Second Thoughts On The Auto Bailout

Now they have scared me. They tell me that letting GM, Ford and Chrysler fail would wipe out some 3 million jobs, 10% of all US jobs. Components factories would close forcing the closure of the US auto manufacturing facilities of foreign makes as well as that of thousands of Ma and Pa shops, stationary shops, pharmacies, butchers, grocers, restaurants, etc. that are servicing those who will have lost their jobs. This would result in additional unemployment, home mortgage defaults and shrinking of the economy. I am also offended. The Government has bailed out the "Wall Street Gang", those greedy, parassitic crooks, and it is dragging its feet to do the same - with a much smaller outlay - for those poor blue collar workers who, with the sweat of their brow, are the underpinning of this country's economy. Poor Government! It finds itsel in a pickle because of the greedy finance speculators and the incompetent mangement of the auto industry. But wait a second: am I ready to swallow all the above hook, line and sinker? Hell no! It is the Government that is the number one culprit. For years they have deregulated irresponsibly and have pushed Fannie Mae and Freddy Mac to lend irresponsibly, totally disregarding something that was obvious from the founding days of the Republic: that man is greedy and, uncontrolled, he will always put his own interest ahead of the interest of the community. Unfortunately, most self-serving members of Congress cannot be held legally accountable for all the messes they create - I would love to see most of them in jail - and when the next election will come around they'll find, no doubt, a way to talk their way out of trouble and blame for their own incompetence and greed - yes greed - circumstances or someone else. So why was the finance industry bailed out? Because almost every American has a bank account and credi cards, because widows, orphans and holders of 401K retirement plans could not be allowed to lose everything and because failure to intervene would have landed us streight into a depression. The amoral bankers certainly did not deserve to be saved and many more strings should have been attached to the bailout money; I hope that the next government will regulate the hell out of what compensation top management can get and under what circumstances, since the owners (the small shareholders) deserve to be and should be protected from these corporate predators. Clearer accounting of the use of the money should have been mandated but this is, once more, Washington catering to special interests and, of course, to their own. As for Detroit, today's problems are the inheritance of over 50 years of mismanagement, arrogance fed by an initial lack of domestic competition and abuse of power by the unions, who never understood that you cannot eat the goose that lays the golden eggs. Since we are a capitalist society - imperfect but better the the alternatives - maybe we should stop fearing the bogeyman and tell GM, Ford and Chrysler that they must go into Chapter 11 and, since we shouldn't cut off our nose to spite our face, the Government should help them put together a pre-packaged Chapter 11. Any Government money should go to back warrantees for the cars that will be sold by the Big Three and to help any components company that may need to borrow.  It is likely that only under Chapter 11 the US auto manufacturers will be able to restructure quickly, bringing the salaries they pay and the number of their dealerships in line with those of their foreign competitors and saving as many as possible of the Detroit jobs. Do I have no feeling for the auto workers who will earn substancially less than they earn now, have smaller benefit packages and some of whom will lose their great jobs? I do but the restructuring beats by a mile not having a job at all. Most American industries have gone through the same pains in order to become globally competitive and now, unfortunately, it seems to be the auto industry's turn. Most American retirees have to make do with an imperfect Medicare system; it is unfortunate but from now own the UAW's retirees will have to make do the same way, They've had it good for a long while and have taken full advantage of the situation. As the adage goes "all good things come to an end"; apparently, the end is now, unfortunate though this may be. Should the auto industry succeed in convincing the UAW and the dealerships to make all the concessions necessary to constructively complete a successful restructure, let's bail them out; however, experience teaches that short of Chapter 11 this will not be possible. Yes! I am scared. But there comes a time when one must swallow the bitter medicine and suffer through its side effects. Experience teaches as well that once any high gasoline price crisis is over the American public demands once more large, gas guzzling cars. While this cannot be prevented in a free society, it certainly could be regulated by a responsible Government, not owned by Detroit's Big Three and by the oil companies. As I had suggested in my previous blog, the cost of yearly car registration should be set geometrically progressive according to engine displacement. Anyone who must have an inefficient, unecological car should pay dearly for the privilege, the money going to alternative energy research. There are solutions but I trust our Government to set its sights on ideology and on the self-interest of individual members and to screw up once more. Who knows, maybe Barak Obama will have the charisma, the power and the perseverance to bring about positive change and actually change Washington's modus operandi.