Put the Dying Animal Out of Its Misery
Let me get straight to it. This plan to bail out the auto industry—again—is a mistake. I’m very disappointed that this is the route Barrack Obama has chosen to begin his Presidency (I know he’s not the President, but Bush is a lame duck). It would be one thing if Detroit hadn’t been bailed out before and this was a fluke, but this has been happening since Carter. Even Reagan tried to protect Detroit. Our automobiles are some of the worst in the world. We are not good at making them anymore thanks to the UAW. It’s time for our economy to move forward. Let the Japanese make cars.
Pelosi and Obama are wanting to require that these automakers make more green-friendly cars as a condition of the bailout. All that is going to do is push them even farther towards bankruptcy. They are not good at that kind of stuff. The WSJ had an interesting article today about the Volt from GM, a car they say will make them no money. Its a terrible car. You have to charge it six hours to get 40 miles of purely electric driving. It costs more than 40,000 dollars. For those not using the gasoline, they will have to pump the gasoline out of the tank after a few months because it goes bad. Yet, they are sort of forced to produce this stupid thing.
I say let GM, Ford, and Chrysler go bankrupt. Not because I hold to a heartless survival of the fittest you can only let something so entrenched get so bad.
I pretty much agree, and found this blog post to be very persuasive.
http://meganmcardle.theatlantic.com/archives/2008/11/save_the_rust_belt.php
let’s not forget that most of the problems the car industry is having is a result of over zealous unions
Indeed, the failure of the American automobile industry is due to over-protection. They are a second-rate industry (a far second behind the rest of the world’s auto industry).
i think the inevitable failure of the american auto industry presents our economy with a very interesting and potentially life saving opportunity.
another multi-billion dollar bailout is a very hard pill to swallow for most people. it certainly is for me. however, i just don’t see how our economy and/or standard of living can survive if, on top of everything else that’s collapsing before our eyes, we lose 3 million more jobs, thousands of technologically up-to-date factories, and over $150 billion in tax revenue each year. if we let this happen i think a serious depression is inevitable and i’m pretty sure that, in the long run, letting the auto industry fail will be much more expensive than doing something about it now.
simply throwing money at the problem, though, is clearly a terrible idea. if the gov’t is going to do something about this situation it needs to demand a complete “overhaul” (is that a car term?) of the auto industry, from top to bottom, raw materials to final consumer product, etc. we should not just incentivize “green-friendly” technology, we should require it. we should condition any money that we give to the auto industry with a requirement to, essentially, develop the best, cheapest, greenest, most incredible, most important pieces of new technology in the 21st century (hey, we did something very similar with the atomic bomb). In doing this, i believe we can save our economy, just like the auto and the steel industries have done in the past.
now, i know that sounds kind of dumb and idealistic, but i am actually using the basic ideas that just won Paul Krugman the nobel prize in economics. his basic framework is this:
(1) industrial/economies-of-scale goods can be produced anywhere, regardless of geographic location;
(2) efficiency, the mobility of economic resources, i.e., labor, capital, etc, and large scale markets “promote concentration of economic activity” of an industry in just a few spots of the globe (think about detriot (cars), silicon valley (computer), & new jersey (crap));
(3) the government can encourage or “steal the march” on the development and the subsequent concentration of a new technology/industry by directing tax credits, funding, etc. in that direction.
i think the position that we’re in with the auto industry is a perfect opportunity to become the mecca of the “green revolution.” we’ve got 3 million employees that would otherwise be out of work; we’ve got thousands of factories that would otherwise be stripped and sold off, piece by piece, to china; obama was planning on doing something like this anyway (only my idea is easier, cheaper, and faster); the industry is already in the process of upgrading and developing new technology; there is currently no definitive epicenter of “green” economic activity; and we have nothing else to lose.
so, why not pump an “S” load of money into detroit and beat everyone else to the “green” punch? (again, we did it with the atomic bomb). the environmental aspects would make the lefty tree-huggers happy; the “keeping jobs america” promise would make the lou dobbses happy; the reduced costs of transportation, energy, and living in general would make everyone happy; and the fact that wouldn’t just be throwing more money at a problem would at least piss the fiscal conservatives off a little less.
i, personally, can’t come up with any other alternative ideas to the unpalatable standard “bailout or bust”
whoops, i didn’t mean to write so much.
can anyone say, “procrastination”?
A comment referencing Krugman would slam Jersey. Those Princeton elites are jerks, right?
I, too, would be inclined to let them die, but also start up some sort of huge government program for most of the workers. Get them building/repairing infrastructure. It’s gotta be done anyway, you may as well kill two birds with one stone.
I am certainly not opposed to using transferable payments or a government re-education program (that sounds pernicious, but I mean it for what it is). This is essentially what keeps countries running during times of economic hardship.
David Brooks of the NY Times agrees with you. Wish I knew how to attach it, but you can read his Op-Ed in today’s (Nov 14) edition.
domane
I am such a fan of David Brooks. Not so much because I like what he writes, but because his picture on the NYT site has him wearing some awesome glasses. No one can rock the tortoise shell frames like Mr. Brooks. Unfortunately he wasn’t wearing those awesome frames during his debate coverage on PBS–I lost a little respect for the man.
Funny, I was reading that this morning before I decided to check on the blogosphere. Here’s the link:
http://www.nytimes.com/2008/11/14/opinion/14brooks.html?_r=2&ref=opinion&oref=slogin&oref=slogin
And Derek, I’m not automatically anti-union but I have to say the UAW is probably one of my least favorite unions in our country.
The Green Bomb, jball. The Green Bomb.
have you seen the bloomberg numbers? lol
its not about how much you lend out, it’s the principle of the thing. the ball is already rolling and has been. good luck stopping it.
U.S. Pledges Top $7.7 Trillion to Ease Frozen Credit
http://bloomberg.com/apps/news?pid=20601109&sid=arEE1iClqDrk&refer=home
the monster that needs to be destroyed is the FED