The Great Bailout Debates
The debate centers on whether or not we, the taxpayers, should be expected to bail out the car companies. As has been the case for the past several years, the country seems more or less equally divided between those who feel it is irresponsible and those who feel that it is a necessary evil. I know of no one – with the exception of those actually in the industry itself – who thinks it is a good idea. The arguments on both sides are compelling and it would be easy to throw one's hands up in despair; suffering that helplessness that accompanies all similar crises.
On the one hand, there is the idea that the auto executives and decision makers have been irresponsibly out of touch with what has been happening and slow to act. This is the very least assessment, putting aside the matters of grossly disproportionate salary and benefits and extremely high investor dividends while asking workers, active and retired, to take wage and benefit cuts.
Associated with this argument is its cousin which foresees disaster in letting the Big Three fold up and die, putting thousands – hundreds of thousands – of upper middle class workers out of work and, therefore, taking them out of the consumer economy which so badly needs them right now.
On the other hand is the idea that it is not the responsibility of the taxpayer to shore up a faltering company whose leadership was so blind and so petrified that they could not adapt quickly enough to the changing environment in which we live; a sort of Capitalistic Darwinism, which is, probably redundant since Capitalism is, in fact, Darwin applied to economics. After all, isn't the underlying philosophy of Capitalism survival of the fittest? If a company cannot compete, then it should not exist. And with the way the companies have been run, certainly we cannot count on them being any more responsible in the future than they have been in the past.
And, didn't we do this before, when Chrysler, who had, for years, built lousy vehicles, went hat-in-hand and begged to be bailed out, using the same argument – that we can't afford so many consumers to be out of work -- and here we are, 20-odd years later – doing it all again?
I boil the arguments down to the following categorical definitions:
The first is the suffering servant, willing to endure the pain of rescue for the good of those who would be hurt if it was not to be; the second is the retributive enforcer, demanding an eye for an eye and willing to risk the consequences for the greater, long term good.
In my own mind, as stated before, there is merit in both arguments. We should be willing to rescue our fellow workers and to help ensure, in our own self-interest, the further decline of the economic system. Yet, we also need to show, in no uncertain terms, that incompetence and negligence will not be tolerated when it comes to the economic security of the country – and, in the days of globalization, the world. It would seem that no matter which way we turn, we are going to do something that we don't want to do. There is another issue here that we need to painfully acknowledge, and that is our own guilt, by association, in the automotive collapse.
It was, after all, we who embraced – with great passion – the huge mechanical monsters upon which the Big Three staked their futures, and, for many years, we bought them ravenously, seeing who could have the biggest, most masculine, most powerful gas hog in the neighborhood. It was we, also, who demanded these vehicles and who shunned more economic, more reasonable, transportation .It was also we, the public, who likewise turned away and refused to fund decent, practical and affordable public transportation in favor of our silly, juvenile insistence on "independence" and "privacy." The fact is that most European and Asian car companies are not feeling the crunch that we are here because of their public transportation systems. In other countries, the automotive markets must compete with cheaper and in a more frugal marketplace and must make the automobiles the public will buy; i.e. ones that they tell the motor companies they want, rather than letting the companies tell them what they want. But, while saying that gives me a great deal of personal satisfaction, it is, after all, retroactive finger pointing and not a solution to the problems we now face.
As for that solution, it must first be said that I do not feel there is, short of manipulation of the space-time continuum, one that is going to satisfy everyone or do everything we need it to do. The dirty, unkind fact is that when there is a mess to clean up, someone is going to have to deal with the smell and the filth.
Now, with that said, my solution is this: In order to protect the economy and so that the workers – who, after all, had nothing whatever to do with the decisions that brought us to this pass – should not suffer unduly, we should lend, not give, sufficient money to the automobile companies to dig themselves out of the ditch them created. However –I strongly feel that these loans should be tied – in no uncertain terms – to certain conditions. Those conditions would include a complete dismissal of any executive management responsible for the decisions that brought about the collapse and replacing them with a new management, including a completely new managerial system if need be, to make the companies more responsive, more responsible, and more flexible. Also, the loans need to be tied to more transparency of the companies. If we require it of government, why should we not require it of manufacturers who sell their stock on public markets? Are they not just as responsible for the security of the nation as, say, Congress? Rather than sitting in corner offices trying to find new ways of convincing us what we need and basing that on what is practical for them, they need to be listening to us and following our desires. And for those who scream "Socialism" I would remind them that this is one of the cornerstone philosophies of Capitalism: Supply follows demand, not the other way round. The third, and to me, the most crucial part of the deal, is that we stop this nonsense about environmentally friendlier machines and significant increases in fuel mileage are not contrary to the success of the industry and that the companies be required to offer a full line of hybrid and high-mileage cars with a minimum mileage for all cars set at 35 mpg.
This is not fantasy. In fact, it has been done before, in the 70s and 80s, the last time we went through an oil crisis. And it can be done today, while maintaining a level of performance that is suitable.(Even though I am a former racer and still a racing fan, and while I, at one time, drove 400 hp machines on the street, I believe their time has past, indeed, if it ever really existed.) One last thing to add to this: One of the arguments I have heard is that there is disgust on the part of some about bailing out workers who make up to, by one person's statement, "$80 per hour."
First of all, let me cite the most recent statistics I can find: The average wage of U.S. autoworkers is between $25-$30 per hour before benefits. This equates to roughly $64,000 per year. The average salary in the US as of the 2007 figures was $40,405. This puts the autoworkers solidly in the middle– not the upper–class. By comparison, the salaries for the CEOs of the Big Three were between $28 - $30 million per year. This is equal to $538,461 per week. Broken down into hourly wage, it would equal $13,461 per hour, provided they put in a 40 hour week, which, of course, they do not. It's more like 60-70 hours per week, so, giving that benefit of the doubt, it would still equal $7692.30 per hour.
Quite a difference.