Auto Industry Bailout

[pc313]

 

 

These fuckers should be nationalized (plenty of that going on in finance) for the time being, management and shareholders put to pasture, the factories retooled to make something useful as opposed to something immediately profitable, like bullet trains, or something, and pay people a living wage for doing it. It will certainly pay better dividends than the hundreds of billions being taken out the back doors of banks right now, for a fraction of the cost and a greater benefit to society as a whole.

 

 

I'm for buying up their stock on the cheap,say 5-10 cents on the dollar and let the stockholders,and the bigwigs take a loss,and have the goverment become a 51% stock holder with control,sell off their out of country plants,order U.S. made new and replacement parts only,fire sale all thats not needed to retool for 30-50 MPG cars and small trucks,and all one ton and bigger trucks LP gas only!And no more big paydays for management,these asshats should make no more then $150,000,00 a year,3-5 year turnaround. Change the import laws to the same standers,order all new big trucks to be LP gas only with in the same time, and watch as oil drops back to $30.00 a barrel,and LP gas back to $1.00 GAL. If we loan them $25 billion more their still going to close plants,with big layoffs,and move most of their jobs overseas! Let them go broke and take them over,they allready owe us $25 billion + !! FUCK UM!!

[JayB]

JayB spent all these years supporting the free-marketeers who refused legislating more stringent fuel economy standards and drove Detroit into the wall, and he demonized the “Kumbaya singing hippies” who told him he was a fool for doing it and now he wants main street to pay the price for his misguided laissez-faire ideology. Now and then, all in the name of profit, of course.

 

"Hey! No...Over here! Hey, yeah, look over here! The unions! Yeah, the unions did it all! Hey...hey wait! Look over here. Hey, where you going...hey. Hey?"

 

Somehow foreign auto markers operating in the same market managed to manufacture and scars that sold for more than they cost to make, thereby navigating around the "wall" that you reference. I invite you to explain what accounts for their differing fates in the same market.

 

 

[JayB]

Strawmen aside (again), I think even moderates at this point can agree/have already agreed that in the current climate State intervention in some enterprises can be socially beneficial. Rather than putting millions of people on the streets of northeastern cities with no net just to prove a point, I think the State should gather some leading forward thinking technogeeks, progressive economists, workers, municipal and urban planners, environmentalists, and futurists to outline a plan for reorienting the productive capacity left behind by the Big 3 toward producing green and durable transportation and infrastructural technology for the next 50 years. The alternatives, by almost any measure social or political, are simply unacceptable (unless your economic advisor is Dr. Strangelove). By then, the ideas you're still trotting out around here, despite the apparent failure to make good on their promises thus far, may have come back into fashion.

 

 

I spent quite a bit of time in the river valleys of the Northeast, and pretty much every river I kayaked down had one drop created by the breaching of a dam associated with a long-deceased factory, the decaying remains of which were often part of the riverside landscape. Once their output rose from a net loss to a zero upon closing and liquidation, the net benefits that they generated for society were effectively optimized.

 

Had a crack team of progressive economists and futurists concocted a scheme to keep them generating outputs worth less than their inputs (the inevitable consequence of ignoring profits), the net loss to society would have been immeasurably higher.

 

The fundamental delusion here seems to be that shifting resources in such a manner that you produce outputs worth less than their inputs, you're playing a zero sum game, and the pool of resources available to society is unchanged. This is no more the case than a lone subsistence farmer can elect to use 100 meals worth of energy rolling a large stone back and forth across his fields, instead of using the same energy to grow 150 meals worth of crops without sustaining a net-loss in the amount of resources available to him to live on. The fact that unlike the lone subsistence farmer, we live in a vastly more complex society where we're both producers and consumers, makes it more difficult for the average person to appreciate this reality, but does nothing to change it.

 

There's a set of resources available to everyone who's laid off already, and since virtually *any* scheme to help them relocate and retrain these workers will cost less than either maintaining the status quo or employing them in the 21st century equivalent of rolling a large stone back and forth down a dirt-road (perhaps with the said team of futurists and progressive economists coaching them as they go), I'd gladly support increasing the benefits available to auto workers over 20 years of state-sponsored stone-rolling.

[bstach]

Profits generated in an environment where supply and demand determine profits represent the price you pay for allocating assets as efficiently as possible under the constraints on information and decision making imposed by reality. Not all decisions made by all persons lead to an optimal allocation of resources - but even when people who (thankfully) have the personal and political freedom to do so choose to buy TruckNutz instead of T-Bills, the overall "cost" of this behavior is a fraction of what it costs society when you take these freedoms out of their hands and transfer it to someone else.

 

In short, things that are immediately profitable and aren't "inherently useful" are quite a rarity. You may not agree with the way the person who wants to use something they buy defines "useful," but on balance they're much more likely to be right than you or anyone else who wants to make all of those decisions for them, and the costs that they impose on society to be much lower as well.

 

Jeez J, it sounds like you are implying Truck Nutz are not "useful". How do you figure?

 

[j_b]

First, foreign auto makers aren't doing so well either; VW is on the edge of bankruptcy for example and auto sales have cratered worldwide. They'll probably all need bail outs of some sort. They are doing better than US manufacturers because they are from places where gas prices at the pump aren't as much subsidized as they are in the US and they had to produce fuel economy cars, and they retooled to capture much of the market share of the big 3, and because oil prices went down during the current world recession.

 

American auto makers went for short term profits because deregulation/lack of regulation promoted by anarcho-capitalists allowed greed and incompetence to rule the day. They refused to retool even though they were told for years it wasn't sustainable. They weren't forced to retool because their agents in Washington took over government.

[Peter_Puget]

Total compensation per hour for the big-three carmakers is $73.20. That’s a 52 percent differential from Toyota’s (Detroit South) $48 compensation (wages + health and retirement benefits). In fact, the oversized UAW-driven pay package for Detroit is 132 percent higher than that of the entire manufacturing sector of the U.S., which comes in at $31.59.

 

 

 

Journal of Clinical Oncology reports that 20% of England’s curable lung cancer patients become incurable while waiting for treatment. The British journal Lancet Oncology found that Americans have a higher survival rate than Europeans for 13 of the 16 most prominent cancers. 10% of the Canadian population is stuck on a waiting list without a primary care doctor, and another 800,000 are on another waiting list for procedures.

 

http://www.intelligencesquaredus.org/TranscriptContainer/HealthCoverage091608_v2.pdf

 

[Hugh Conway]

I'm still waiting for more "we need the $700 billion bailout because" excuses. Those have been joyous to read.

[JayB]

First, foreign auto makers aren't doing so well either; VW is on the edge of bankruptcy for example and auto sales have cratered worldwide. They'll probably all need bail outs of some sort. They are doing better than US manufacturers because they are from places where gas prices at the pump aren't as much subsidized as they are in the US and they had to produce fuel economy cars, and they retooled to capture much of the market share of the big 3, and because oil prices went down during the current world recession.

 

American auto makers went for short term profits because deregulation/lack of regulation promoted by anarcho-capitalists allowed greed and incompetence to rule the day. They refused to retool even though they were told for years it wasn't sustainable. They weren't forced to retool because their agents in Washington took over government.

 

How does the fact that GM has subsidiaries or ownership stakes in other car companies operating in virtually all of the places that fuel is expensive (Opel, Holden, etc) factor into this analysis? Also, how would forcing them to retool and manufacture all, or primarily, small vehicles have made a difference if they weren't able to generate profits on the small cars that they were already selling under their existing cost structure? E.g. - if the small cars that they already made were unpopular and often sold at a loss, how would a government mandate to create more of them have made them any better off?

 

If the government *had* arbitrarily changed the market by putting a mandatory floor under fuel prices, what's to say that the increasing demand wouldn't have been captured by the automakers who were already able to sell small, fuel-efficient vehicles that people already wanted to buy even in the absence of such government mandates?

[j_b]

Total compensation per hour for the big-three carmakers is $73.20. That’s a 52 percent differential from Toyota’s (Detroit South) $48 compensation (wages + health and retirement benefits). In fact, the oversized UAW-driven pay package for Detroit is 132 percent higher than that of the entire manufacturing sector of the U.S., which comes in at $31.59.

 

Of course, you provided no reference, credible or otherwise, for these numbers. Did you pull them out of hat?

 

 

[Peter_Puget]

Look around here J_B:

 

http://spruce.flint.umich.edu/~mjperry/

 

 

OH and by the way wasn't there a person from VW on NPR last night saying that they were hiring 2k new workers in the us this year.....

[j_b]

How does the fact that GM has subsidiaries or ownership stakes in other car companies operating in virtually all of the places that fuel is expensive (Opel, Holden, etc) factor into this analysis?

 

the margins were higher on gas guzzlers so this is what they sold here

 

 

Also, how would forcing them to retool and manufacture all, or primarily, small vehicles have made a difference if they weren't able to generate profits on the small cars that they were already selling under their existing cost structure? E.g. - if the small cars that they already made were unpopular and often sold at a loss, how would a government mandate to create more of them have made them any better off?

 

If they hadn't continually hammered american consumers about how macho and better SUVs are, and instead expounded on the virtues of energy efficient vehicles it wouldn't have been difficult. Americans were a long way to being sold on fuel efficiency after a few years of Carter policies and other people not exposed to detroit pro-SUV advertising, have no trouble with smaller cars and no particular desire to drive a tank around town.

 

If the government *had* arbitrarily changed the market by putting a mandatory floor under fuel prices,

 

False. There nothing arbitrary about taking into account huge subsidies to oil companies (waved royalties, tax breaks, military cost to secure the resource, etc ..)

 

what's to say that the increasing demand wouldn't have been captured by the automakers who were already able to sell small, fuel-efficient vehicles that people already wanted to buy even in the absence of such government mandates?

 

We can be sure that if they had retooled they wouldn't be as badly off as they are today. The rest is speculation.

[tomtom]

How many of you bailout guys only own American cars?

 

Prole?

 

j_b?

 

Trash?

 

If these companies are to succeed, then *someone* needs to buy their products.

[Peter_Puget]

J_B, Trash, Prole! Listen up!

 

[Hugh Conway]

If these companies are to succeed, then *someone* needs to buy their products.

 

Amusingly they made money hand over fist selling things that people wanted but our free marketers now think that this was a "bad" thing and no government help is necessary.

 

Of course the banks who made money hand over fist selling things that people wanted now deserve a bailout.

[j_b]

Look around here J_B:

 

http://spruce.flint.umich.edu/~mjperry/

 

where? I said 'credible reference' not 'wild goose chase'

 

 

OH and by the way wasn't there a person from VW on NPR last night saying that they were hiring 2k new workers in the us this year.....

 

I was wrong about VW 'on the edge of bankruptcy' (I misread their being taken over by Posche) but it doesn't change my point. All auto corps are in a world of trouble.

[j_b]

How many of you bailout guys only own American cars?

 

Irrelevant. American car companies had a huge customer base that would have followed suit if manufacturers had provided the right product.

[JayB]

If these companies are to succeed, then *someone* needs to buy their products.

 

Amusingly they made money hand over fist selling things that people wanted but our free marketers now think that this was a "bad" thing and no government help is necessary.

 

Of course the banks who made money hand over fist selling things that people wanted now deserve a bailout.

 

Nothing wrong with making things that people want to buy. Plenty wrong with the keeping them in business when they no longer make things that people are willing to buy at a price that exceeds the costs of making them.

 

If only people involved in manufacturing buggy-whips and whale-oil lamps had had such ardent defenders back in the day....

 

[j_b]

Amusingly they made money hand over fist selling things that people wanted

 

Did they "want them" before or after Detroit spent billions of dollars in advertising expounding the virtues of jumping ditches when driving the kids to school?

[tvashtarkatena]

How many of you bailout guys only own American cars?

 

Prole?

 

j_b?

 

Trash?

 

If these companies are to succeed, then *someone* needs to buy their products.

 

Fuck no. I wouldn't own one of those pieces of shit. Merkin cars suck ass.

 

My Pubaru was made in Merka, though. It only sucks one ass cheek.

 

Why don't all you big ballers with an big ass SUV sitting in your drive just go out and buy a couple more and save the economy?

 

 

 

 

My next car's gonna be a horse

 

with a lion on it.

[tvashtarkatena]

J_B, Trash, Prole! Listen up!

 

 

Her mouth's big

 

but it ain't that big.

 

BTW, thanks for the compliment, PP. Hey, you're not so bad after all.

Edited November 14, 2008 by tvashtarkatena

[JayB]

How does the fact that GM has subsidiaries or ownership stakes in other car companies operating in virtually all of the places that fuel is expensive (Opel, Holden, etc) factor into this analysis?

 

the margins were higher on gas guzzlers so this is what they sold here

 

 

Also, how would forcing them to retool and manufacture all, or primarily, small vehicles have made a difference if they weren't able to generate profits on the small cars that they were already selling under their existing cost structure? E.g. - if the small cars that they already made were unpopular and often sold at a loss, how would a government mandate to create more of them have made them any better off?

 

If they hadn't continually hammered american consumers about how macho and better SUVs are, and instead expounded on the virtues of energy efficient vehicles it wouldn't have been difficult. Americans were a long way to being sold on fuel efficiency after a few years of Carter policies and other people not exposed to detroit pro-SUV advertising, have no trouble with smaller cars and no particular desire to drive a tank around town.

 

If the government *had* arbitrarily changed the market by putting a mandatory floor under fuel prices,

 

False. There nothing arbitrary about taking into account huge subsidies to oil companies (waved royalties, tax breaks, military cost to secure the resource, etc ..)

 

what's to say that the increasing demand wouldn't have been captured by the automakers who were already able to sell small, fuel-efficient vehicles that people already wanted to buy even in the absence of such government mandates?

 

We can be sure that if they had retooled they wouldn't be as badly off as they are today. The rest is speculation.

 

That's far from certain. [Cough, cough "Saturn."] The first iteration of "Retooling" in the 1970's gave us the Pinto and the Vega.

 

Their perpetual failure to make small cars that people were willing to buy at prices above the cost of production since that time shifts the balance of probabilities decisively towards a scenario where hastening to crank out more unpopular vehicles leads to accelerating losses and they implode sooner.

 

 

[JayB]

How many of you bailout guys only own American cars?

 

Prole?

 

j_b?

 

Trash?

 

If these companies are to succeed, then *someone* needs to buy their products.

 

I'd venture that in Seattle, at least, a given person's enthusiasm for the Big 3 bailout is inversely proportional to the probability that'd ever buy a car made by them.

[prole]

Really, what was it like voting for John McCain?

[Hugh Conway]

If only people involved in manufacturing buggy-whips and whale-oil lamps had had such ardent defenders back in the day....

 

Alas, they did not have the Henry Paulson that AIG does.

[prole]

Nothing wrong with making things that people want to buy.

 

 

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