Sunday, November 30, 2008
Who do we bailout?
This was originally going to be a reply to Adam’s post titled The sky is falling and Congress doesn’t see it., but it grew way too big. Before the election he was on board with the socialism buzz word and I asked him if he really thought people were going to just stop working and mooch off the system. I asked if we had the moral responsibility to protect people. No one likes seeing people live for free while others struggle.
Adam says the United Auto Workers of America must be to blame for ongoing talks of auto industry bailouts. That everyone just wants them to go bankrupt, “reduce cost” by lowering wages and wipe the slate clean. Obviously the union is fighting it - that’s what unions do. Remember that no unionized company/industry was created that way.
You can’t speak so callously of union workers refusing to give up their wages for the good of the company! These workers are the ones who go into work every day and on weekends. They don’t get to chose the cars they make, SUV or hybrid, etc.. But they will be the ones to bear the failures of their management. They will be the ones not able to pay their mortgages, loans, and living on unemployment and welfare. The very people Adam himself said we have a responsibility to help.
Take a lesson from the airline industry. In September of 2001 all of a sudden people stopped flying. Airlines had to pay salary without any income. Pretty similar situation to today. All the legacies went into bankruptcy except American. Thanks to our lovely bankruptcy laws, airlines were able to throw pilot contracts into the garbage. American pilots gave up 1.6 billion in salary, benefits, and pensions…so same thing, put 2000 of their own pilots on the street. Pilots are skilled workers just like the UAW, and it wasn’t the pilots that made people stop flying. But the pilots and the other “lower class” employees took the brunt.
Several years later the airlines are just starting to turn around again, and how has American given back to those employees who gave up their future, their kids futures (everyone loves the little emotional burst you get by mentioning kids), those who gave up their livelihood so management could keep trying? By giving $21 million in bonuses to top level executives! By giving the CEO a $6,600,000 bonus on top of his $581,000 salary for a total of $7,181,000 not including stock. Other airlines are all the same. Pilot salaries are down 66% since 1978 while these executives hand out pat on the backs to themselves. So forgive me for not having any sympathy.
What will happen if we bailout the auto industry? I want to say let them fail but bankruptcy will just do to them what it did to the airlines. The executives responsible will just lower the pay of the workers to cut costs and then it’s business as usual again. What we need is some way to hold those accountable…accountable.
Again a look at history proves this isn’t the first time we’ve bailed out Chrysler anyways. In 1979 we bailed them out for $1.5 billion dollars. There were many strings attached just as there should be many strings attached now. But the point is, they paid it back!
“Under the leadership of Lee Iacocca, Chrysler doubled its corporate average miles-per-gallon (CAFE). In 1978, Chrysler introduced the first domestically produced front-wheel drive small cars: the Dodge Omni and Plymouth Horizon. In 1983, Chrysler paid off the loans that had been guaranteed by US taxpayers. The Treasury was also $350 million richer. “
I’m not an economist or even that good at money stuff, but I do know that this stuff is all connected. Demand is down because people cant afford to buy things because we’re all scared we are losing our homes. Probably wouldn’t be half as bad without the media telling us how we should feel, but we are officially in a recession, so demand is down. Prices will fall until everything evens out, and then values will grow again. It stands to reason that the government can make interest off the bailouts just as it did with Chrysler.
American cars suck. They all look the same. I just recently bought a German car, after shopping around. American cars, don’t care which brand, are all big, gas guzzling, square-looking bricks. Gas prices have been rising for years and they failed to deliver higher mpg vehicles. It’s management’s fault, not the union. So I say bailout the auto workers, not management. Give the money to the company, but not to the executives.
By “Spreading the wealth”, Obama didn’t mean stealing your money from your bank and giving it to poor people. He meant rebuilding the middle class. Let the CEOs live with their failures, kick them out and let those who actually work get the pay! Congress should be scared shitless! They should get what’s coming to them!