If an industry is contracting and there is an oversupply of productive capacity, then the worst thing we could do is prop up that industry by taking jobs away from the healthier portions of the economy (including better run automakers). If government planners really were a lot smarter and better planners than business people (they aren’t), then the government’s strategy should be to try to drive bad businesses out of business quicker, not try to destroy the healthy companies by propping up the dying companies.
He then continues to pile on by beating down the people that are abolishing their own jobs - the unions.
Heavily unionized businesses usually have trouble competing with non-unionized
businesses. Unions are successful in getting above-market wages and benefits, which makes it difficult for the businesses to compete. In the auto industry, there are many more dealerships than necessary. And, according to Larry Kudlow, the average compensation and benefit rate for auto workers in Detroit is $72 an hour, compared to $44 an hour for foreign car workers at US plants. Even if two of the three Detroit automakers were to go out of business, most of their workers and the workers for their suppliers would be able to get some sort of job. That the jobs they would get would pay a lot less suggests just how much they are overpaid now. If General Motors has become a health and pension plan that makes cars on the side – in other words, unions pressured bad management to make promises they couldn’t keep – then inducing GM to go out of business should be on balance good for the economy. Any government bailout should go to the Federal Pension Benefit Guarantee Corporation, to provide money to cover partial pensions for the employees of companies in the bankruptcies certain to come.
Unions usually include provisions in their labor agreements where there is a mandatory pay or benefits increase each year, regardless of how large or small the overall profits are. Does anyone else find it ridiculous that a company losing billions of dollars a month gives pay increases to its employees? If your blood isn't already curdling, does it incense you that many of these employees view this pay raise as an entitlement?
In regards to above, lets note the reference to the pension plan and how much the employees are paid. GM provides retirement benefits to its former employees. Part of these benefits are health care benefits. Why the hell did GM agree to such a thing?! Well, I'm guessing the dumb-ass unions demanded it, but why is this such an important issue when health care benefits are not hard to come upon when one is retired? Social Security provides Medicare to all persons over the age of 65 who qualify (GM workers would qualify). This money is automatically taken out of their SS benefits and even the most complete supplement plans are not that expensive. Why pass this cost off to GM? Did the Unions not think that paying these entitlement costs out the ass would end up taking their toll one day? Every time I read or hear someone on the news say we need a bailout or else retired GM employees are going to lose their health care I want to shoot someone. That is utter bullshit. Stop the propaganda. And why is the MSM lending a microphone to these people saying that?
I know it is a touchy subject for many people. I live in Ohio and I have family members who rely on the continuance of the big 3, but the government should not reward failed businesses, greedy unions and mismanaged corporations. I don't see why I should have to subsidize the wages of overpaid union employees. I am within the top 4% of educated people in the world (it may be different now that I am in law school) and I have yet to make over $15 an hour. Also, I eat the same meal almost every day in the week to save money. Well, who am I kidding, I don't have any money, yet you don't see me expecting other tax payers to subsidize my rent or food budget.
We have heard the ridiculous PR stunts of the big 3 execs this week, such as arriving to Capitol Hill in a Ford hybrid, even though the execs took their own private jets from Detroit in order to ask for federal bailout money but this has gone far enough. If Ford, GM or Chrysler buy an ad during the Superbowl, I'm going to get a pitchfork and drive my foreign car to Detroit looking for someone. My money will not be used for a friggin Superbowl ad.
Let's let Lindgren get in one more word.
The only job-saving justification I can think of for a Detroit bailout is if the problem were only temporary; then destroying jobs might be imprudent. If Detroit’s business model were strong, if there were little or no overcapacity, and if Detroit’s problems were only temporary, then one could reasonably think that a bailout might be efficient. But there is no temporary market failure here to redress. Detroit’s problems have been here since the late 1970s. Anyone who thinks that giving money to a company losing 2-3 billion dollars a month — with overpaid workers and overpaid executives – would usually save jobs in the long run, rather than lose them, doesn’t understand economics.
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