The demands of the auto industry continue to escalate. It really should come as no surprise but the audacity of it all continues to delight and disgust me in a curious way.
Auto industry executives who, through their own mismanagement, have killed the viability of their very own industry are now using that outcome as a way to leverage the government for concessions. How did this situation turn from an industry desperate for aid into an industry dictating demands euphemistically described as needs? Let’s say: political mismanagement and a complacent media. Although some of the coverage is improving thanks to good ol’ self-interest. The light bulb: wait a minute our industry is also suffering huge job losses but we aren’t getting help — what’s up with that !?.
This situation is a classic example of a distinction I taught my first year Intro to Political Philosophy classes classes back in Auckland. These auto executive certainly have “the right” to do what they are doing (trying to exploit the outcomes of their own mismanagement for their own gain), but it certainly isn’t right for them to do it either. I hope our politicians, workers, and citizens are bright enough and courageous enough to see what’s happening and let the industry go down in the flames they themselves let.
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Guy
March 13, 2009
There is a problem in letting them go down in flames. The spiral effect globally would be devestating. This is analogious to a person and banks. If you are the average person when you have no money then it is your problem, but if you r are stinking rich and have no money then it is the Bank’s problem. The thousands of people that would not have an income would be crippling in many nations around the world. Even now the declining economic engine of the US has had an impact on the emerging Chinese economy. If a whole industry colapsed it would take years to re-align the situation. I suppose it would fulfill the dreams of Henry Ford and foreign auto manufactutrers.
Lets not kid ourselves this is a global economy and the greed of the banks in the US with sub-prime lending rates has gotten us all in this mess.
sterlinglynch
March 13, 2009
Guy, thanks very much for your comment.
You are right to emphasize the negative consequences of the collapse but we should also be fully aware of the potential positive consequences as well. The auto industry soaks up an incredible amount of wealth and resources that could be much more efficiently employed elsewhere. Once the resources are unlocked and put to better use somewhere else, there will be incredible potential for growth in other areas. This is how a free economy is meant function. And remember we are knee-capping all kinds of other industries right now by propping up this one industry.
So, I absolutely agree there will be serious negative consequences as a result of the auto industry’s collapse but I do not see how those effects are avoidable. Instead of flushing billions of dollars down the black hole of a ridiculously mismanaged and inefficient industry which is on its last legs, let’s put those billions of dollars to work protecting workers and stimulating consumer demand right now.
Furthermore, the sooner the workers are disentangled from this dying industry the sooner they will get new and stable employment in other industries. Right now, the best they can hope for is reduced wages in an unstable industry run by people who have proven they are incapable of running the industry efficiently — this will not stimulate consumer demand or help them and their children. Nor will it benefit the developing world which presently relies so much on North American demand. Of course, if we really cared about the developing world, we’d immediately eliminate all the subsidies propping up our agricultural businesses … but I guess that’s another story.
Wayne C
March 13, 2009
I think it’s important to point out that not all automakers are asking for bailouts. Toyota, Hyundai, Kia are not. Why? Because they made cars people actually wanted to buy. Go figure. GM and the failures of the auto world did not. They deserve to fail and they should. That is how a healthy market works.
As to the downward spiral, recessions are a necessary part of a free market system. If you are living in a bubble and it bursts there will be a recession. Bubbles can not support themselves indefinitely. The answer is not to create a bigger bubble by loaning more money to failures (like GM). The answer is to put that money instead into supporting the workers so they can retrain, find new jobs and ensure their families are fed etc. Out of the ashes will come leaner, stronger, more innovative companies.
Rather than putting the money into bailing out a corporation it makes more sense, in my view, to put it into the pockets of displaced workers. Yes, the consequences will be harsh in the short-term; however, they will be even harsher in the long-term if we keep these failures afloat by incurring more debt. Of course it won’t be our generation that has to pay the piper. It will be our grandchildren’s.
Paper Bag Princess
March 13, 2009
Burn baby, burn!
Big auto has orchestrated its own demise, and artificially propping it up only delays the inevitable, I think. I agree with you Sterling – it makes so much more sense to plan for the economy of the future, than clinging to a clunky old dinosaur for short-term benefit.
Enough of the big three’s antics! Sure, it has some comedic value, but I can stomach no more!