?
Maxwell's Demon
We all have our leanings. That's all good.
As a Physicist I would just ask that folks don't try to apply statistics too broadly. The economics of a system, in which everyone starts out with equal capital, and resides in an infinite world, with an infinite number of people, and infinite resources, and with a government of idiots, is one thing.
All real economies are not that however. A Maxwellian like Demon, in government, might well do "better" (defined in a host of ways), at one point in time, than a massively skewed Aristocracy.
Please not that the bar of proof that I must vault is quite low. I am NOT trying to resolve the question of how one should LEAN politically: either Conservative, Libertarian, or Liberally. I am simply asking folks to understand that some of the reason so much passion exists between philosophies is that each of those philosophies makes propositions within the real world that are true ... and false.
Jim
Let's see: the Middle Class
Let's see: the Middle Class expanded greatly under the original anti-monopoly and regulated industries era. AFTER deregulation and the gradual demise of the Labor Unions, however, the Middle Class all but disappeared.
Am I missing somehting here? Is the Middle Class to blame for the failing economy, as you suggest?
Sorry but
Regulation and oversight are intended to prevent crime. The market can only regulate crime on the local level. A small business owner would be virtually guaranteed bankruptcy if he screwed his clients.
Big business and multi nationals have no such fear of reprisal without some sort of intervention from the governments or the courts.
Regulation is not an excuse to tax and spend, unless you considerate it a waste of your tax dollars to prevent Monsanto from poisoning your children.
You as an individual can do nothing about this unless you have the power of the courts. But the "Idiots in Charge", since 1994 have largely taken that power away from you, calling them frivolous lawsuits. We all remember the whining about Tort reform.
So get a life. Regulation will not kill you or ruin your financial situation unless you are the CEO of Exxon Mobil.\
In fact, it might save your life.
Saving the world from stupidity
One Republican at a time
Since November, 2004
Bail-outs
When, for god's sake, will everyone understand what is really happening in the United States, and has been for several years now. Please pay attention and simply read the next paragraph and understand what it states, nothing more, nothing less!
"CORPORATE AMERICA IS IN CHARGE OF OUR GOVERNMENT, WHAT, WHEN, WHERE, WHOM, AND HOW MUCH."
Corporate America has bought and paid for the elected officals in our government. Most elected by the public, in one way or another, owe their votes to someone other than the people that elected officals. These elected officials, have chosen to sale their support and votes to the highest bidder, for their own personal gain, and campaign controbutions. If someone still thinks differently; WAKE-UP. SMELL THE ROSES, TAKE A LOOK AT WHAT HAS HAPPENED TO THE UNITED STATES of AMERICA.
Until ;WE THE pEOPLE" Regain control of our Country, we will continue be dumped on by Corporate America, with their bought and paid for government officials. If you're afraid of reality, you're part of the problem.
Electric Car and what?
It would be useful if each time the electric car is brought up, the source of the electricity is also noted.
Misc:
-It is not clear to me the extent to which Tesla "pimped up" the price of their vehicle.
I'm sure that with limited production the price was too high for the average consumer. It would then make sense to add luxuries to make it so desirable (while only increasing the price a bit) that it would move into the luxury market niche.
If the extent of the above is known (as is suggested in the opening post) it would be useful to have the details.
-VW will be introducing a 2 seat, 238 miles per gallon vehicle in 2010.
Democrats and the American worker.
I always voted Democratic because of the Democrat Party always being on the side of the American worker and American jobs. But when I read the negative comments about about the American auto industry that provides millions of jobs for American workers, I wonder what happened to us and think maybe I'm on a Republican website. When I hear buy a Toyota and boycott the American companies out of business, I can not believe what happened to the party of FDR, And what would Harry Truman say? Have we , like the Republican Party, lost our way, our focus, and identity? If the Democratic Party starts stepping on the American worker as the Republicans do, then why should the American worker support them and maybe we should ask for our contributions back? If we do not stop targeting American workers and Companies as the bad guys, There will not be anything left that is ours but the flag and it may be made in China. If we do not change, Eventually we will wind up with another Bush plan, like moving California ports down to Mexico and using Mexican truck drivers to deliver goods across the our country. All we have to do to accomplish this is to keep targeting each other. Support your neighbor, your country, and Buy American. After all the American worker is you and your job may be next.
William
Hi. It was a Libertarian, not a Democrat, who suggested buying a Toyota ;)
Jim
Thanks Jim for letting me
Thanks Jim for letting me know about the Libertarian. I thought this is a site for Democrats to express their views.
Hi William
Absolutely!
This is a private site for Democrats to gather and build the party from the grass roots up. Anyone however (Republicans, Greens, Libertarians, Independents, etc.) may join up, and remain in the forums, as long as they behave as one should when invited into someone's living room.
There are plenty of places on the internet for everyone to rumble, and a few places for each group to get a little time to communicate semi privately. This site is one of the latter. Here are the rules: http://www.democrats.com/rules
I should also note that we have a few Independent bloggers (I.E. NOT Democrats). I am a Democrat and I sometimes agree with them and sometimes vehemently disagree. As this is a grassroots Democratic site you can expect a few more elbows to be thrown compared to a polished political site ;)
Best,
Jim
Thanks again Jim. I always
Thanks again Jim. I always vote Democrat and I also do not always agree with them. Right now they best represent my views. As a member of the DAV and American Legion, I have several brothers that I do not always share views with, but as brothers we respect each other and work together towards the greater good of every American Veteran. I just hope our great Nation can pull together as Brothers and Sisters, regardless of political views, for the greater good of every American, whether or not they are the Detroit autoworker, the CEO of Goldman Sachs, the unemployed, and the self employed business owner. What's important is that we come together in support of all Americans. In closing, I would like to say this about the Republican Party; I hope they can rediscover their roots and become, once again, the Party of Lincoln and Teddy Roosevelt. That would be one of the greatest happenings in my lifetime. Thanks again.
A quote from Lincoln:
My hope is as yours ;)
We can't perfect the union, but we can make it "a more perfect union". I think this implies that we MUST compromise, but not try to include the most extreme of voices.
As we Democrats get our house in order, I'll second your sentiments and wish those who lean Republican the best of luck in righting their own party.
Jim
P.S. Nice to have you aboard William.
But as a Democrat I'll note that...
...the Auto Industry does NOT provide jobs to poor lowly American workers.
Instead, folks who want to make money for THEMSELVES REQUIRE labor, and can only make cash for themselves if they can get labor to work for low enough wages. This is neither bad, nor something to be applauded. It just is. Workers need not grovel nor condemn. This Democratic view had been lost for a time during Republican rule.
You are absolutely correct about the dogs eating the dogs. Pitting one American worker against another. The classic Republican game normally pits a fictitious "middle class" against "poor bums". The problem of course, is that those "poor bums" they keep referring to are actually the majority of Americans.
As to the opening post's author, you'll find disagreement amongst fellow Democrats to be sure ;)
Jim
You do know that
There are American plants building Toyota, right?
Toyota.com
My first VW...
...came from a Pennsylvania plant.
I still managed however, to have a guy who almost crashed into it, scream that I should "buy American".
fleecing America consumers
As I watch all the rhetoric about the big Auto makers asking for handout from the taxpayers, if by now you know that the Auto makers really don’t give a damn about what you think about their bad management and over paid CEO’s. Wall Street jockey’s who believe that the Wealthy own the USA and the Consumers are for fleecing by the wealthy. As Wall Street continues to milk the consumers, and our Government continues to operate on what Wall Street is telling them. Our economy will continue to be in a nosedive. We can point fingers at just the “Unions” and the CEO’s, but really it has to be bad management. They are asking for help, but don’t know how to get it. Bankrupt is not the answer for them, they have to began to be rebuild from the ground up, and all the crap that they have accumulated can be weeded out, then and only then maybe they can start building Auto for the average American consumers.
We see that over paid people all want more wages then they worth from CEO’s, Senators, Congress people, managers, Healthcare and etc. but when it comes to waiters and the laboring people we are at the mercy of the wealthiest Americans, we have literally became unbalanced and our economy is showing us that this imbalances is tearing this country apart. Any businessperson knows you cannot throw good money at a bad business and expect to save it. But, we see Paulson doing just that by giving corrupt Banks taxpayers money, but cannot help homeowners who were “scammed” by these Banks (don’t get me wrong here, I know that some homeowners were wrong too)! Something is rotten here, and the smell is coming from Capital Hill! (Paulson must be very happen with himself in his quest to fleece the American consumers again.)