Tuesday, November 18, 2008

Event: Bailing Out the Big Three.

New York Times: Congress Remains Divided on Bailout.

New York Times: Clout Has Plunged for Automakers and Union, Too.

New York Times: How Many Jobs Depend on the Big Three?

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New York TimeS: Saving Detroit from Itself.

Paul Krugman: Cars.

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Daily Kos: Ideas for an Auto Plan - GM Edition w/ Poll.

The articles above pretty effectively stake out the boundaries of my position. With possibly over three million jobs at stake, it isn't with a lot of pleasure that I watch the Big Three work the nation over now as they've worked Michigan for decades. What do I mean by work over? I mean that they draw assistance from the government (whether in terms of tax breaks, incentives, and now a bailot) to rectify a mess they've made, and in exchange for which the best they can seemingly offer is a non-worst case scenario. If that. In Flint, throughout the eighties and nineties, GM continued to drink that city's tax pool dry in infrastructural and fiscal accomodations as if they were dying of thirst at a desert oasis. And yet they persisted in the manufacturing strategy that has put them in dire straights. The cities and states which invest in these companies, essentially at gunpoint, rarely see such speculations realized. There is a risk of this being mirrored on a national level. The Big Three's market share will presumably continute to dwindle in the near-future, albeit hopefully at a slower rate, they'll close plants and hemmorage jobs, and if everyting goes perfectly, it will still be a long, long time before they can offer a fleet as well-adapted to the next global environment as their competitors.

It's just like the Wall Street Bailout all over again. These were my original reservations with that bailout package, and here is the upshot after just two months.

Let's learn a lesson from this very recent history and not be handing out blank checks.

Let's encourage our representatives to cautiously support a bailout for the auto industry, but let us absolutely insist that it only come with serious and meaningful restructuring that will lead to an industry that can legitimately compete. Symbolic shuttling of executives will not be sufficient (and the Wall Street bailout didn't even achieve that obvious step); any Company that requires taxpayer money to fight for profit is fair game for prudent meddling. It's more than auto plants that will need restructuring; it's the Big Three's entire corporate structure.

I wrote more on this at Daily Kos: Don't Be Flint, Michiganized by the Big Three.

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