RSSCan a Progressive not oppose the auto bailout?
Dec 12
My earlier post today generated a lot of comments: No bailout yet, maybe the Big 3 should save themselves
At a glance count, most commenter’s seemed to agree with me, but there was a forceful minority who strongly opposed it. They even started their own post to trash me (I admit to having some fun over there too), calling me all kinds of awful things. My feelings were hurt; really. I’m crushed. They even suggested I should be removed from the Progressive Bloggers roll because I oppose the bailout. I think I just got an attempted smack-down from the extreme left!
Never mind the fact that it’s ridiculous to assume people on one side of the political spectrum can’t have differences in opinion, but why do some people obviously assume any progressive should support the bailout? And to the extent of claiming the person can’t be a progressive if they don’t?
Here’s what I see as the pros and cons of the bailout. First, some points I believe to be true, to add some context:
- Neither Ford or GM will go away, no matter what happens. At worst they will enter bankruptcy and retool.
- Ford and GMs largest problems are related to weak products and product timing as well as the massive pension and health care liabilities.
- The 3M lost jobs quoted by the UAW is as gross an exaggeration as is the $70/hour wage for the average UAW employee. Some people just won’t accept that if the Big 3 don’t get their bailout money they will not evaporate. Sure, tough times are ahead (they are no matter how much money the government gives them), but there are many ways for them to survive that do not involve nationalization.
Pros:
- Help some people keep their jobs, at least in the short term.
- There is a national interest in maintaining manufacturing capacity.
- If it weren’t for government-run car companies we’d never have gotten the VW Beetle.
Cons:
- The role of government, as defined in Canada and the US, does not include guaranteeing jobs to anyone. Their most important role in that area is to produce an environment where business can grow and thrive. I don’t know if I missed a memo that said Progressive has to mean Communist, but if I did then count me out.
- Propping up a failing business is harmful in several ways. First, it rewards failure. Second, it stifles new innovation and new business that could employ those same people in a sustainable way. Third it’s a government-enforced monopoly.
- GM does not appear to have a plan to bring themselves to solvency after taking our tax money. What’s to be done in 6 months? More money? Then what?
- It does not seem fiscally responsible to give more money to companies who have proven they are experts at losing it. Losing $2k on each product you sell means you’re doing something very wrong.
- I’m sick of this “Support American business” line. I work in the tech industry. The Big 3 had no qualms whatsoever about firing thousands of us in North America and replacing us with people in India and China. Why would I give them a level of respect they won’t give me?
- We don’t live in a Communist country, nor have our governments proven particularly adept at running most types of business. There are exceptions, for example the American Medicaid program apparently runs at a fraction of the administrative costs of private health insurers.
So, that’s where I am. I think there are reasonable justifications for the bailout, I just don’t see how that’s more than a short-term band-aid that has more downsides in the long-term.
And, if anyone doesn’t think I quality as a progressive because of my thoughts above, guess how much I care?
Dec 13, 2008 @ 04:18:16
I think when people quote the $70/hour wage, what they don’t mention is that some of that money may include benefits and pension payments to retired employees. In general, benefits in unionized or non-unionized companies will consist of about 40 to 60% of what an employer needs to pay an employee. Essentially, an employee will see about 25 to 35 dollars per hour.
With the huge auto industry, governments cannot afford to pay for thousands of unemployed workers who may eventually go on welfare. Even indirect health costs would increase. Other businesses that serve auto workers would also be affected.
Yes, there is a cost to bailing out the auto industry. There is also a cost of not doing anything. The problem is trying to find the right balance of how much governments should contribute with loans and other guarantees. Opponents may make a case that Canada’s contribution is 2x too much. However, they will need to be very convincing to explain why one dollar is too much.
Dec 13, 2008 @ 08:46:40
I don’t think (1) is true. Ordinarily, if a company goes bankrupt in the US, it enters Chapter 11, can obtain emergency loans from financial institutions (mostly banks, also investment groups), and use those loans to retool. However, the financial system in the US is also in serious trouble. So, observers are worried that GM or Ford, if they go bankrupt, they will enter Chapter 7 not Chapter 11 — which is total liquidation.
Dec 13, 2008 @ 10:37:50
Daphne and I are considered progressives and we too are against the bailout; and for much of the same reasons you give.
The point you raise about being frozen out by certain other progressives is one we’ve shook our heads over. It does appear that some – the majority? or just the loudest? – argue that anyone who opposes the bailout cannot be a progressive. Hence, there are calls for removal of our blogs from PB.
The effort to impose such a freezing atmosphere, to shut down dissenters even among progressives, is not itself progressive. Which leaves us wondering if some people should just get down off their high horses and give it a rest for awhile. A vacation would be nice but many of us can’t afford that.
Dec 14, 2008 @ 14:19:47
Wow! Most controversial subject ever to create a schism between the left and the extreme left!
Can we at least all agree that it was the extreme right, the southern Senate Republicans, who scuttled the bailout package by making demands that they had to know would not be acceptable?
Regarding pogge’s attempts to have you boiled in oil:
“It just took me by surprise to see what Tim accurately described as anti-union talking points. I know I can get that in other places but that’s why I normally don’t go to those places.”
You don’t go to any site you suspect might contain views that don’t perfectly match your own? What a wonderfully sheltered life you must live. It’s this kind of narrowminded groupthink that got us where we are, except it was the conservatives refusing to listen to opposing views and liberals shouting for their voices to be heard.
I don’t like this bizarre liberal censorship and in-fighting that’s going on. People are saying that they read Progressive Bloggers expecting a recitation of liberal talking points, but definitely or not conservative ones! What happened to listening to opposing views and having a dialogue?
WWOD? You know he’s sit down and listen to all sides.
Dec 14, 2008 @ 14:38:34
As I was driving to work yesterday, a rock hit my windshield. Now there is a big chip and the beginnings of a crack in my windshield.
My question to you is this:
Should I pay out of my own pocket to have the rock chip fixed today, or should I just let it go until the crack spreads across the entire windshield?
Dec 14, 2008 @ 18:21:56
@Randy: It was the extreme right who brought the package down and I don’t like how or why they did it either.
@Oblong: In your simplified example of course you should pay to have the crack fixed. But, I don’t get the analogy. Is the windshield the economy or the Big 3? If it’s the Big 3, then I’d propose the solution of nationalizing the auto industry is like fixing your crack by covering the windshield in tar. Sure, it’s not going to break, but it’s not doing much anymore.
If you think the windshield is the economy, then there’s only so much you can do. You can try putting some superglue on the crack to slow it down, but the way the North American auto industry is setup that crack is going to keep growing no matter what.
Look, even at the best of times in the last decade the Big 3 have been losing money or breaking even, as far as I’m aware. It just blows my mind that people think it’s a good idea to keep throwing money at these failed businesses. If another very large company like IBM was about to run out of cash, would they be nationalized?