The Militant Libertarian

I'm pissed off and I'm a libertarian. What else you wanna know?

Tuesday, November 25, 2008

Look! There’s Another Wolf! No, I Just Saw Him, Behind That Tree!

by Vin Suprynowicz

Even as Detroit’s Big Three automakers teeter on the brink of collapse – General Motors Corp., Ford Motor Co. and Chrysler LLC are seeking $25 billion from the government to get them through the worst sales slump in 25 years, with GM particularly short on cash and reporting an inability to borrow more – United Auto Workers President Ron Gettelfinger announced on Nov. 15 his workers will not make any more concessions.

“The focus has to be on the economy as a whole as opposed to a UAW contract,” Gettelfinger told reporters on a conference call, noting the labor costs now make up 8 percent to 10 percent of the cost of a vehicle.

Other number-crunchers report that for the Big Three, contractual long-term health care obligations, alone, add nearly $5,000 to the cost of each new vehicle.

Mr. Gettelfinger called on Congress to act quickly on a bailout for the industry, saying action is necessary before President-elect Barack Obama takes office in January.

He said if one automaker were to file for bankruptcy, the others could follow. The union chief said the automakers would then find it difficult to restructure under bankruptcy laws and instead could end up out of business. “Would you buy a car from a bankrupt automaker?” he asked.

Well, did American commuters buy tickets on the famously “bankrupt New Haven Railroad,” or more recently on airlines which were reorganizing under bankruptcy protection? Yes they did.

Why this bum’s rush for a congressional “bailout,” really? Why this demonizing of the well-established option of bankruptcy protection, when this is precisely the circumstance for which our bankruptcy laws – the envy of the world’s economies – were designed?

If the current bank bailout is a model, the word “bailout” has essentially now come to mean (quite literally, to the denizens of Washington) “the government will purchase shares of your stock as a way to bolster your balance sheets.”

That’s the form of economic central planning made popular by Mussolini and Hitler. Is that really where we want to head?

What was the last thing Congress had to do “urgently – no time to waste”? Oh yeah, they had to hand Shifty Paulson $700 billion, right away before the election, to buy all those “poisoned mortgage-based securities” and get them off the balance sheets of his friends the investment bankers. Remember?

Had to do it right away, remember? Otherwise the economy would collapse. That was a month ago. How many “poisoned assets” has the Treasury Secretary now bought? None. Changed his mind.

But look! There’s another wolf! No, I just saw him, behind that tree! You’ve got to believe me!

The best thing Congress could do to “bail out” Detroit – at no financial cost to taxpayers, and at a considerable benefit in highway safety – would be to repeal all “fleet fuel economy” standards (the imposition of which exceeds Washington’s constitutional powers, anyway), allowing auto makers to build exclusively the safer, more attractive, more solid cars and trucks U.S. consumers want, without the artificially imposed mandate to crank out low-powered, easily-crushed little wind-up toys on which the Big Three lose money on each unit.

But that’s never going to happen if Washington becomes MORE directly involved in auto plant management, rather than less.

There are plenty of U.S. auto plants with addresses considerably south of Detroit that still manage to turn out fine cars at a profit, because they pay only about $48 per hour in wages and benefits to their mostly non-union workers (hardly a starvation wage), as opposed to a number approaching $75 in Detroit.

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  • At 3:11 PM, November 25, 2008 , Blogger Mberenis said...

    It's not about losing money, it's about making money. It's easier than ever to do so with lenders at their knees begging for borrowers. The bailout is causing lenders to practically give away money. You would be surprised at how much cheap and in some cases "free" money is going around out there.

    Bailouts for Everyone


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